A leading think tank, the Social Market Foundation (SMF), in partnership with the financial services firm M&G, has called for the introduction of free "health checks" for pension savers. This initiative aims to combat a looming retirement under-savings crisis in the UK, offering a proactive solution to enhance financial security for millions.
Integrating Health Checks into Pensions Dashboards
The proposed health checks would be seamlessly integrated into the forthcoming pensions dashboards, which are designed to consolidate individuals' pension pots into a single, accessible view. When savers access their dashboard information, they would be offered free, personalised guidance sessions. These sessions are intended to help interpret their savings data and make informed decisions, addressing gaps in engagement and understanding that dashboards alone might not resolve.
Research Highlights Low Awareness and Engagement
Research commissioned by M&G reveals concerning statistics about pension knowledge among UK workers. It found that 40 per cent of full-time employees with pensions are unaware of how much their employer contributes to their pension scheme. Additionally, 43 per cent have never adjusted their own contribution levels, indicating a lack of proactive management that could impact long-term retirement outcomes.
The SMF warns that while pensions dashboards will provide greater transparency by consolidating information, they may not sufficiently motivate savers to take action. Many individuals might feel overwhelmed or lack the confidence to address potentially worrying figures about their retirement savings without additional support.
Potential Delivery by MoneyHelper
It is suggested that MoneyHelper, a service operated by the government-backed Money and Pension Service (MaPS), could deliver the initial version of these health checks. This would leverage existing infrastructure to provide accessible, trusted guidance, helping to bridge the gap between information and action for pension savers across the country.
By offering tailored advice at critical moments, such as when reviewing consolidated pension data, these health checks could empower individuals to optimise their savings strategies, potentially averting a broader under-savings crisis and promoting better financial well-being in retirement.
