Building on the “three dates” discussion in Sample007 and the example timeline format in Sample008, Sample009 discusses the challenges for users in understanding their out-of-date (past) deferred DB pensions and their projected (future) pensions. Especially when placed alongside each other!
Because this will be so complicated for dashboard users to understand, I believe all pension income amounts should be as at now, i.e. as at the present.
This is discussed below.
All pensions as at the present
Sample009
Out-of-date deferred DB pensions in the past
It will be incredibly confusing for users to see out of date pension incomes (like my PSPS1 and PSPS2 pensions in Sample008).
These need to be brought up to date. It’s as simple as that, and it’s what the IORP II Directive requires. All of this is discussed in Sample010.
Uncertain projected pensions in the future
We know from the 2018 Simpler Annual Statement research (see page 31) that users very easily understand the difference between:
factual information as at the present – what has happened, and
uncertainty into the future – what could happen.
What users may not understand, though, is quite how vast the range of uncertain variables is which can affect predicted pension income amounts in the future:
| 1. Variables between now and pensions being accessed | 2. Variables on when pensions are accessed | 3. Variables on how pensions are accessed |
| 1.1 Future revaluation of deferred defined benefit (DB) pensions | 2.1 What will be happening in my life in my 50s and 60s? | 3.1 Will I take the tax free cash lump sums available? |
| 1.2 Future pensionable service for active DB | 2.2 Will I access pensions from different dates? | 3.2 Will I give up pension increases (under PIE options)? |
| 1.3 Future pensionable earnings for active DB | 2.3 Will I access any of my pensions early? Or late? | 3.3 For DC, will I drawdown my pot or purchase an annuity? |
| 1.4 Future continued availability of the scheme on the current basis | 2.4 Will I consolidate any pensions prior to access? | 3.4 If an annuity, will I want it to increase each year? |
| 1.5 Future DC contributions (esp. earnings-related contributions) | 2.5 Other factors | 3.5 Will I want it to continue to a spouse after my death? |
| 1.6 Future DC investment returns net of future charges | 3.6 How will my future health affect the level of the annuity? | |
| 1.7 Future inflation assumption to discount back to “today’s money” | 3.7 If drawdown, at what rate will I withdraw my money? | |
| 1.8 Other factors | 3.8 Other factors |
This very significant range of variables, all of which require assumptions to be made, makes it very difficult, if not impossible to meaningfully predict what pension income amounts might be in the uncertain future.
I believe users understand this. They wouldn’t expect their banking app to show them what their current account balance is going to be in 2050.
My assertion, which of course should be thoroughly user tested like everything else, is that users will be able to understand pension income amounts if they are all as at the present (or at least as at a date within the last year).
This will require:
1) out-of-date deferred DB pensions to be brought up to date: discussed in Sample010
2) a simple way of showing what pension income has built up so far for a DC pension: discussed in Sample011.
Sample012 then brings all of this thinking together across all of a dashboard user’s pensions.