Pensions Dashboard could offer retirement income planning panacea for nearly half of Baby Boomers15 November 2017
Explains Adrian Boulding, Director of Retirement Strategy at Dunstan Thomas
The Pensions Dashboard project has been given a major boost in recent weeks following the transferral of responsibility for its delivery from HM Treasury to the Department of Work & Pensions where, in Guy Opperman, the Department has found a minister who is genuinely passionate about driving it forward.
The Pensions Dashboard was originally envisioned as an online portal facility which would enable all our previous pension policies to be viewed in one place. The need for this facility is clear when you look at the reality of changing work patterns in which, for example, we now see the average millennial anticipating at least 11 different jobs in their working lives.
That’s one key role for the Pensions Dashboard. However, feedback we gained from surveying 1,002 Baby Boomers aged 54-71 years old nationwide, suggests a much more extensive role for the Dashboard as a great place to do some retirement income and decumulation planning. This is all the more-important as two-thirds of this age group have never consulted a regulated adviser and they are early beneficiaries of new Pension Freedoms which offers them decumulation choices which they definitely need help with, our findings suggest.
For example, one in five Baby Boomers (22%) said they would use the Pensions Dashboard to assess whether:
“I’ve got enough in my pension pots to hit my retirement income target”.
Nearly as many (20%) wanted to work out:
“How much I can draw monthly out of my income drawdown plan from my pension without running out of money too quickly”.
A smaller group (15%) wanted to use it to run comparisons between different decumulation options such as cashing it in and putting it into an interest-bearing bank account, selecting an income drawdown or annuity scheme. Others (13%) wanted to use it to: “work out how much I need to set aside for an adequate long-term care pot”.
This understanding of what consumers will be using the Pensions Dashboard for is very valuable. It will help those planning to be Dashboard providers to build the right interactive tools to help users to put this newly-available raw data to work to do some active planning.
We understand that for each pension found, the Dashboard display will offer the consumer a click through link to that provider’s website. The importance of the landing page for that link cannot be understated. It t will make the difference between re-acquainting a consumer with their pension provider who may have been out of contact for years, or losing that same consumer within minutes.
These findings confirm our view that consumers will not take kindly to a Dashboard that does not support post-retirement decumulation decision-making as well as pre-retirement accumulation and at-retirement decision-making. The line between pre- and post-retirement is irreversibly blurred and the Pensions Dashboard must reflect this.
Advisers are also potential beneficiaries of the Dashboard, cutting preparation times for client visits considerably and helping them to deliver advice that covers all a client’s pension plans. To achieve this the governance framework for Pension Dashboard needs to include a robust and secure access framework for advisers with client permission.
Data Crunch -
*Survey of 1,002 54-71-year olds resident in the UK conducted by Opinium for Dunstan Thomas during June 2017
30%Of 60-65-year olds don’t know how much income they are likely to get in retirement, based on accessing all their assets
34%Of 54-71-year olds don’t know, or are not sure, how to work out how much income to draw out of their pension each month to avoid running out of money in-retirement (post-Pensions Freedom choices/compulsory annuity purchase)
10%Of 54-71-year olds plan to use retirement tools/online calculator to help them work out how much they can take out each month to avoid running out of money in-retirement
66%Of 54-71-year olds have never used a regulated financial adviser
31%Of 54-71 year olds have never actively planned for their retirement
19%Only began actively planning for retirement after a major life event (e.g. redundancy, ill health, receipt of inheritance/windfall etc.)
68.4%Is the mean average percentage of total retirement income that Baby Boomers expect to get from their own state pension and personal pension pots combined
The Government and pension industry are developing an online tool, a Pensions Dashboard, to be launched in 2019 that shows all your retirement savings at one glance.
What would you use a Pensions Dashboard for?
*Based on a nationally-representative sample of 54-71-year olds conducted by Opinium, commissioned by Dunstan Thomas
|N/A- I would not use a Pensions Dashboard||41%|
|Understanding whether I’ve got enough in my pension pots to hit my retirement income target||22%|
|Understanding what a specific monthly contribution increase into my core pension from now until anticipated retirement date will do to increase my retirement income||12%|
|To work out how much I can drawdown monthly from my pension without running out of funds too quickly||15%|
|To run comparisons between different decumulation options – income drawdown, annuity, taking it all out and putting into a savings account etc.||15%|
|Understanding how much I need to set aside for Long Term Care||13%|
|None of the above||18%|
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