Pensions  

The pensions dashboard: A marathon not a sprint

The time scales may seem generous, but as we have seen with previous technical innovations, getting all parties using the same protocols to communicate can be a very lengthy process for all involved. Some administrators, especially those running in-house occupational pension schemes, will have a variety of systems, many of which could be bespoke.

Purpose of the dashboard

In order to be successful, the dashboard needs to provide a complete picture of a person’s pensions wealth, irrelevant of the size of funds and the number of schemes a consumer has. If some pension schemes are excluded, it won’t have the desired impact.

The report states that as a minimum, pensions dashboards can help to:

  • Increase individual awareness and understanding of their pension information and estimated retirement income;
  • Build a greater sense of individual control and ownership of pensions;
  • Increase engagement, with more people taking advantage of the available advice and impartial guidance;
  • Support the advice and guidance process by providing people with access to their pensions information at a time of their choosing;
  • Reconnect individuals with lost pension pots, benefitting the individual and industry; 
  • Enable more informed user choices in the decumulation phase – the point when a decision is made by a saver on how to access their savings – by making it easier to access the information on which to base these decisions.

The proposals don’t restrict the number of dashboards, but a central, non-commercial dashboard is envisaged as being hosted by the SFGB to offer an impartial service to those who may not be targeted by the commercial offerings. This is seen as the starting point, with other commercial offerings to follow. 

Although the option to have additional dashboards could be seen as a positive, it could alternatively just cause more confusion. However, the government’s international research found only positive outcomes in the few existing examples of multiple-dashboard systems.

Pension finder service

In addition to the dashboard, the government is proposing a single pension finder service and will compel schemes to provide their data to this. As this is part of the main project, the industry delivery group will also be responsible for its design and implementation. 

The service will be designed so that the information will directly be linked to a member’s dashboard if a provider responds positively to the search, rather than being sent to the pension finder service.

A pension tracing service is already available to consumers, and this should continue until the new option is available. Having full knowledge of all the pension schemes to which a consumer belongs is key to ensuring appropriate planning can be undertaken for the future. 

Defined benefit pensions are often referred to as frozen, but this isn’t the case, and getting regular updates would make it easier for consumers to understand what they have, and to protect them from scammers.

Costs to the industry

As announced in the recent Budget, the government committed to funding for 2019-20 to help fulfil its facilitation role, though it stopped short of actually funding the creation of the dashboard itself or the ongoing costs. It has been made clear that the cost of the governance structure should be met by the pensions industry, and that it should also fund:

  • The development and delivery costs of the dashboard infrastructure, such as the pension finder service and identity verification;
  • The development of a non-commercial, consumer-focused dashboard hosted by the SFGB; 
  • Any new regulatory functions related to dashboards.

The pensions dashboard will not be welcomed by all providers and administrators because it is likely to increase the levies chargeable on the providers with little or no benefit to them directly. Without ongoing government funding, this appears to be the only way to fund the project in the long term, although it has said that different parts may be funded in different ways. The issue with this is that for those providers unable or unwilling to swallow up the charge, it is likely to be passed on to the consumer in one way or another.