Pension dashboard cop out causes concerns

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Pension dashboard cop out causes concerns

The government's decision to let the industry take lead on the pensions dashboard, without a commitment to force providers to submit client data, has been branded a failure.

Esther McVey, secretary of state for Work and Pensions, announced yesterday (4 September) that the industry, not government, would be put in charge of the project.

She said: "By taking a leading role, and harnessing their knowledge, industry can develop a dashboard that works for pension holders – and government will help facilitate this."

Guy Opperman, minister for pensions and financial inclusion, added the government will continue to engage with industry, pledging it will "protect pension savers and personal information by legislating where necessary".

But he stopped short of committing to force providers to provide a comprehensive set of data and did not confirm whether all state pension data would feed into the project, meaning the dashboard could be incomplete.

He said the project would be built on the government’s Check your State Pension tool, which gives people estimates of their projected retirement income.

He said the Department for Work and Pensions (DWP) would report on the findings from its feasibility study on the pension dashboard "shortly". The report has been expected since March.

The pension dashboard, which is due to launch in 2019, is to allow savers to see all of their retirement pots in one place at the same time, giving them greater awareness of their assets and how to plan for their retirement.

However, several pension experts are warning without strong commitment from the government, the project may fail in its aims.

Alistair Wilson, pensions expert at Zurich, said the fact there was no explicit compulsion for providers to use it was a "blow for savers".

He said: "A dashboard that helps savers identify their pension policies, as well as the state pension, is essential to help them keep track of and manage their savings, and plan effectively for their retirement."

Jon Greer, head of retirement policy at Quilter, branded the government statement as vague.

He said: "We remain in murky water when it comes to what the dashboard will actually look like, whether one or multiple dashboards, and what the government actually means when they say they will ‘facilitate it’.

"More clarity is needed and we await the feasibility study, which the minister suggests is imminent.”

Mr Greer argued that the "government cannot wipe their hands of the project, as a pension dashboard without all the data would be as useful as a recipe with only some of the ingredients listed".

He added: "Shelving the dashboard indefinitely would have let down savers and could even risk undermining the successful auto-enrolment policy over the longer term. However, a half-hearted solution is not much better.

"Any industry led dashboard will need not just backing from the government, but engagement. The industry can certainly get things off the ground by using their resources and expertise.

"However, the DWP still need to take responsibility for ensuring data is protected and that all relevant pension information, including state and public sector pensions are included."

It had emerged in July that Ms McVey has made moves to kill off the project, saying the service should not be provided by the state.

However, a DWP spokesperson dismissed the reports soon after, saying they amounted to no more than "speculation and rumour".

Labour MP Jack Dromey, shadow pensions minister, classified yesterday’s announcement as "a cop-out by the government".

He argued that passing the project "onto the private sector means there is no guarantee of compliance from all providers, no indication of whether the state pension will be included and centralises huge amounts of financial information for the private sector to access."

Kate Smith, head of pensions at Aegon, said without legislation from the government making the disclosure of data mandatory for all schemes the project "risks being half-baked".     

Laura Suter, personal finance analyst at AJ Bell, said that the government’s statement "is hardly a huge vote of confidence for the initiative".

She said: "It hasn’t walked away from the project completely but it has acknowledged the size and the complexity of the challenge and laid responsibility for delivery firmly at the door of the industry."

Other experts are more positive about the future of the project.

Sir Steve Webb, director of policy at Royal London and former pensions minister, said the announcement was a "huge breakthrough after a period of uncertainty".

Anthony Rafferty, managing director Origo, said it had always been envisaged that industry would need to take on board the operation of the dashboard, with government ‘facilitating’ in respect of governance and legislation.

The firm will hold a meeting with several pension providers in the next few weeks to discuss the future of the project.

maria.espadinha@ft.com