Digitalisation?
With a great deal of noise, the Government announced yesterday its intention to pilot a set of data standards with 11 pension providers;
Aon
Avivia
B&CE
LV
HSBC
NEST
NOW
Royal London
Standard Life
WTW
Zurich
The list is not inclusive so other providers such as L&G, Aegon, Prudential, Scottish Widows et al will be join in when they choose.
In his speech, Treasury Secretary Simon Kirby told us that these standards would be Open,Flexible and Reliable, would not create a monopoly, would include Fintech start-ups and would nor require a single Government funded platform.
The Government clearly sees this as an easy win. The private sector puts up the money and it takes the credit. It is of course what it should have done at the outset of auto-enrolment but at least it is learning from past mistakes.
But the central question of what people do with the information that will be presented on the dashboard remains unanswered. It is one thing to know how much money you have built up, how much of what you would have had has been taken in charges and what you are likely to have in future – it is another think to know what to do about it.
The phrase “pensions dashboard” is used pretty loosely. the dashboard will (in time) carry a wide range of financial services and will be used to cross sell other insurances as well as the suite of Treasury promoted ISAs.
Regulation
We heard at the meeting from David Geal (FCA) and Andrew Warwick-Thompson (tPR). Five of the eleven providers are occupational schemes (tPR) and six providers are predominately personal pension providers. The inclusion of Aon and Willis Toweres Watson suggests that these consultants are gearing up to be asset gatherers in a big way.
The two Regulators are beginning to work better together but there is still a big difference between the way aggregation is governed. The FCA and its innovation hub promotes itself to those offering regulated advice while tPR relies on guidance with a lighter touch, Michael Johnson was in no mood to quibble over such niceties and demanded doing away with the distinction; advice is advice whether regulated or not.
It’s clear that the direction of travel is towards empowerment of individuals to do what they like- the Freedom and Choice agenda. However it remains unclear how pensions dashboards will be used, whether they will move the market towards more advice or more guidance – or whether Johnson is right and that the dashboard will make the distinction redundant.
In practice
As well as Government and their Regulators, we heard from a number of service providers, True Potential, My future Now and Yoti. In keeping with Aviva’s digital garage, each presentation focussed on the immediate delivery of financial services in a way that consumers would appreciate- the phone, tablet and PC. I have a high regard for these services, the challenge will be to see whether Fintech will be absorbed into the propositions of the Pension Providers or whether they will be squeezed out.
We didn’t hear from the plumbers – pensionsync, Origo and Altus who will be called on to build the pipes and construct the joints linking systems to each other.
We heard from one provider, B&CE (Peoples Pension) and we got a press release from NOW. The timing of the initiative could not be better for NEST (who see the restrictions on transfers in and out, lifted in April 2017).
So long as this project is set up to deal with the recent past, present and immediate future, the technology on display looks fine. The problems are all in the past but they are not going away any time soon. Nor is there much coming from the third party administrators not engaged with asset aggregation but in the front line when it comes to dealing with member queries.
Verdict
As the title of this blog suggests, this way an announcement more to be remembered for style than substance.
I am concerned that the pilot is far from inclusive and that what works for the 11 providers, may not work for others. However I think the mix of insurers and master trusts is helpful.
I am pleased to see the Regulators working together but continue to be frustrated by the opacity of the guidance/advice debate.
To feel comfortable about what is going on, we need greater openness about what the new data standard are about.
But ultimately, knowing about what we have is no substitute for knowing what to do. The central dilemma for those of us with DC pots is not what they’re worth but what do do with them.