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Millennials will need Pensions Dashboards

8 October 2020

A seismic shift in job flexibility among younger generations will lead to greater need for a pensions dashboards, says Aegon.

According to the retirement specialist’s global survey, two thirds (66%) of workers in the UK consider the idea of a ‘job for life’ as outdated, with almost three quarters (73%) agreeing that today’s workers will have far more job changes than previous generations.

In contrast, just one in 20 (5%) of workers aged 18-34 expect to spend over 20 years with the same employer, significantly below the 48% of over-55s who have either already worked for, or expect to work for, a single employer for more than two decades.

Aegon warns that having “much less linear” working lives will present new retirement saving challenges and potentially result in workers having a scattering of pension pots with different employer schemes. The Pensions Policy Institute estimates that the number of deferred pension pots in the UK is likely to rise from 8 million in 2020 to 27 million in 2035.

Kate Smith, head of pensions, Aegon, says: “The journey that many under-35 workers take through their career will be fundamentally different to the generations that went before them.

“As nearly every job comes with a pension, multiple jobs means multiple pension pots to manage and keep track of. Younger generations often forget about their savings, or don’t realise their importance, or worse still don’t even know they have them, which can ultimately lead them to lose touch with valuable pension savings. Having an incomplete picture of their pension saving is disastrous when it comes to planning their retirement future.”

Smith adds: “Having Pensions Dashboards up and running with an overview of savings in one place online will of course be a big help and should dramatically reduce the risk of losing track of pensions from previous jobs. The hope is that with a complete overview people will become more engaged with their pension savings, checking to see if they’re on track for the retirement they aspire to and if not, take action.”

Commenting on the survey results, Anthony Rafferty, Managing Director, of Origo, the FinTech which developed a Pension Finder Service for the prototype Pension Dashboard, says: “While much of the attention around the Dashboards has been on legacy pensions, belonging to those in the run up to retirement (age 50-66), the pension savers of now and the future are likely to benefit most from Dashboards as they accumulate pensions over their careers. The ABI estimates the average worker could have 11 different jobs over their working life

“We are already seeing this as many of the people who entered auto-enrolment in 2012 and after will have changed jobs in the intervening period, some more than once. With Covid-19 altering the UK business landscape, many more people may find themselves working for different companies in the months ahead adding to the number of deferred pensions they hold over time.

“Keeping track of those numerous pensions is where the power of the pensions dashboards starts. Knowing what you have saved and where it sits, is the cornerstone of a retirement plan.

“Furthermore, built on the proposed open architecture technology, with digital identity, consent and authorisation at the heart, dashboards can be developed to offer an ‘open pensions’ capability, helping to better inform and empower the UK’s savers.”

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