Can the new ‘Pot for Life’ scheme really solve the UK’s pension crisis?

By Paul Holland, CEO & Founder, Beyond Encryption

The UK is currently facing a pension fund crisis. Pensioners across the country are now receiving state pensions funded on a pay-as-you-go basis. Additionally, with the cost-of-living crisis continuing to pile on the pressure and the average life expectancy continuously rising, public pensions are feeling the squeeze. This, amongst other factors, has led to a greater focus on private savings, but these are not even scratching the surface when it comes to finding a solution to the issues we are facing.

On top of this, the current auto-enrolment process has led to a strong divide between consumers and their pension providers. The process does not allow customer relationships to be formed and savers are now quickly losing track of their accounts, with the value of lost pension pots reaching an alarming £26.6 billion. Despite promising to resolve these issues, the new pension reform announced by the Chancellor during the Autumn Statement promises much but gives us very little tangible evidence that it will resolve the current crisis.

How the ‘Pot for Life’ scheme will fail to address the pension crisis

The newly announced ‘Pot for Life’ scheme will allow employees to select the pension scheme that their employers will pay into, rather than the employer nominating a scheme on their behalf. This is a very ambitious scheme, but it fails to take the bigger picture into account. For example, what does this scheme mean for those individuals who often change their careers? Studies have revealed that the average person will change jobs every four years, and with the pension process often being described as an administrative nightmare, how can we be sure that our pension pot will seamlessly switch from our old to our new employer?

The issues in the pensions market have been around for years now and despite the Government being aware of them, we are yet to see any meaningful changes being made. The problems we are facing have been left unresolved for so long that they have started to fossilise, and the Government must act now before the damages become irreversible.

This new scheme claims that it will help consumers to be more engaged with their pensions and resolve the crisis once and for all. However, it seems like it will be just another idea that fails to launch, much like the Pensions Dashboard which has been pushed back to 2026 despite receiving millions in investments. This scheme is yet another pledge to add to the pile of empty promises that the Government has created. Consumers are rightfully beginning to feel fatigued, and they are left battling the fallout of the pension crisis alone. Before introducing another flawed scheme, they must sit down and take the time to understand what consumers want and need instead of continuously making decisions without input from the people who matter the most.

The key to resolving the pension crisis

In order for this ongoing crisis to finally come to a halt, consumers must be placed at the forefront of all pension decisions. Despite there being a strong incentive for savers to be reunited with their lost pension pots, awareness around this issue is still too low. Most savers across the UK are unaware of the processes they must undertake before they can even begin trying to reunite with their lost pots. And with the majority of pension providers relying on unsecured and inefficient communication methods, such as post, customer interactions are far from where they need to be.

However, all is not lost. There is a middle ground that allows savers, pension providers and the Government to effectively engage with one another and put consumers back at the centre of the pension market. Although the Pensions Dashboard could help in this regard, if it ever reaches completion, it is not the solution to all the problems that we currently face. Pensions are merely the tip of the iceberg for consumers who are dealing with multiple insurance providers, investment plans, bank accounts and utility providers.

We have invested significant development funds and research into a unique, innovative toolset that allows savers to take back control of their data, and far exceeds anything the Government has suggested so far. By leveraging natural language processing, AI, and optical character and brand recognition services, we can truly bring customer data to life, identify opportunities for better rates and services and offer a consolidated view of all savers’ accounts, including pensions.

The tools and technologies we need to start making these changes and resolve the ongoing pension crisis are already available to us. Continuing to explore new schemes, which will inevitably take years to launch, if they even launch at all, will only make the problems we are currently facing worse. Savers across the UK have been promised too much and delivered too little; now is the time to give consumers the power to actively manage their pension pots and put them back at the centre of the pension process where they belong.


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