Where to begin with the pensions dashboard? It’s still early days, but the principal engines of the project are in danger of breaking down before they even get going.
There are issues everywhere you look. Chief among them, according to the Association of British Insurers’ (ABI) 86-page blueprint for the project released in early October, is a lack of commitment from the government.
Subsequent comments have reaffirmed policymakers' support for the initiative, but several important questions remain unanswered: will the government compel providers to make data available, and if so, by when? Will it commit to a funding and timetable programme? Will it endorse and promote the service to consumers?
Advisers will have their own problems with the plan. The “minimum viable product” outlined by the ABI, deemed the only service that has even a chance of being launched in time to meet the 2019 deadline, will not give them access to the dashboard on consumers’ behalf.
The most significant problem of all, to my mind, lies with another of the intended exclusions from the initial dashboard. Charges will not be shown in the first instance, the ABI says, “given the very real challenge of comparing costs and benefits between pensions, and the risk of consumer detriment from taking a simplistic approach”.
At this point, you may be forgiven for rolling your eyes at the sight of another journalist rabbiting on about fees at the expense (no pun intended) of all other topics. But there’s a deeper point here, specific to the concept of the dashboard itself.
The ABI may believe that disclosing charges is extraneous to the dashboard’s principal goal of enabling consumers to see all their pensions in one place, and thereby encourage greater saving for retirement. That misses the wood for the trees: the biggest problem for the industry is not financial illiteracy, it is a lack of trust in their services.
For the latest evidence of how this affects pensions, just look at the FCA’s ‘Financial Lives’ survey released on 18 October. Consumers ranked DC pension providers at the very bottom of the table for trustworthiness, below 21 other sectors including insurers and credit card companies.
The idea that the impediments to dashboard disclosure are purely logistical would look more credible if individual providers were used to being upfront with their customers.
I’ve spent many years writing about asset managers – no strangers to criticism over opaque costs and charges, and rightly so. Yet no level of murkiness over fund management fees compares to the difficulty I’ve had in discovering exactly what charges are being levied by Zurich, my workplace pension provider. I doubt it’s an isolated problem.
Is there any essential difference between displaying incomplete charges, as asset managers are still prone to do, and not displaying charges at all? One does at least make a gesture towards transparency. The other indicates a fundamental refusal to engage with customers.