Labour Urged to Introduce Pension 'Health Check' System in Dashboard Reforms
The government is facing calls to implement a mandatory "health check" system within the forthcoming pensions dashboards, aimed at tackling the UK's deepening retirement savings crisis.
Addressing the Savings Shortfall
The Social Market Foundation, in collaboration with financial services firm M&G, has proposed that savers accessing their pension information through the new digital dashboards should automatically be offered a free, tailored guidance session. This initiative seeks to transform passive awareness into actionable financial planning.
Richard Hyde, a senior researcher at the Social Market Foundation, emphasised the urgency of the situation. "Pensions dashboards are a welcome step forward, but information on its own won't fix the problem," he stated. "Millions of people are still under-saving for retirement and many barely engage with their pensions at all. Without follow-up support, there's a real risk people see worrying figures and don't know what to do next."
A Crisis of Engagement and Confidence
Anusha Mittal, Managing Director of Individual Life and Savings at M&G, highlighted the broader context of the issue. "The data and research is clear we are facing into a retirement and savings crisis, fuelled by low levels of engagement and underpinned by low financial confidence," she explained. Mittal argued that "collective action is now necessary" and that dashboards must be "supercharged by regular pension health checks, which provide practical and accessible guidance."
Alarming Research Findings
Supporting the call for intervention, a recent Opinium survey of 3,000 people conducted in December revealed a significant knowledge gap among employees:
- Two-fifths of full-time employees with pensions do not know how much their employer contributes to their retirement fund.
- This lack of awareness underscores the critical need for improved financial education and engagement tools.
- The proposed health check system is designed to bridge this gap by offering personalised support at the point of information access.
The Role of Pensions Dashboards
Pensions dashboards, a key government initiative, will enable individuals to view all their retirement savings from different pots in a single, consolidated online location. The proposed health check would integrate seamlessly into this platform, providing:
- Immediate access to free, tailored guidance upon reviewing dashboard data.
- Practical steps to address potential savings shortfalls.
- Enhanced confidence in retirement planning decisions.
As the government finalises the rollout of pensions dashboards, pressure is mounting to ensure these tools do more than just display information—they must actively guide citizens toward more secure financial futures.
