ITM director, Matt Dodds, has warned that preventing all financial transactions on the pensions dashboards could limit the platforms’ effectiveness in helping to solve the small pension pot problem.
Dodds argued that the pensions dashboards must deliver a “robust solution” to members and providers, highlighting the potential benefits of transactional dashboards in tackling the “proliferation of small pots”.
He emphasised that small pots, lost members and pensions dashboards are three “interlinked industry issues” that should have a joined-up approach to deliver the most efficient solution.
Welcoming the launch of the Department for Work and Pensions’ cross-sector working group, Dodds argued that this issue is “sure to be crippling many automatic enrolment providers”, as administration costs remain higher than any revenue generated.
“Coupled with the current economic situation where fund values have taken a hit,” he added, “employers are going into administration and members are stopping their contributions – the impact of small pots on the bottom line is likely to be felt more”.
Indeed, recent research from the Pension Policy Institute revealed that the number of deferred pension pots could grow from 8 million to 27 million by 2035 if policy changes are not introduced.
Dodds noted that whilst the House of Lords previously voted 281 to 241 to excluded all financial transactions from the dashboard to protected savers from potential scam activity, this could have further implications.
He explained that whilst preventing scams was a “paramount consideration”, preventing all transactions would also prohibit pensions dashboards form being part of the solution to small pots.
He added: “There are many challenges facing the industry right now, but these three significant areas should be looked at holistically to ensure we build and deliver a robust solution that benefits members and providers – utilising technology to make processes vigorously secure, but straightforward to use.
“The ultimate success of dashboards rests on encouraging consumers to use it – so let’s make them useful.”
— to www.pensionsage.com