Pension Passport on Agenda

Pension Passport on Agenda.

Pensions Minister, Steve Webb, is floating the idea around the industry that a ‘pension passport’ system be created to allow people to keep track of all their pensions in just one place.

The idea has been around in different guises for a number of years with many pension companies producing pension statements including state pension projections.

The pension passport would allow the public to access details and values of all their pension funds in just one place.

The idea is simple in that people can keep track of pensions and see the combined effect of all pension plans built up over the years.

Comment

The average person moves job every 7 years.  This can mean that people will have 7 or more different pension schemes by the time they retire.  In addition, people lose track of their pension of the employer closes and the former employee from 30 years ago has difficulty tracing their pension.  Likewise, pension companies spend millions themselves sending out statements and trying to trace people that have moved on.

The idea is simple and indeed it is probably what many financial advisers already do, including us, by keep clients informed of all their pension choices in one place.

The reality will be that systems wise, many pension companies and trustees simply do not have the resources, systems and services to be able to comply.

The acid test is you only have to look at large insurance, investment, pension and banking groups to see that they all struggle to support all their different products via industry standard “electronic messaging” standards called the PAC or Origo standards.  This is a standard that investment companies allow outside sources such as financial advisers to send bulk electronic messages to collect data and values for clients.

Add to this the many different laws that affect different pensions when they started, we see the pension passport can only be a very simple record and not a full calculation and combined projection tool.   We are working on a pension passport tool right now.