I was invited yesterday to the Treasury’s “Challenge Panel” , held to discuss the proposals for the pensions dashboard, a prototype of which will emerge next month. Actually, I wasn’t invited – I went in someone else’s place. I went to challenge.
“Challenge” was not a word I’d have associated with any of the 120 minutes we spent listening to and discussing the pension dashboard’s details and principles of governance.
For the Pensions Dashboard is not as sold. Sometime between the kick off meeting in September and today, the dashboard has been taken over by the ABI and it has gone from something that could make the life of consumer’s easier, to something that every Insurer, SIPP provider, master trust and occupational scheme will have to participate in.
COMPULSION, according to the ABI’s Rob Yuille is a pre-requisite for the Dashboard to work. That means placing a burden on those organisations struggling to provide pensions to provide regular feeds to whatever portal an individual has chosen to sign up to.
It is clear what the direction of travel for pension money will be. Money will be moved away from the large collectives which are focussed on paying pensions and into the modern self-invested personal pensions. To a forward thinking Treasury, bent on personal (digital) empowerment, there could be no challenge.
And so it proved. For the first hour we were talked to by the Treasury and the ABI and for the second, we were given a list of questions to answer that gave so little scope for debate, that I really didn’t know why I’d bothered going. Here are the discussion topics for “principles of governance”.
- Should governance strike a balance between a commercial or public model? What is this balance?
- What responsibilities should fall on dashboard governance? Is there a role for regulators?
- Where should risk/accountability sit for dashboard governance?
- What rules or standards should there be governing operators of front-end dashboards? Who should or should not be allowed to have one?
We went on to discuss the details of “governance”, which was really a discussion of “who pays for what” and “how does it fit together?”.
I still don’t understand the questions and though I hear lots of answers , none of them addressed the concerns I wanted to discuss!
So what about COMPULSION?
Having been told, that everyone agreed compulsion was needed to get those who weren’t going to benefit from the dashboard – to participate, I wanted an opportunity to challenge!
I don’t see why all kinds of legacy pensions should be required to provide real time information to the dashboard. I tried to ask the ABI what sort of RTI a defined benefit scheme would be giving, I was told that the ABI had thought of that and had a way round my problems. Not having heard what my problems are, I am surprised about that!
I don’t see why organisations running long-term investment strategies based on the defined benefit should be required to lay before the dashboard what is effectively a work in progress. Whether a defined benefit pension scheme or a with-profits pension, the value of the pension is based on it being a pension, not an immediate property right.
Since we were not able to ask the questions, I cannot give readers the answers. But if all four moderators and two of the four speakers were from the ABI, I can be pretty clear that they are in control.
There are (according to the Treasury) 63.8 million pension pots. These include what were referred to as “DB pots”. For the Treasury, the success of the governance model they arrive at is based on it being “open”, “flexible” and “trustworthy”.
But if we are being compelled to play the dashboard game, what part of this is “open”?
If we are to treat everything as a “pot”, where is the flexibility?
And if the whole shooting match is to be managed by the ABI – how can I call it “trustworthy”?
We need a default in retirement product before a dashboard is made compulsory.
I am not walking away from the “challenge panel”- convinced. The relentless attempts to undermine our pension infrastructure and aggregate it into DC pots may suit the ABI and its members, but it may not suit the consumers – especially the consumers who do not have the protection of true fiduciaries.
Nothing was said at this meeting about what people would do once they’d seen all their retirement savings on one dashboard, but if the next step is aggregation, my next question is “into what”. Since the “decumulation solutions” being put forward by ABI members are simply not fit for the purpose of managing ordinary people’s pots, I see the dashboard as a way of leading horses to water, and then throwing them into the sea (to sink or swim).
Concurrent with any development of this financial portal, we need to find a collective way for ordinary people to spend their pension savings. People want and need a lifetime income and – short of the individual annuity – we are not providing them that!
Pension Freedom is not a solution – nor is the dashboard.
Giving people the freedom to do what they like is not a solution- it is another problem. Personal empowerment will not happen because people can see one big pot of savings, people need to know what they can do with it! Reducing pensions to savings pots assumes people can live off capital- most can’t – they need income in retirement.
What I saw yesterday was very worrying. There was no challenge in this “challenge panel”, all that we had was a discussion on the minutiae of a “fait accompli”.
The big ideas are going unchallenged while the debate is being talked out , moderated by the ABI. This is no way to make policy and will certainly not get universal support when the implications of this compulsion are realised.