Pots for life will fail to launch
"The pensions market has become the equivalent of an archaeological excavation site, with consumers left digging for the remnants of their 30-year-old pension pots."
There is no mistaking that we are currently facing a pension fund crisis. Those in retirement and receiving the state pension are now funded on a pay-as-you-go basis, and with an ever-increasing average life expectancy, the burden is only increasing.
This has, unsurprisingly, led to a greater focus on private pensions – yet they are faring no better. The current automatic enrolment process has left providers with no real relationship with their customers and thousands of pounds worth of individual funds unclaimed, with lost pension pots now in excess of £26.6 billion. Unfortunately, the new pension shake-up announced in the Autumn statement does little to change that.
The ‘Pot for Life’ scheme is an ambitious proposal that seems to neglect a few important factors. What happens with workers who hold multiple occupations? Or those that change careers often?
Statistics show that the average person moves jobs every four years, and with pension processes generally considered to be an administrative nightmare, do we have any guarantee that our personal pots will seamlessly shift from employer to employer, or will we be left playing catch-up yet again?
The government cannot keep failing to learn from their mistakes. The legacy issues that the UK faces have existed for decades, and we are still yet to see tangible change.
The pensions market has become the equivalent of an archaeological excavation site, with consumers left digging for the remnants of their 30-year-old pension pots. This problem should never have been left long enough to fossilise.
While ‘Pot for Life’ claims that it will help consumers to engage with their pension, it simply seems like it will be yet another failure to launch, much like the Pensions Dashboard, which has been pushed back to 2026 despite millions in investments.
Consumers keep receiving big promises with no end results, and these repetitive oversights on critical issues have left people fatigued. The government must take the time to sit down and understand exactly what consumers want, instead of building new legislation on top of new legislation. At some point, the house of cards will fall down.
Consumers have to be at the forefront of thinking around pensions. While there is a clear and strong incentive for consumers to be repatriated with lost pots, general engagement and awareness are still far too low. Currently, the majority of pension holders are unaware of the correct processes to undertake to even begin trying to find their lost funds. Then, with the majority of pension providers still relying on inefficient and unsecured communications such as post, interactions with customers remain lacklustre at best.
There is a middle ground to be found here, one that allows the triad of government, providers, and customers to effectively engage with each other and transform the pensions market into something that champions the consumer.
Whilst the Pensions Dashboard, when and if it is built, will help in this regard, it is not the solution to all problems. In fact, pensions are just the tip of the iceberg for consumers who contend with multiple utility providers, insurance providers, bank accounts and investment plans.
We have invested significant research and development funds in a toolset that blows any idea that the government has suggested thus far out of the water, allowing consumers to take control of their data. By utilising AI, optical character and brand recognition services, and natural language processing, we can bring customer data to life, identify opportunities for the consumer to achieve better rates and services, and offer a consolidated view of all their accounts, including pensions.
The tools we need to start making headway in resolving this crisis are already available to us. Further exploration of new schemes that may take years to enact or won’t be realised at all will only exacerbate the issues we face.
We have had too many promises; now is the time to deliver and provide consumers with the power to actively manage their pension pots, making life admin exactly what it should be about – the consumer.
Paul Holland is CEO of data security company Beyond Encryption.
