Pensions minister Steve Webb last week called on the next government to implement a combined state and private pension statement within the next two years that also incorporates aspects of pot-follows-member.
Speaking at the Ceridian Customer Conference 2015, the minister called for a system similar to the 'pensions dashboard' proposed by the Financial Conduct Authority in its retirement income market study late last year.
The dashboard would allow members to view their state, company and private pension benefits in one place.
“Already this year we’re digitising the national insurance records so that you’ll be able to go to a website, see what national insurance you’ve paid… and see what that’ll do to your state pension,” said the minister.
“We already, on a paper-based system, contact 2m workers with company pensions to tell them their state and company pension in one place.”
The proposed system could also draw on databases being built for pot-follows-member, he said, allowing for a consolidated statement of pension benefits.
But Ros Altmann, the government's older workers' champion, was doubtful a system would be implemented in two years.
“It is a massive task. It’s something that should happen and could happen in the long term,” she said.
It is a massive task. It’s something that should happen and could happen in the long term
Ros Altmann, government older workers' champion
Altmann added that the main obstacles to such a system were the continued prevalence of defined benefit – where calculating pensions is more complex than with DC – and the simplification of the state pension.
Pensions dashboard
The FCA’s proposal for a pensions dashboard is based in part on a similar system that was successfully implemented in the Netherlands, which shows individuals all their pension entitlements.
“As people increasingly have multiple pension pots and other sources of retirement income, there is a stronger need for this tool,” said the FCA report.
Many tools allowing members to aggregate benefits are already in place. Debbie Falvey, head of DC proposition at consultancy Aon Hewitt, said it would welcome the opportunity to incorporate Department for Work and Pensions information into its products.
“Having the real-life data would be ideal," said Falvey.
However, Mark Pemberthy, executive director for consultancy JLT Employee Benefits, said while such tools are prevalent in the US and the Netherlands, the fragmented UK system presented hurdles.
“The biggest challenge is a lot of occupational schemes aren’t enabled for online yet – the state pension isn’t either. The technology is there though,” he said.
