Government slammed for old age savings U-turn

Stakeholders react with rage over rumours that support for a revolutionary plan to help pensioners is to be axed

Esther McVey, secretary of state for work and pensions, has been urged not to withdraw support for the Pensions Dashboard (Parliament Live)

Imagine this. You’re living on £18 a day and you’ve lost £50,000.

Sound unlikely? It’s a scenario playing out thousands of times a day up and down the country. And far from slowing, it’s only likely to become more common.

And yet this week fears are growing that the government is lining up to withdraw its support from a massive initiative designed to reverse that trend.

What are we talking about? Pensions saving. Or rather, lost accounts and the ability to keep track and properly manage the money we work hard to set aside for retirement – just as the government regularly tells us we must.

Indeed, figures from the Department for Work and Pensions (DWP) estimate that as many as 50 million policies could be lost by 2050 as the rollout of the workplace pension means more of us have retirement savings linked to our employers.

With the average British adult changing jobs 12 times during their working life, the chances of losing track of our money are huge and growing all the time.

But now rumours have surfaced that the secretary of state for work and pensions herself is manoeuvring to pull government support for an established project designed to help people not only keep track of where their savings are but make sure they don’t endure old age in poverty.

Known as the Pensions Dashboard, the pensions industry and government has been working for years to produce an online service that would allow each UK adult to view every one of their pensions policies, as well as their state pension forecast.

Its aim is to engage with and protect consumers from a financially difficult retirement after a lifetime of work.

With the pensions industry already concerned over government delays to the launch of the scheme already, Esther McVey is said to be waiting until MPs break for the summer to withdraw the support pensions minister Guy Opperman had assured stakeholders was unwavering.

The response from those involved as well as charities supporting those at risk and others has been nothing short of incandescent.

“At a time when 14 million people are at risk of not having enough to live on when they retire, it’s astonishing that an initiative aimed at helping millions of people to live comfortably in retirement, could be seen as a distraction by government,” said Andy Tarrant, head of policy at The People’s Pension.

“The government should be doing everything possible to help people plan ahead. With one in five people across the UK having lost track of a pension, the Dashboard will help ensure people keep track of all their savings, have all the information needed to make the important decisions about their financial future, and will allow them to watch all their retirement savings grow and compound over time, helping them to understand what their retirement might look like.”

With no official comment on the rumours forthcoming from the Department for Work and Pensions, stakeholders are now scrambling to ensure the Dashboard goes ahead.

Helen Morrissey, pension specialist at Royal London said: “This is a policy that has received support from the Treasury while pensions minister Guy Opperman has repeatedly said the dashboard will happen and urged the industry to back the project. We would urge him to do all he can to persuade the work and pensions secretary to continue with this important policy.”

Esther McVey is said to want to scrap the Pensions Dashboard in parliament’s summer recess (Parliament Live)

Kate Smith, head of pensions at Aegon added: “The pension industry stands ready to go ahead with the Dashboard and constant delays and procrastination have been unhelpful in the extreme. There was never any intention for the government to fund this project, it was always going to be financed by the industry, the question was exactly how?

“First the Treasury, then the DWP, had taken on the leadership role, and we hoped that the much-promised feasibility study would give an indication of the direction of travel and setting out the government’s expectations.

"We had always believed that there should be multiple dashboards, rather than a single dashboard provided by a government agency, such as the single public guidance body. This would overcome many of the ministers’ concerns.

“With the government’s ban on cold calling delayed, this could prove to be yet another blow for the nation’s savers.”

But industry experts also warn that if McVey can’t be persuaded to see sense on a policy that would cost the taxpayer almost nothing, the problem won’t simply disappear.

Tom Selby, senior analyst at AJ Bell, said: “It might just be that a government department burned by the painful introduction of universal credit has simply got cold feet over another major IT project.

“There is also a broader issue here of trust between the government and the pensions industry. It was the government that told the industry it needed to develop a workable Pensions Dashboard model and deliver it by 2019. Huge amounts of time, effort and money have been dedicated by Association of British Insurers members to make that happen, with wide engagement from platforms, charities, advice firms and others.

“If the DWP is now going to pull the plug at the eleventh hour then the industry will legitimately question whether involvement in future such projects is really worth it.”

When offered the chance to respond to the rumours of McVey’s u-turn, a DWP spokesperson refused to comment on her commitment to the scheme, saying only that the feasibility process for the Pensions Dashboard was ongoing.