A third (32 per cent) of adults contributing to a DC pension did not know, broadly speaking, how much their pension pot was worth, according to the Financial Conduct Authority’s Financial Lives 2020 survey. More than half (54 per cent) had not reviewed how much their pot was worth in the past 12 months.
But Holly Mackay, chief executive of financial website Boring Money, predicts greater engagement will emerge. “As auto-enrolment matures and as more young people start to accumulate meaningful balances, at some point the penny will drop that pensions are not just for rich people,” she says.
“Although I think it will be a slow burn, at some point the combination of higher balances, awareness of choice, better digital options and interest in impact investing will take us to a tipping point. People will come to see pensions as something they control rather than something which is ‘done to them’.”
However, LCP’s Webb says the dashboard also presents a threat to online pension providers as many may want to host one. “If, for example, your bank hosts a dashboard it may nudge you to move your pensions to the bank’s products,” he says.
Independent retirement and pensions consultant Richard Parkin agrees dashboards will hopefully make people more aware of their pension savings, and so could encourage consolidation.
But like Webb, Parkin also predicts existing pension providers will use dashboards to encourage consolidation into their own products, potentially making it even harder for standalone providers to drive switching.
“Also, many consumers will not want to have all of their eggs in one basket and dashboards may allow them to manage their pension savings without having to consolidate,” Parkin adds.
Hopkins likewise says the dashboard could be a threat to pension consolidators, but that it presents a greater threat to businesses that “rely on making it difficult to move pensions”.
As Sam Turner, a consultant at Altus, explains: “Where online pension consolidation is concerned, the consumer journey appears highly digital.
“However, the reality is that ceding pension providers are under no obligation to accept digital letters of authority, in some cases responding to requests for information with a request for a signed paper letter, which flies in the face of the digital experience PensionBee is trying to promote.”
The rise of the online pensions adviser
As digitalisation occurs on the provider side, advisers are also joining the technological revolution, with the launch of virtual retirement income planning service Chancery Lane this month, and automated advice service Destination Retirement in March.
Hub Group’s chief executive David Cooper says the latter was created to reach customers who otherwise would not seek professional help. According to the FCA, its retirement income data suggest more than a third (36 per cent) of pots accessed for the first time in 2019-20 used regulated financial advice.
