New details on the development of a pensions dashboard are welcome, but there’s still some way to go, argues Sara Benwell
After six months of waiting, details are starting to emerge about the government’s plan to launch a standardised pensions dashboard.
Speaking at the Aviva Digital Garage, economic secretary to the Treasury, Simon Kirby, announced that a prototype of the pensions dashboard will be ready by March 2017.
He said: “Pensions and savings decisions are some of the most important a person will make during their lifetime. The government is determined to make sure people can access the information they need to plan effectively for their future.
“Technology, like mobile phone apps, has made day to day banking easier than it’s ever been and it is time for pensions to catch up. Think of a future where you can compare your pension pots with the touch of a button.”
Leading the charge
The project to develop the prototype will be spearheaded by the Association of British Insurers.
Yvonne Braun, ABI director of policy, long term savings and protection, said: “Leading this Cross-Industry Project Group to deliver a prototype is a significant step forward in creating a one stop place to help savers see and understand their various pension pots.
The Pension Dashboard can help tackle under-saving”
“Given our ageing society, it’s essential that we engage people in their long-term savings. The Pension Dashboard can help tackle under-saving as well as help savers locate lost pension pots, and empower them to get financially prepared for retirement.”
The Cross-Industry Project Group will be reporting regularly to HM Treasury who will continue to have final oversight over any developments.
Its objectives include:
- Agreeing the design of infrastructure for data sharing.
- Building and demonstrating a basic working prototype using anonymised customer data and a digital ID.
- Proposing potential solutions for the development of an industry-wide dashboard.
A coalition of the willing
Pensions Insight has long supported the building of a pensions dashboard – and we are relieved to see the project moving forwards once again.
In particular, it is encouraging to see some of the largest pension providers getting involved. So far, Aviva, Aon, HSBC, LV=, NEST, Now: Pensions, the People’s Pension, Royal London, Standard Life, Zurich and Willis Towers Watson have all signed up to the project group.
However, it is precisely this ‘coalition of the willing’ who have long been pushing for development of a dashboard, and the real test will the next stage where smaller schemes will need to be onboarded.
Closed-book providers may need to be dragged kicking and screaming to participate”
The ABI has said it will happily welcome any other schemes or providers to the project group providing they get in contact by the end of October. And the organisation recognises that over the longer-term these eleven providers alone will not be sufficient. A spokesperson said: “It’s only going to be really useful if it includes everything.”
Getting closed book schemes on board could be tricky. AJ Bell senior analyst Tom Selby said: “It’s vital that the Pensions Dashboard is as all-encompassing as possible, and most modern platforms, personal pension providers and auto-enrolment schemes should have no problem linking into the technology once it is built. However, closed-book providers operating on outdated back-office technology systems may need to be dragged kicking and screaming to participate - through legislation if necessary.”
Smaller schemes could also pose a problem. Tom McPhail, head of retirement savings policy at Hargreaves Lansdown said: “There is still a huge amount of hard work needed to get the scheme up and running. Eventually it will require every pension provider, scheme and administrator to build data feeds into the dashboard. This means thousands of organisations holding millions of bits of data, some of which is not even on computer at present, all feeding information via a common set of standards. This is no small undertaking and particularly for some small occupational schemes it will present a real challenge.”
Bringing in DB
At the moment, the working group seems to be largely focused on DC, but a spokesperson for the ABI confirmed that the inclusions of DB will be a priority in the future.
Jon Hatchett, Head of Corporate Consulting at Hymans Robertson, thinks this will be crucial if a dashboard is to survive.
He explained: “For the dashboard to work effectively defined benefit pension entitlements are a key part of the jigsaw. However, integrating DB data will come with challenges. The quality of the data is hugely variable depending on a scheme’s history. There is also a question over how much it would cost to make this happen across the 6,000 DB schemes in the UK, and who would foot the bill. Given the savings shortfalls we see across the nation, it’s surely got to be a worthwhile spend.”
Understanding state pension entitlement
Another future priority for the group must be to make sure that state pension is included. Interestingly, despite the fact that this is a Treasury project, as yet there is no confirmation of when (or if) this might happen.
I have concerns that the overall delivery could be undermined by working to such a tight deadline”
This is a huge cause for concern, according to Hatchett: He said: “Getting the dashboard in place for a working prototype by March 2017 is a big ask and I do have concerns that the overall delivery could be undermined by working to such a tight deadline. Pensions are undoubtedly a priority, but we can’t afford to compromise on quality.
“As things stand, there is no guarantee that the state pension will be included in the pensions dashboard, and yet, for many, this will make up a huge proportion of their retirement income. In order for savers to receive a complete picture of their retirement funds, this clearly needs to be built into any dashboard the industry develops, even if it means pushing the date of the prototype back.”
The ABI has confirmed that it is in talks with the Treasury to try and nail down when this information might be included.
It’s important to remember that this is just a prototype, so gaps in the data are not necessarily a disaster yet.
However, the industry is clear that by the time the dashboard launches officially it will need to cover every aspect of a person’s pension provision. Unfortunately, it is this missing data that will be the hardest to secure without legislation.
The ABI and the Treasury have made some good strides in beginning to develop this prototype, but if we want to move to a world where a pensions dashboard is a useful tool for consumers, there is still some way to go!