Jaco Wasserfall explains that Pensions Dashboards are emerging as a transformative tool in the realm of retirement planning

As the landscape of financial technology continues to evolve, it is crucial for Independent Financial Advisers (IFAs) to understand the significance of Pensions Dashboards and how they could influence their clients' decisions and, therefore, ultimately, their financial well-being. Pensions Dashboards also provide a huge opportunity for IFAs to enhance their own services and improve their clients' financial outcomes.

In a recent FCA Financial Lives Survey it was found that 62% of UK adults have multiple pension pots and 6.6 million adults have also lost track of at least one of their pension pots. To add to this, 30% of members don't know the value of their pension savings and 30% have not received a statement in the past 12 months.

That's a lot of unknowns. There are an estimated 100 million pension pots in the industry and an obvious need exists for people to be reconnected with their pension pots.

The Pensions Dashboards Programme, first introduced by the UK Government in 2016, aims to provide individuals with a single platform to access information on their various pension schemes in an effort to simplify pension planning and consolidate scattered retirement savings.

Following initial delays and challenges, the development of Pensions Dashboards has undergone a reset in March 2023.

The Pensions Dashboards Programme indicated that this was necessary due to several challenges, including the complexity of the project, the need to ensure data security, and to get the last hurdles out of the way. They are also confident that this will be the final delay and firm deadlines will be communicated soon.

Rather than being viewed as a negative, this reset is actually a great opportunity for IFAs to investigate and formulate a plan for how they will incorporate Pensions Dashboards as an essential tool for empowering consumers and improving financial planning. One of the most significant advantages of Pensions Dashboards is their ability to provide individuals with a holistic view of their pension savings. Users will be able to access information from all their pension schemes in one place, including State Pension entitlements, workplace pensions and personal pensions.

While dashboards empower individuals to access and interpret their pension information - a very good thing - what it will not do is help them to interpret any of that information. The complexity of retirement planning and the importance of making informed decisions cannot be understated. IFAs are uniquely positioned to provide the trusted guidance and expertise that individuals require to navigate this changing landscape.

Version 1 of the Pensions Dashboards Programme is focusing on helping consumers find and view their pension information and there are strict guidances on what Pensions Dashboards providers are allowed to communicate to consumers. The focus is on financial guidance and not financial advice, but Pensions Dashboards are set to evolve in the future. Integration into the broader concept of open finance holds immense potential for expanding the functionality and value of these dashboards.

Open finance aims to provide individuals with a holistic view of their financial information across various products and services, enabling seamless integration and data sharing. As dashboards become an integral component of the open finance ecosystem, IFAs will have access to a wealth of real-time data, allowing for more accurate and personalised financial advice.

Furthermore, the integration of Pensions Dashboards, along with other financial planning software.will save IFAs considerable time on data gathering and enable them to improve their service. By incorporating dashboards into existing software platforms, IFAs can streamline the planning process, making it more efficient and interactive.

This integration will enable IFAs to generate comprehensive retirement projections, model different scenarios, and provide clients with a clear understanding of how their current financial decisions will impact their future outcomes. These integrations will further enhance collaboration between IFAs and their clients, facilitating more meaningful discussions and empowering clients to make well-informed decisions leading to better long-term outcomes.

While it is unlikely that IFAs will become Qualified Dashboard providers themselves, the opportunity exists to partner with established providers. By partnering with Qualified Dashboard providers, IFAs can leverage the benefits of Dashboards while focusing on their core expertise of providing tailored financial advice.

Pensions Dashboards represent a significant advancement and a big opportunity. Embracing this technology and utilising it effectively will enable IFAs to enhance the retirement journeys of their clients and expand their business opportunities in the ever-evolving landscape of pensions and financial planning.

Jaco Wasserfall is the CEO and Founder, PensionSmith