Ireland could learn a few things from the UK's quiet pensions revolution

A QUIET REVOLUTION is about to occur in the UK making it easier for people to gain access to information on their pensions savings.

So what do the changes look like and what do they mean for Ireland?

In the UK, employees will have an average of 11 employers during their working life. This makes it tough to stay on top of your pension entitlements. It also reduces the ability of people to plan effectively for retirement.

The UK treasury has noted there is around £400 million in pension savings which are unclaimed. Meanwhile in Ireland, the existence of small unclaimed pension pots also creates a large administrative headache for life offices.

Last September, the UK announced plans to establish a ‘pension dashboard’. This dashboard will be a single digital hub where you can access information on your entire pensions’ savings.

It is intended to be a one-stop shop for people to view state pension forecasts and savings updates, and will help eliminate ‘lost pensions’ that accumulate when people move jobs.

Similar systems are already in place in countries such as Austria, Finland, the Netherlands and Sweden and have been largely viewed as a success.

They allow people to properly plan for retirement with a full understanding of the extent of their pension savings.

What exactly is the ‘pensions dashboard’?

Some 11 of the largest pension providers in the UK have joined together to create a prototype dashboard. The deadline for the project to be available to consumers is 2019.

Observers have noted that there are still a number of pension providers who have not yet committed to the initiative and believe that legislation will be necessary to get all providers on board.

At the moment it is not intended to make participation compulsory. It was, however, stated that legislation or regulation will be considered if necessary to ensure the dashboard is widely used.

The major concern is that those with older pension policies may not take part in the project, particularly those winding down operations or with much older or paper systems.

A number of ‘closed book’ pension providers – those which have ceased taking on new policyholders – have, however, signed up.

If participation in the dashboard is widespread, it could cut the cost of financial advice by up to 25%.

The dashboard would avoid financial advisers needing to track down the details and values of their client’s pensions. This will also make the process of receiving financial advice much more efficient.

For the dashboard to have a major impact, the information will need to include details including guaranteed rates, with profit-bonus details, guaranteed minimum pension details and all charges.

Data protection

Crucially, the dashboard must meet the required security and data protection standards.

Even with Brexit, the dashboard will still have to comply with data protection standards equivalent to the EU’s new General Data Protection Regulation (GDPR), which will strengthen the rights of pension members with respect to the processing of their personal data.

There will be stricter requirements for obtaining valid consent from an individual, as well as increased accountability for entities which control and process personal data.

It is important that privacy of personal data is considered and incorporated into the very early stages of the development of such a system, rather than as an afterthought.

What next for Ireland?

For the moment, and until a similar system is planned for Ireland, members of pension schemes should continue to receive annual statements from any pensions schemes that they’ve paid into.

People can also consult the Department of Social Protection’s website to estimate their entitlements to future state pensions. If Ireland decides to follow a similar approach, the EU’s GDPR will have a large effect on what form that it takes.

There is scope for a pensions dashboard-type design to work in Ireland. As a typical Irish worker will have between five and 20 employers before they reach retirement, the potential for amassing a large number of separate pension pots is growing.

There is no accurate figure for the amount of unclaimed pension benefits in Ireland, but estimates put this figure at anywhere between €500 million and €1 billion.

The industry is watching developments in the UK with interest and as many of the providers developing the product in the UK also have Irish operations, one could imagine that it would be easy to replicate here.

The development of a pensions dashboard in Ireland would certainly assist in the aim of simplifying pensions which the industry is driving and the amounts unclaimed highlight the usefulness of such a project.

Possible barriers to the project exist in the form of privacy and data protection issues which may hinder the sharing of sensitive personal information.

However, provided systems are put in place for obtaining the requisite consents and securing the data, this barrier may be capable of navigation.

The era of greater and quicker accessibility to pensions information is just around the corner, but the final bend may take several years yet to fully navigate.

Stephen Gillick is a partner in the employment law and benefits team at Mason Hayes & Curran. He specialises in pensions law.

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