James ConeyAug 8 2018

Pensions dashboard belongs in cloud cuckoo land

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Pensions dashboard belongs in cloud cuckoo land
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It was former MP Mark Hoban who first told me about the idea for what has become known as the pensions dashboard.

Mr Hoban, a Department for Work and Pensions minister at the time, had asked me to Portcullis House because the Daily Mail was causing a stir with its annuities campaign – in the days when more or less everyone had to take one out.

As with all great ideas generated by government the dashboard was rooted in a strong set of fine principles: Mr Hoban had seen how similar schemes had worked in Sweden (why is it always the Scandis?) and wanted it to be put in place here. 

The DWP would provide the information on the state pension and then private providers would take it from there.

Surely it is only right that you should be able to see all your pensions in one place? All fine and dandy.

But now the government seems to have booted the dashboard into the long grass, it hasn’t got me overly flustered.

An idealist would say that it is a consumer’s right to be handed all the information about their savings in one place. And a pension dashboard would certainly be a major aide for financial advisers.

My initial enthusiasm for the idea quickly faded alongside the practicalities of how this would work. The dashboard was fine for modern digital pension schemes. Most defined contribution schemes would cope admirably.

But there was no way smaller pension schemes, older policies, and the vast majority of defined benefit schemes would have been ready. And a partial dashboard was as good as none at all.

What’s the point in seeing how many miles you’ve done if you don’t know what speed you’re going? To get to the final destination successfully you need every bit of information.

Until recently I was the trustee of a company pension scheme – the admin of keeping on top of member requests for pension valuations and the paperwork from employees who had held policies decades before, was an enormous challenge.

I’ve got a few thousand pounds myself sitting in a pension policy from my first employer, a minor newspaper publisher which almost went bust and has since been gobbled up by a muchlarger firm.

Every now and again I make moves to move this cash into another private plan – but getting the information proves so time-consuming I’ve usually lost interest before I get round to doing it.

To think all this information and all the technicalities contained within older pension plans could be easily dropped in to some kind of dashboard is cloud cuckoo land.

Many of the heritage life insurers have seen their policies gobbled up by those willing to buy closed-books of business. You’d need Indiana Jones to pick out these ancient relics from the archives.

An idealist would say that it is a consumer’s right to be handed all the information about their savings in one place. And a pension dashboard would certainly be a major aide for financial advisers. 

Although it would need to be universally available, otherwise all the power would be handed to the most technologically equipped firms.

But a more pragmatic approach would realise that such an idea is a long way off yet.

Every little bit helps?

For the first time in three decades we are living way beyond our means.

The Office for National Statistics says that the average household is spending £900 more than they earn – and having to eat into their savings or borrow to pay for this. This comes as the savings ratio falls to 4.1 per cent from 15 per cent in the 1990s. On one hand, trying to get clients to put money aside in this environment seems almost impossible. 

On the other this should be seen as an opportunity. Never more has the message been so important that your prudence is the only solution to squeezed incomes.

People don’t need to put away vast sums; rather the message should be about the long-term. Little and often is the motto that any adviser should be banging intoclients’ heads. 

Doing time

Wealth manager Freddy David has been jailed for six years for fleecing clients out of £15m.

He told friends and business acquaintances he was putting their cash in a high-interest account. In reality he gambled it, and spent it on school fees and holidays – and paid so-called interest out of the funds of the next victim he scammed.

In these days of internet con men and online fraudsters, it is rather reassuring that the old Ponzi scheme is still out there.

And just like Bernie Madoff he should be made to listen to the plight of his victims every day he is behind bars.

James Coney is finance editor at the Daily Mail