Consumer association Which? is calling on the government to legislate for a pensions dashboard, but there are barriers to implementation that must be overcome first.
The problem with dashboards and regulation is a little like that of the ‘chicken and the egg’. But in this instance – it’s all about what should come first.
In principle a dashboard is surely a good thing. It could raise consumer awareness of pensions, it would help with transparency, and crucially it would make it much easier for people to stay on top of their retirement situation.
Great – we think – let’s crack on!
But it’s just not that simple. In order for a pensions dashboard to work, most people agree that all the providers and schemes need to be involved. Frankly, a dashboard where you log on and only see some of your savings, depending on whether or not your provider has voluntarily got involved, is doomed to fail.
And for a lot of schemes there’s just no incentive to get on board, and actually it’s probably going to cause quite a lot of hassle. This is particularly true for life companies with closed book legacy schemes or smaller trust-based DC schemes where records may still be paper rather than digital.
The obvious solution is legislation. Without a regulatory shove it is hard to see how we could encourage these schemes to buy into a voluntary dashboard.
And it was the FCA who first floated the idea of a dashboard in their Retirement Income Market Study released in March 2015.
At an event earlier this year, held by the People’s Pension and Origo, Mark Boyle, chair of the Pensions Regulator confirmed the body was in talks with the FCA on a possible dashboard.
Since then, however, all has been quiet on the regulatory front leading many proponents of the idea campaigning for more government intervention.
And consumer body Which? has gone even further, arguing that the government should use the next Budget to announce legislation on a dashboard.
The organisation said in a statement on its website: “So far there has been no public commitment from the government for the creation of a pensions dashboard, and no timeline for its implementation.
“Which? wants the government to use the Budget to announce plans for the introduction of a pensions dashboard, so savers can see all their pension pots in one place, alongside their state pension forecast, with a clear timetable for its implementation.”
The problem, Pensions Insight understands, is that there is reluctance on the part of the regulators to push anything through until the industry has shown that some of the other barriers to implementing a dashboard can be overcome.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “It’s great that [Which?] are nudging on this. It would be even better if they got involved in the development work too.”
“But it still requires the variously tedious grind through of all the detail on what we’re actually going to do.”
“Until you can find a way through all that, it’s unreasonable to expect the government to legislate.”
So we need legislation to make a dashboard work, but legislation is unlikely to come along unless we can show the nitty gritty of how one might work in practice.
But which should come first - the chicken or the egg?
“The onus is on the industry,” says McPhail. And Clive Bolton, managing director of retirement solutions at Aviva UK Life, agrees.
He said: “Urgent action is needed to encourage people to take an active interest in their retirement savings as we know that people are not saving enough for retirement.
“Rather than wait for government to legislate, we believe that a progressive coalition of providers, government, regulators and consumer representatives could deliver a solution faster.”
At some point, however, regulation will be required.
As Darren Philp, director of policy and market engagement at the People Pension puts it “It needs a push by Government and regulators to ensure it gets off the ground in the right way. A dashboard, first and foremost, has to be about the saver. It needs proper ownership and governance for it to be truly trusted by consumers.”
Although it seems unlikely that we’ll see anything on dashboards in this budget (although at this stage it would be foolish to rule anything out) few supporters of dashboards would be unhappy if we did.
Essentially, the industry doesn’t much care whether the chicken or the egg comes first - as long as we get both soon.