While it has been pointed out that a lack of government majority in parliament means the proposals contained in the pensions bill might not necessarily all go ahead, pension dashboards have crucial cross-party support as well as champions within the Department for Work and Pensions, including pensions minister Guy Opperman, who have made it clear that dashboards are essential to those approaching retirement.
People need to know what pension savings they have and where they have themAn ageing population and increased life expectancy, the shift to defined contribution pensions and the increased pressure on state pension provision, mean individuals must now take on greater responsibility for saving and investing for their retirement years.
People need to know what pension savings they have and where they have them, along with guidance on how to prepare for retirement with greater confidence.
The Association of British Insurers has estimated the average person could have 11 jobs over a lifetime.
The success of auto-enrolment has led to millions of new pension savers and a proliferation of pension pots.
Key points
- The pensions dashboard was given the go-ahead in the pensions bill
- The Money and Pensions Service has taken responsibility for the dashboard
- Master trusts and larger DC schemes should be onboarded first
It is very time-consuming for an individual to obtain a simple overview of what they have, where it is and what it is worth – the basic information required to plan for retirement.
Yet, the current generation of savers wants control and has high expectations, given positive online consumer experiences outside of pensions.
Hence it is not just those approaching retirement who need dashboards.
Access to a dashboard will be ever more critical in the years ahead as individuals building their pension pots take greater responsibility for their retirement future and as the state pension is moved further and further up the age range.
Money and Pensions Service
It is encouraging that the Money and Pensions Service has taken responsibility for delivering pension dashboards and established the Pensions Dashboards Industry Delivery Group to take things forward.
In his comments at the time of the Queen’s Speech, Chris Curry, principal of the PDIDG, said compulsion was a “crucial next step in delivering trusted dashboard services”.
In addition to providing for a framework to support pension dashboards, the pensions bill includes new powers to compel pension schemes to provide accurate information to consumers.
This, the document said, “will include provisions for the regulators to ensure relevant schemes comply”.
What was not mentioned in the Queen’s Speech was inclusion of the state pension information, although the DWP has said previously this will need to be part of an individual’s dashboard information.
Industry work on the pension dashboards has been ongoing for the past five years, and fintech company Origo has been heavily involved in progressing the initiative.
To see government policy taking dashboards through to the final stage where they can become reality for individual pension holders, and to see the crucial work undertaken by the industry to deliver the first dashboards come to fruition, is hugely gratifying.
The next steps
Maps now has the responsibility of bringing dashboards to fruition, building on the five years of industry and government collaboration to date on developing a secure digital architecture. The government’s policy objective is to introduce a highly secure, fit-for-purpose dashboard at the earliest opportunity.
Building on the work done to date, the next steps in delivering dashboards are not solely about the technology – in this respect there is a firm foundation built on technology trusted by the industry and consumers already in place, which could be implemented quickly – but they also address key areas such as consumer identity, data security and privacy.
Although the Queen’s Speech will renew the industry’s enthusiasm to deliver dashboards, the fact remains that no pension providers can truly begin work until they know how to connect and engage with the dashboard. Key areas such as data standards, technical standards, and user-managed access profiles are all aspects that will need to be progressed and adopted by the industry.
One way of addressing the issues around identity, risk, data security and privacy would be through an early delivery of the core architecture, on which these aspects can then be developed. This is an approach Origo strongly advocates.
We should not forget that bringing dashboards to fruition will require investment by a large number of companies across the industry. Therefore, the sooner the architecture is confirmed the sooner the necessary informed investment decisions can be made.
Indeed, one of the key challenges for Maps will be in educating and onboarding an entire industry.
Currently, a low level of online access, a reliance on legacy systems and a need to up-date and correct data among pension schemes and third-party administrators, mean there is a huge task ahead for the industry to make dashboards fully comprehensive.
Hence, sensibly, in our view, the DWP paper proposed that master trusts and larger DC schemes should be onboarded first.
The rest of the industry will follow, building the value of dashboards incrementally in distinct stages, in a similar way to the roll-out of auto-enrolment.
The challenges ahead are not new and we, alongside key organisations involved in the dashboard initiative, have been working on them.
Furthermore, there is a wave of support and commitment to dashboards from the industry, which has always been encouraging, and we are now at the stage where these outstanding challenges can be tackled and resolved, enabling the full project to come together and be made live.
I cannot wait to mark the day when the first pension holders use their chosen dashboards to access their pension information.
That will be a milestone from which arises the opportunity to build on the dashboard concept to give individuals greater access and confidence in all aspects of their savings and investments.
Anthony Rafferty is managing director of Origo
