At yesterday’s session of the DWP select committee there was consensus that a pensions dashboard is a good idea.
But what is it? Why would it help? When will we get one?
What is it?
A pensions dashboard is an online app that you should be able to view on any digital device from a handheld to a PC.
It should give you live information on the value of your workplace pension account (s).
It should give you information about your Defined Benefit pensions and your state pension entitlement.
This information about what you have saved for in retirement should be able to integrate with other data feeds from your savings accounts and even the value of your other assets.
The collected data should answer the kind of questions you might typically have
What will I get when I get to 55,60,65, my state retirement age etc?
What do I have to do to reach certain financial targets I might set myself?
What’s the situation if I were to die?
How long will my income last?
What would be the impact on my savings of needing long term care?
Why would it help?
Most people struggle with big ideas like “living too long” , “dying too soon” or “getting sick”.
People don’t have the mental apparatus to deal with these problems which is why they have traditionally turned to financial advisers.
Most financial advisers do not want to advise ordinary people who do not have the money to pay for the kind of detailed financial guidance they offer.
The digital dashboard is a way of helping ordinary people monitor their savings, measure how much they need to do to meet targets and enable people to manage their finances to achieve these goals.
Since the cost of providing this service should not be more than a few pounds a month, this digital technology should bridge the advice gap between those needing advice and the sources of advice.
When will we get one?
No dashboard will ever be perfect. The Apple Iphone 9s is going to be very special but we will have to wait till around 2020 to see it!
Just so, a pensions dashboard that does all the things I’ve mentioned above won’t be generally available for a couple of years. But the prototypes are already being rolled out. Check out https://www.moneyhub.com as an example.
What’s stopping the development of these dashboards tends to be the technology lag associated with the big financial organisations. They pioneered computerisation back in the day but the pioneering systems of the 70s and 80s are the legacy systems of today. Getting data out of these systems is hard, especially where the benefit calculations are based on complex formula (as with with-profits and carious other kinds of guaranteed benefits.
The state pension falls into this category. We should be able to get online pension calculations showing our entitlements to the new single state pension coming into force from April 2016. But the calculations are fiendishly complicated as most people do not have simple contribution histories, especially for the second pension (formerly known as SERPS.
Having said that, new technology, using simple identifiers such as national insurance numbers , is increasingly “scraping” personal information from a variety of sources and pulling together people’s pension entitlements on a single screen.
The idea of a pension dashboard won’t be delivered by Government, these big IT projects don’t work like that. The best Government can do is to make the information needed for organisations like MoneyHub to get the data easily and in real time.
I’d like to think that by the end of next year, most people will be able to get most of what they need on a single screen at the touch of a finger.
Engage -Educate – Empower
The three E’s that inform this blog and drive most of what we do at First Actuarial and Pension PlayPen are the drivers for technology reform.
The momentum behind this kind of data integration is unstoppable, we will get pension dashboards and the big question is when.
Smaller questions remain as to how we purchase these services. Some employers will see the advantage of offering a dashboard as an employee benefit. Some people will buy the app and pay for the subscription but ultimately we need to find a way to make this information service free.
I am quite sure, with the money in the financial services industry and the capacity to manage outcomes that such apps give, the financial services industry will find a way to make that happen!