The pensions dashboard project could cause consumer confusion according to Sir Derek Morris, the former head of the UK's Competition Competition.
Pensions dashboards let retirement savers see all of their pension pots all together - in an online place that they can choose. The government’s objective is for the service to be available to consumers by 2019.
But concern has been raised that if all the product providers feeding information into the dashboards use different growth assumptions, their income forecasts would be different and the results very confusing.
Derek Morris, who ran the UK Competition Authority from 1997 to 2004, speaking to FTAdviser's sister newspaper the Financial Times, said there were “really quite serious issues” with the so-called “pensions dashboard.
But Sir Derek — who is now independent chairman of Cheviot pension trust, a not-for-profit “master trust”, or multi-employer pension scheme — said the dashboard could confuse savers.
“The plan is to have multiple dashboards run by commercial firms — instead of a single, centralised dashboard,” said Sir Derek.
“This could be really quite confusing for savers and difficult to operate,” he said.
Sir Derek warned that younger savers using the dashboard to try to project how their funds may grow in retirement could be left bamboozled because insurers and schemes are able to use different growth rate assumptions for pension investments.
“If different firms have got different assumptions, then people could look across their pension arrangements in the dashboard and again they could find it quite confusing,” he said. “These problems are not insurmountable but it would seem to me that these issues are really quite serious.”
The Association of British Insurers, which is co-ordinating the industry dashboard effort, told the FT the previous government’s clear policy position was for a marketplace of dashboards, rather than a single centralised portal.
“Both approaches have pros and cons,” said Yvonne Braun, director of policy, long-term savings and protection at the ABI. “However, we need a transformation in the way people engage with pensions and believe a competition of ideas is the better way to achieve this.”
The ABI said it agreed growth rate assumptions should be consistent to avoid confusion for savers.
“This has been the working assumption for the project so far, but regulators and government need to engage closely with the work to take these decisions,” Ms Braun added.
