The government must take control of the pensions dashboard to ensure bad quality providers are not allowed simply to boycott the entire project, a new report by the Centre for Policy Studies has argued.
The pensions dashboard is intended to be a one-stop shop where consumers can view all their pension pots.
But while the government has requested the dashboard be up and running by 2019, it has not made participation compulsory.
Rather than calling for compulsion, the free market think tank recommended the government set up a governing board to “oversee dashboard delivery and to ensure that consumers’ best interests are served by it”.
Without such a board, it said “a minority within the industry” might view the dashboard as damaging to their business.
“A fully functioning dashboard would highlight poor performing, high charging providers, and make it harder for them to retain customers.
“Some have little interest in seeing a consumer-empowering dashboard materialise: they could choose to play chicken with the government,” it said.
Alongside a governing board, the think tank made eight other proposals.
These included hosting the dashboard on a “.gov.uk” website; setting up a central communication hub hosted by a body that was independent of the industry; and more clarity on deadlines.
It also recommended the pensions dashboard mimic Australia’s SuperStream program - a government-mandated project that standardised superannuation payment technology.
“This would require employers, pension funds, service providers and HMRC to adhere to standardised electronic pensions data and payments processing, linked by National Insurance number, to facilitate consistent messaging standards,” the report said.
The report’s author Michael Johnson went on to outline a grander vision of what the dashboard could evolve into, displaying not just pensions, but also bank balances, savings accounts and investments.
This, he said, would put consumers “a mouse click away from offsetting high cost credit card overdrafts and consumer loans against any positive cash balances (today yielding next to nothing)”.
“Thus consumers would be able to dramatically improve the return on their assets, by disintermediating the retail financial services industry, much of which we do not need. Indeed, it is one of the underlying causes of the UK’s poor productivity growth.”
Steve Danson, a chartered financial planner with Banks Wealth Management, said the pensions dashboard would be a very useful tool, but feared the lack of compulsion would be a problem.
“I think it should be compulsory, because the old guard providers probably wouldn’t buy into it if there was no incentive,” he said.
He said there was a real need for a service that helped people find lost or forgotten pension pots.
“I’ve seen two clients in the past fortnight who had pension pots they didn’t know about,” he said.