Why pension dashboard must be free to users

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Why pension dashboard must be free to users

The director of the Bath-based financial services software company said while it is possible that some dashboard services may include some interesting extras that might justify a fee, it is universally agreed that a basic dashboard needs to be free for users if we are to encourage the kind of engagement that’s needed.

Turning to whether pension providers should pick up the tab for a dashboard, he said: “It wouldn’t be the first time that providers were asked to shell out for a new government initiative and the news that 17 pension companies are paying £50,000 each just for the prototype suggests that many are thinking along these lines again.

"Whatever the outcome of the debate it’s likely that providers will have some costs to modify their own systems but in an environment of increasing focus on pension fees it doesn’t seem a good idea to impose the full cost of the dashboard on long suffering schemes and their members.”

But equally Mr Cocks is against the government or regulator paying for a pensions dashboard.

He said: “I do hope it doesn’t come to this. Whether it is funded by a new levy on pension schemes or some other measure, a central committee tasked with spending other people’s money on a big IT project rarely results in good value for anybody.

“Our view is that everyone should be responsible for their own costs. Pension providers will need to cover the cost of opening up their systems to requests from dashboards.

"Similarly, dashboard service providers should pay for their own chosen dashboard technology and any agreed security and communication mechanisms on which it depends. With each party having control over their own costs there’s a much better chance of a cost effective outcome.”

Richard Parkin, head of pensions policy at Fidelity International, thinks Mr Cocks’s observations are “spot on.”

He said: “Data providers will have to meet a number of internal costs to be able to pass data out to the dashboard. It is not clear that they should also be asked to fund the dashboard if they’re not benefiting from it.

“Those providing front-end dashboards, be they pension providers or others will inevitably absorb the cost of those on the basis they’ll be offering them for some direct or indirect commercial benefit (i.e. to drive business or just to meet a customer service expectation).

“The question then arises of who will pay for the link between dashboards and data providers. Again, if there is likely to be a number of these (and certainly the current model assumes there will be) then it would seem difficult to fund this through some sort of industry levy.

"Instead they’d need to operate on a fee for service basis with dashboard providers paying the intermediary to provide connectivity for its dashboard. 

“Whether the business case for this makes sense enough for anybody to participate is interesting.

"Crucially it will depend on the extent to which legislation will support the creation of a viable dashboard market. Without compulsion to provide data it seems that the business case for setting up the infrastructure would be pretty risky as an incomplete dashboard might limit consumer and provider demand."

Yvonne Braun, director of long-term savings and protection at the Association of British Insurers, said:  "The firms involved in the pensions dashboard project, along with dozens of stakeholders from across the industry and beyond, have been having fruitful discussions about many of the practical aspects which need to be decided when it comes to the future operation of pensions dashboards.

“Funding is just one of the issues which we expect the government to start formally to consider once the next stage of the project can start after the General Election. Enabling dashboards to be free for consumers to use will be a core aim."

stephanie.hawthorne@ft.com