The government’s realism on pensions dashboards is welcome.
The approach set out in the feasibility study is serious and publicly minded.
The scale and complexity of the dashboard delivery challenge demands government get right the initial decisions on governance and project landmarks. On these two biggest issues we think the Department for Work and Pensions (DWP) has done so.
First, on governance, the DWP suggests delegating responsibility for the project to the new Single Financial Guidance Body (SFGB).
This is right and proper. The prize of a dashboard featuring all pension pots is significant but so are risks to the public, whether around data security or poor quality products offered via multiple commercial dashboards.
From a risk perspective the dashboard creates potentially millions of new vulnerable customers overnight – so risk management must be right. That means a governance entity accountable to DWP ministers and, in turn, parliament.
Second, the focus in the initial build stage on a single dashboard as register of all pension pots and entitlements hosted on a non-commercial basis. The public wants, in the first instance, to see all their pensions in one place, and that should be the initial focus for the project.
It will be hard enough given the well trailed challenges of integrating 5,500 defined benefit (DB) schemes, state pension entitlements, and public sector pensions onto the new register.
DWP’s suggested approach of single dashboard first is sensible.
Which brings me to the issue of compulsion. There’s no doubt that legislation is necessary to mandate providers to supply their data to the dashboard.
There remains ambiguity about which sorts of pension arrangements come where in the phased approach suggested by the feasibility study. For example, master trusts like our own are slated to phase first, but it is unclear whether this first phase will also include contract-based defined contribution (DC) arrangements and single-employer trust based DC.
It is easy to make a case for all or most DC coming on board together to offer a more complete picture of entitlements in phase one.
Either way, communication to manage dashboard users’ expectations will be key across the phased approach.
A focus on general awareness of entitlements rather than financial planning automatically follows from the phased approach – the latter is too granular a process to promote in a situation where not all pots and accruals are on site.
More widely, one can see government grappling with short-term imperatives to deliver something called ‘dashboard’ in line with political undertakings against the very long-term approach of seeking to deliver digital pensions in line with the wider digitalisation of citizens' financial consumption.
For example, if integrating Open Banking and other financial data with the pensions dashboard can provide a platform for the provision of aggregation, analysis, monitoring, recommendation, transactions, automation and promotion of advice/guidance services, then that should be in the build scope.