James Coney  

Dashboard potential could be squandered

James Coney

James Coney

I do hate to be the party pooper, but this needs saying: everyone just calm down. It is only a pensions bill. 

I know that we have not had any exciting financial services legislation in a while, but the way the industry mob on Twitter was behaving after the Queen’s Speech, you would have thought we had landed a person on Mars. Or that England had won the World Cup. Or that HM Treasury had revoked the Retail Distribution Review.

Perhaps the excitement is because we have all been lulled in to a Brexit stupor where nothing has been done for so long.

Certainly the pensions bill does offer some opportunities, not least of which is the much-vaunted dashboard.

Many would have it that this will be the Holy Grail to help savers achieve the pensions outcomes they want.

No longer will we be left in the dark over where all our pots have gone.

In reality there is fat chance of this happening, at least immediately.

From the few providers I have spoken to, the tech is a long way from being ready.

This poses a significant risk because half a solution is as good as no solution at all, particularly in that it risks disincentivising those who use the dashboard in its early stages.

It is hard enough to motivate people to be interested in pensions – they certainly will not come back if their first experience is a bad one.

The second problem is that many providers with warehouses packed with paper policies will not be able to put them on a computer file. Meaning the schemes where it matters the most will not be on the dashboard.

What good is a dashboard if the policies you are most likely to have lost or forgotten are not on it?

And then there is the risk that too much power will be put in the hands of too few providers, plus the threat of what happens to the companies with all this information.

The pension dashboard has potential. But potentially it could also be a damp squib.

The bill also hands more powers to the regulator to cut down on mismanagement of a pension scheme – at long last.

It also creates the legislation for collective defined contribution pensions, which I have expressed my doubts about on plenty of occasions before.

Perhaps most significant is the detail tucked away in the bill that will restrict the statutory right to move a pension from one DC scheme to another.

This is the front end of policing pension scams, because DC to DC transfers do not normally require trustee oversight.

It now means trustees can do more to protect savers from having their money ploughed into unscrupulous looking schemes that invest in rainforests, car parks or other exotic investments.

Now all we need is the Financial Conduct Authority to be handed more powers to crack down on the unregulated introducers who are the real villains in this piece.