This month's question: Would multiple pension dashboards be better than a single solution?
Yes
Tamsin Hazell, chartered financial planner at Succession
The pension dashboard should be available from multiple sources. Competition and innovation should result from service providers having the option to offer their own dashboards. Moving towards a live dashboard should encourage providers to improve and modernise their systems, and lead to the best outcome for clients.
The alternative is to rely on one system provided by the public guidance body, the danger of which is that it could lag behind the industry in terms of technological development.
More often than not, prospective clients feel thoroughly confused by what they’ve got in terms of pension provision and what it means for them. Statements are presented by clients for us to translate – the perception being that they are written in a foreign language. This confusion presents a significant barrier to engagement with the financial planning process.
The model of working for a single employer, building up one pension fund and working towards a fixed retirement age is increasingly rare. Far more common is to have several employers over the course of a working life, with the same number of accumulated pension pots.
A pension dashboard is a great way to encourage individuals to take ownership of their financial future. The dashboard should clearly show what the pension savings could mean in terms of retirement income in today’s terms. Once all plans can be viewed from one point, the next natural step is to consider a cohesive investment strategy, and then to take other non-pension assets into account.
No
Ricky Chan, chartered financial planner at IFS Wealth and Pensions
I’m all for helping individuals become more engaged with their finances and planning for their futures, but even though investment platforms have grown exponentially and benefitted many investors (particularly those with multiple tax wrappers), I can’t see similar benefits being transferred to a world with multiple pension dashboards.
First, multiple dashboards run the risk of confusing consumers rather than empowering them to take action. This is the classic ‘information overload’ problem we have in society today. It’s far easier and simpler for clients to visit one website, much like HMRC when completing tax returns or PensionWise for those considering drawing pension benefits.
Second, there are more data privacy issues to consider with multiple dashboards. Some providers may have better online security than others – so with multiple dashboards and potential access points to personal data, it would inevitably increase the chance of personal data being stolen, or identity theft.
Next, if providers of those dashboards are allowed to directly market financial products (or other products) to those logging in, then this could lead to potential mis-selling in future. Let’s be honest, if providers are not being paid by the government to run pension dashboards, then they’d need to recoup their initial investment and cover ongoing overheads somehow. Hence, a single pension dashboard should be independent and provide clients with guidance information only.
