"Many people find it difficult to navigate and compare their pension options due to overly complex or inconsistent information, leaving them extremely vulnerable in these types of transactions. "
- Patrick Heath-Lay, CEO of People’s Partnership
The introduction of pensions dashboards could see losses of up to £2 billion before the end of the decade due to ‘poorly informed’ transfers into higher charging pensions, workplace provider People’s Partnership has warned today.
The provider of The People’s Pension has shared new data from its Pension Transfer Outcomes Index showing losses from savers transferring into higher charging pensions will continue to rise. This trend is expected to increase once pensions dashboards, designed to give people an overview of all their pensions in one place, go live in two years’ time, on 31st October 2026.
New research commissioned by People’s Partnership has found that over 4 in 10 pension savers (42%) say they would be likely to use a pensions dashboard to move their pension from one company to another. However, the firm warns that an increase in transfers will "lead to an increase in poorly informed pension transfer decisions, given the difficulties people face comparing their options, leaving many savers vulnerable to making choices that could negatively impact their financial future".
The organisation is now calling for the incoming FCA Value for Money metrics to be clearly displayed on pensions dashboards. This will allow people to compare their pensions based on the information that matters most, such as the fees they are paying. This is supported by its research, which found that a simple way to compare the overall value for money provided by each of their pensions is one of the features over 4 in 10 (43%) pension savers most want to see on a dashboard, after a projection for their pension pot in retirement for over half of savers (53%).
The research also reveals that a fifth of pension savers (21%) have lost track of a pension. Half (50%) said they are likely to use a pensions dashboard to find any of their missing pensions, meaning millions could now take action on pensions previously lost to them.
People’s Partnership has previously revealed that nearly three quarters (72%) of people who had recently transferred a pension didn’t know exactly what the fees were for their new or old pension, and one in 10 (11%) didn’t think their new pension had any fees.
Patrick Heath-Lay, CEO of People’s Partnership, said: “Pensions dashboards are a ticking timebomb for further detrimental pension transfers. Our research shows that many people find it difficult to navigate and compare their pension options due to overly complex or inconsistent information, leaving them extremely vulnerable in these types of transactions. With the arrival of dashboards, we anticipate this confusion will only intensify, making it even harder for savers to make informed decisions.
“We are very worried that dashboards will increase poorly informed decisions which lead to big losses over time. The risk is particularly severe if providers use dashboards as an opportunity to aggressively market the pensions they offer to consumers, without any way to easily compare options as we know that people don’t shop around for a pension transfer.
“It is vital that simple, easy-to-understand comparisons of value for money are on commercial pensions dashboards when they begin to go live in two years’ time, so people don’t fall victim to offers that seem better than they are and make decisions which they later regret. A simple consumer-facing value for money framework should apply to all pensions, not just relatively low-charging workplace options. Urgent action is needed to stop people from losing thousands of pounds and having to work for years longer before they can retire.”
