17 September 2018
News that the Government has firmly put the onus on the pensions industry to deliver the much-anticipated Pensions Dashboard has been met with a mixture of concern over the future viability of the project and relief that it’s not altogether dead in the water.
Despite stepping back from taking responsibility, the Government has pledged its ‘full’ backing. Exactly what that means is, as yet, unclear. So where do we go from here?
An unexpected turn?
Looking at the project’s history – and given its complexity – this recent announcement was perhaps to be expected. Delivering a one-stop portal where people have access to up-to-date information about all their pensions savings was always an ambitious task. The dashboard project – and its forerunner the combined pension statement – has been talked about since 2001, and it always seemed that the Department for Work and Pensions (DWP) accepted the dashboard project reluctantly. The delay in publishing a feasibility study made it clear that the proposal was sat in gridlock, and that the lights were not turning green anytime soon.
It was therefore only a matter of time before DWP stepped away.
However, if Government can and will support the project as Esther McVey has suggested, then perhaps handing over responsibility to the industry will be the vital spark that the project needs to really bring it to life. There are very few who think that a working dashboard wouldn’t bring considerable benefits, if it can get off the ground.
Too much at stake to stop now
You only have to look at the number of signatories to the recent petition to save the Pensions Dashboard – over 150,000 in total – to see how important an undertaking this is. Visibility over whether they are saving enough for retirement is something that people really want – and need. New research suggesting that millions of savers stand to lose thousands of pounds if they can’t keep track of the savings in their various pots starkly underlines what’s at stake.
The good news is that Government involvement isn’t necessarily essential to really move the project forward. Indeed, the ABI-led industry consortium has delivered a prototype dashboard already. In all likelihood, building on that prototype will enable people to view their State pension forecast alongside valuations of their pension pots from those providers who are willing participants.
Bumps in the road
As I have pointed out recently in Investment & Pensions Europe (IPE), difficulties may arise when it comes to getting the other providers on board, particularly those whose records are not yet digitalised. The dashboard project may well provide an important catalyst for individuals with pension savings to locate legacy funds, as well as challenging providers to make data available and accurate. There is also potential for the project to lead to more critical examination of the charges and performance of the underlying funds to see whether they are getting a good deal. If providers are still reluctant to put their data into the system, the Government may well spring into action to compel them to do so.
Defined benefit pensions provide a further challenge, but that juncture is further down the road. They are an area where government legislation enabling schemes to simplify complex benefit structures would be welcome. Such simplification would, incidentally, have other benefits such as cleaner data, lower admin charges and ease of understanding for members.
Cause for optimism up ahead
There remains a huge amount of detail to be hammered out and many uncertainties remain. However, my hope is that this recent announcement will come to be seen as a positive development, which will empower the industry to take the initiative forward in the manner it sees fit and to work together to see it through.
With the Government no longer in the driving seat, it’s up to the industry now to get on with the journey. A working dashboard would bring many benefits and we can’t afford to see it kicked to the kerb. We need to prove wrong those doubters who suggest that the dashboard will ever gain real momentum.
Persevering with the Pensions Dashboard: the vital benefits
An industry-wide push to deliver a fully-functioning Pensions Dashboard would:
- Encourage people to save more by giving them visibility over how much (or how little) their various pots are worth – including legacy pots that may otherwise get overlooked
- Give people confidence that saving for a pension is an essential part of their financial planning
- Make pensions more accessible and understandable to more people