In 2017, the government announced the development of the Pensions Dashboards Programme, an initiative to help address the common gaps in retirement planning, including the billions of pounds currently sitting in lost pension pots. The dashboards that come out of the programme will allow people to see information about their pensions from different providers, as well as their State Pension, in one place. The project is finally reaching completion, with the first full product due for release by the Money and Pensions Service (MaPS) in 2027/28.
The free dashboard should be a big help for lots of people who need support in planning for their future. As an HR or wellbeing lead, it could be a great tool for your employees. But it’s worth planning ahead for the potential impact on your financial wellbeing strategy. We’re here to help you understand the benefits and drawbacks of the Pensions Dashboard Programme, as well as how your strategy might need to change in response.
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Why do I need to know about the Pensions Dashboard Programme?
Pensions are one of the most important aspects of most people’s financial lives. And yet, many people struggle to stay on top of saving for the future. Around 15 million people in the UK currently aren’t saving enough for retirement, while half of adults don’t currently have a financial plan for when they stop working.
Lost pensions are part of the problem. Many people now save for retirement through their workplace, especially since auto-enrolment puts a majority of eligible workers into a scheme. With the average British worker holding six jobs in their lifetime, doubling for Millennials and Gen Z, the number of workplace pension pots each person holds can quickly become hard to manage.Some will also open personal pensions. No wonder people can forget small pots they may have accrued decades ago.
How the Pensions Dashboards will work
The Pensions Dashboards Programme aims to connect around 3000 pension providers and pension schemes to a digital service that will eventually power a range of dashboard sites.
To begin with, the MaPS version will pull through information on pension pots and schemes for each user. It should pull through data from personal pension providers subject to Financial Conduct Authority (FCA) rules, as well as workplace schemes with over 100 members, covering 99% of UK pensions. Some data will appear instantly, some will take time to come through, and some pots will require users to give permission before they link to the dashboard.
When all pension pots are drawn through, the dashboard will then give users an estimate of their monthly and annual retirement income, using the data from their pension accounts. MaPS will then signpost users to their other pensions resources, tools and guidance, in order to decide next steps.
Once the free MaPS dashboard is complete, private companies may be able to create their own dashboards using the existing connections. These may have additional or alternative features.
What benefits could the Pensions Dashboard bring to the workplace?
Although the MaPS Pensions Dashboard will be a free service, independent of individual workplaces, it will still bring potential benefits to you and your employees.
Benefits for employees
By drawing together information on pension pots, theoretically, your employees will be able to:
- Get an overview of what they’ve saved so far.
- Understand what their retirement income might look like and whether this matches what they were expecting.
- Use this information to plan ahead for retirement.
- Make changes to their pension savings now, to adjust what might be available in the future.
- Seek further help and advice about their pensions and retirement.
Ultimately, all of these steps can help them achieve a more comfortable retirement in the long run. In the shorter term, knowing they have a plan for the future can help them feel less stressed and more in control.
Benefits for you as an employer
Your pension scheme is a major workplace benefit. Yes, it’s one you are likely obliged to provide at a minimum level for the majority of your employees. But when you consider the monetary contribution you’re making to their futures, it’s a sizeable investment in their lives beyond your organisation. You may even contribute more than the legal minimum, making your pension scheme even more valuable.
Your pension scheme can therefore help you recruit and retain employees who recognise the importance of your investment in their futures. However, if your employees don’t fully understand their pension, they may not appreciate the benefit..
What’s more, employees who are disengaged from their pension may feel stressed and anxious about retirement planning. That stress is counterproductive to your wellbeing agenda.
So when employees are able to see and use their pension savings overview, they may:
- Appreciate your contribution to their future.
- Make full use of any additional offers, like matched contributions, to boost their pot.
- Feel less stressed and unhappy when thinking about retirement.
However, these benefits may remain theoretical for many employees, who will ultimately need support in understanding and applying what the dashboard is telling them.
Why a Pensions Dashboard is only the first step
The reality is that many employees will find it difficult to fully understand what the dashboard is telling them, what action they might need to take, and how to go about it.
For example, imagine Employee A. They are in their 30s and have four workplace pension pots that they know about, plus one they have forgotten. Their dashboard pulls through the pots and lets them know they can expect a projected annual retirement income of £17,000. So, what now? Employee A isn’t sure if that’s the right amount for their future self, nor what they should be saving right now in order to get more. They also need help to juggle their day-to-day finances so they are able to put more aside.
What employees might need beyond the dashboard
To help them navigate next steps, employees might need:
- A greater understanding of what a pension is and how it works.
- A more holistic understanding of finances in general.
- Support with planning ahead in more detail.
- Guidance on how to actually make changes such as increased pension contributions.
Some employees might be able to engage with learning resources such as web pages, webinars or flyers. Others may need more specialist 1:1 support from a trained professional such as a coach or financial advisor.
What does MaPS provide?
The MaPS service provides a variety of online informative pages and calculators, as well as the chance to connect with experts over the phone, email or web chat. Employees over 50, or younger people who fall under a limited set of more complex circumstances, may be able to access a MaPS Pension Wise appointment to discuss retirement plans.
However, your employees may need a greater variety of ways to engage with and understand what the dashboard is telling them.
How should our financial wellbeing strategy evolve in response?
With this in mind, your financial wellbeing strategy might need to change to accommodate the Pensions Dashboard. For a start, you may want to build in opportunities to tell employees about the dashboard and how to use it.
As this could be overwhelming for some employees, it could be important to have more support ready, beyond just signposting to MaPS. This could include:
- Financial coaching sessions. A coach can help your employees break down their retirement goals and think about next steps to get there, as well as helping them stay accountable.
- Financial planning tools. Just creating a plan out of thin air can be very difficult! A specialised tool can support employees to understand exactly how to reach their goals and how other elements of their finances will contribute.
- Day-to-day budgeting. Some employees will need help to build and manage a budget so they can potentially move more money into their pension pot.
- Pension management tools. Writing to the HR team to request changes can be onerous for employees, and create workload for you, too. Simple tools to increase contributions and model changes can be helpful.
A digital solution like Maji provides all this and more, including ways for employees to save money that could be used for their pension instead, through deals and discounts, and options for salary sacrifice.
Making the most of your pension scheme
The Pensions Dashboards Programme, starting with the MaPS dashboard release in 2027/28, should be a great opportunity to help employees engage with and understand their pension savings. The overview of savings, connection to lost pots and projection of income will undoubtedly help lots of people feel more in control of their futures. But many will also need significant support to take full advantage of the springboard the dashboard provides.
Updating your financial wellbeing strategy over the coming months will give you time to plan and embed any changes before the dashboard’s release. To speak to a member of the Maji team about how they could help you build a holistic strategy that doesn’t just cover pension pots, book a demo today.
