Don’t dash to the dashboard finish line

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Don’t dash to the dashboard finish line
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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.

There’s no doubt that legislation is necessary to mandate providers to supply their data to the dashboard.

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. 

Likewise on data provision. Only a minority of pension schemes will be able to link directly to pensions dashboards electronically through Application Programming Interfaces (API). Others will have to have some method of uploading their members’ data to a data repository.

These new mechanisms could be used as the first stage to develop a fully automated pensions tracing service – which would be a crucial step for the operation of dashboards and could reduce the number of stranded pots, a huge issue in the automatic enrolment sector both from a customer and a provider efficiency perspective.

In the longer term again, it will be important that consumers can access comprehensive and consistent information through the dashboards and that they are able to make any comparisons on a clear basis. This will require open data standards to be developed and for all dashboards to calculate their outputs using consistent projections of future returns and rates of retirement income.

Get this right and potentially the costs of producing and distributing annual pensions statements in paper form decline substantially.

Time after time, government is slated for getting things wrong, but the feasibility study gets the big calls right in recognising 1. that the public interest demands that governance of the pensions dashboard project go to the SFGB and 2. that building a non-commercial register of pension entitlements should be the starting point.

But this is only the end of the beginning. Dashboard at its best is part of a wider vision of a digital relationship between citizens and their finances – building out with that future in mind is the long-term purpose that dashboard should seek to fulfil.

Gregg McClymont is a former shadow pensions minister and director of policy at B&CE, provider of The People’s Pension