All dressed up with nowhere to go?

This lunchtime , the Pension PlayPen lunch will be discussing this very question. If you’d like to have your say in what is likely to be a robust discussion, get yourself to the Partners Room in the Counting House at 12 for 12.30 (more details below).

The Pension Dashboard is what comes out of work being done on common data standards which will allow ordinary people to see their entitlements to retirement income from everything from the State Pension, to their “ISA portfolio”.

I hope we’ll hear more today about who’ll be supplying pension dashboards and where they will appear. In case anyone’s confused, they are unlikely to perform the original intention of the “dashboard” which was to protect travellers from mud “dashed” up from unpaved roads. Instruments only started being added to the “board” when carriages became “horseless”. As late as the 1930’s, the major technological advance was the “padded dashboard” which became a primitive safety bag.

We shouldn’t forget that unless we are young and/or digitally savvy, there is still a tendency to think of a dashboard as a useful part of the car’s infrastructure where information happens to be displayed.

The Pensions Dashboard is not yet a familiar term, outside the narrow circles of the “pension digitati”. No wiki article exists for it; my father thought it might be attached to a Zimmer frame.

It needs to be functional to deserve the name

Dashboards distinguish themselves by being functional and used. The Pensions Dashboard should be judged on this basis.

I have yet to understand where gauges that tell me how much money I have to spend, how fast I am spending it and when my pension fuel-tank will run dry – will sit. Clearly I don’t want to be looking at this information as I drive down the road (though it might be useful if I got stuck in traffic).

But even if this information is generally available (for instance from an app on my phone), I will find the information frustrating if I can’t make good use of it. Again, the original point of dashboards is helpful –

A dashbord is a control panel located directly ahead of a vehicle’s driver, displaying instrumentation and controls for the vehicle’s operation. -https://en.wikipedia.org/wiki/Dashboard

IMO, Pensions Dashboards don’t just need instrumentation but controls for the pension’s operation.

The original conception was as a way of seeing how pensions could be aggregated (small pots into one big pot). I did this for myself a few years ago and found that most of my small pots could easily be transferred to my big pot.  The one that couldn’t (from Zurich) had whacking great exit penalties on it, I am waiting till April this year for Zurich to allow me to transfer this pot into the big pot with only 1% cost to myself.

You can get a  kind of primitive dashboard which reminds us who is currently charging for our pots to follow our members (so to speak). I won’t publish here as it will simply annoy JRA (who I know are going to come in line very soon).

I must say it was tricky for me to collect all the information I needed and to take decisions on it. But I found it a whole lot more tricky, once I had decided which pots I wanted to transfer, to move the money. I had to sign a wedge of disclaimers confirming that I knew i was liable for any loss- that I wasn’t able to sue a financial adviser (not having one) and that I couldn’t sue either the ceding or receiving pot provider for the consequences of what I did.

My suspicion is that the Pension Dashboard will be both a cure and a curse. It will, through finding my various pensions (with my national insurance number) display what I have, but it won’t link to the controls.

To return to the mechanistic origins of the  dashboard, unless I can make use of the information I have to provide myself with a satisfactory pension , I will be like the man who finds himself speeding but has no access to the brake pedal.

Now we come to the real point of the dashboard, or at least what I suspect it to be (for financial services people do not get excited unless there is commercial gain in sight).

If the pensions dashboard can be linked to a set of controls that allow pension pots to be aggregated, re-invested, drawn down and ultimately inherited or abandoned , then the pensions dashboard becomes real.

However, you would not buy a car because it had a nice dashboard. My sceptical aide-memoir on all things dashboard-esque is this.

“Dashboards for show, funds for dough”

I fear that much of the interest in dashboards is in the belief that he who owns the dashboard will sell the car, and some pretty rubbish cars may be bought because of pretty dashboards.

We are in danger , with these dashboards, of simply dressing up the current solutions in new digital clothing. The fundamental issues with pension drawdown, currently being explored by Abraham in his work with Finalytiq and  the recent report by IRESS suggest that drawdown will be unlikely to offer anything more than an annuity without substantial extra risk.

The  conspicuous failure of Government to advance the agenda for any kind of collective solution that might be called a “default spending option” means that we are no closer to providing people with simple answers as to how to spend the money displayed by the dashboard.

Until we address these fundamental issues, the dashboard will lead us like this structure to a perilous place

Retirement Bridge

If this article has inspired you to do something more constructive with your lunchtime (Monday 6th Feb) then come to lunch. The cost is generally £17 per head to include food and beverages and the Counting House is at 50 Cornhill – EC3V 3PD. I hope we can see you there.