Pros and cons of the pensions dashboard

So while the development of the pensions dashboard is an excellent way to bring the best in financial technology and data provision services together, it has to be done properly, or it will not work in the best interests of consumers.

As with every technological innovation, there are pros and cons to consider, and it is important to be aware of potential concerns now, in the development process, rather than to discern these after the launch of the pension dashboard services in 2019.

Thumbs up

Primarily, most respondents to this guide believed the development of the dashboard was a positive move in the right direction towards helping people take more responsibility for their retirement.

Says Philip Brown, head of policy for LV=: “The dashboard is a much-needed and long-overdue service that will give consumers much greater control over their retirement savings and, ultimately, ensure they have more comfortable retirements.

The wide variety of firms involved in the prototype demonstrates that a large portion of the industry is already supportive. Rob Yuille

“We believe the dashboard will be a turning-point for the industry, providing a platform for better engagement with consumers, and a useful tool to enable them to make more informed, active decisions about their retirement.”

This is also the view of the Association of British Insurers, which believes the easy access and aggregation of data from personal pensions, state pension and occupational pensions will help individuals engage with their pensions at a much earlier stage, and possibly achieve a better outcome in retirement.

Moreover, according to John Kelly, consultant at Mattioli Woods, clients will “have the ability to access information about arrangements which they had perhaps completely forgotten about”. No more ‘lost pensions’, he opines.

The fact the dashboard will put pressure on providers to ensure their data is fit for purpose is another plus point for Fiona Tait, technical director of Intelligent Pensions.

She says: “This will enable consumers to make financial decisions based on credible information. Assuming the dashboard delivers what it promises, what’s not to like?”

Thumbs down?

However, as with everything, time and technology wait for no man, and the momentum behind the initial development of the prototype must be maintained if pension dashboard services are to be launched in 2019, and if they are to be as useful as promised.

Earlier this year, the industry called on government to do more to make sure the 2019 launch date would be met with pension dashboard services that are fit and proper for use, especially given how onerous the task of building and testing the prototype is currently.

Indeed, Mr Kelly says a big negative would be if the “sheer size” of the task could lead to delays in launch or, perhaps, “a launch without sufficiently robust information at plan or consumer level”.

Rob Yuille, head of retirement policy for the Association of British Insurers, says there are concerns currently, although these are known to the teams working on developing the dashboard.

One of the most significant challenges is the cost, which will be a burden on some players.

He says: “As most of the costs will be borne by industry, there will need to be a comprehensive and compelling business case to stimulate investment in data cleansing, API connectivity and digital identity.

“The wide variety of firms involved in the prototype demonstrates that a large portion of the industry is already supportive.”

Another challenge, cited by Andy Kirby, managing director of The Pensions Portal, is that the “dashboard will only be as good as its relevance to an individual and their understanding of their situation.”

He therefore urges for an educational piece to be incorporated into the dashboard to make it engaging, meaningful, trusted and relevant.

Taking it forward

Some participants believe the more government is involved, the more convoluted the development and the more dilatory the decision-making.

For some, this is a negative and therefore they would urge the government to take its hands off the wheel and allow the pension professionals to drive it forward.

This is the view of Mr Brown, who opines: “Now the prototype has been reviewed, the government must allow the industry to get on with the job to ensure continued momentum and that all providers and schemes sign up.”

But government should not leave the process completely, says Mr Yuille, especially when it comes to funding and all-important regulation.

He adds: “The industry alone cannot deliver the robust regulatory framework needed to ensure delivery in 2019.

“Therefore, existing efforts must be supported by legislation that can guarantee a critical mass of pension providers participating [in delivering dashboard services].”

simoney.kyriakou@ft.com