The Pension Dashboard is under pressure. Having lost its sponsor, Simon Kirby MP in this summer’s election, early-day momentum is running out. The ABI are clearly fed up and are now calling for Government intervention if they are to continue their involvement. Such intervention would mean that those holding data on our pension rights would be required to feed this data to a central source – not so much a dashboard – more a “NEST board”. This idea of a public utility, sponsored and maintained by some NGO has been rejected in the past by a Government anxious to keep away from such a role. I can see little reason to suppose anything will change.
What options for the friends of the dashboard?
- They can continue with plan A and deliver protocols that enable private firms to aggregated data more easily (multi-dashboards)
- They can move to plan B and force the Government into intervention (as they are doing)
- They can accept that the dashboard itself will evolve over time and that the advantages of having a dashboard, engagement, aggregation and better value for money, will happen without their work,
What does recent history tell us?
Government intervention in data management is quite common. The Real Time Information (RTI) initiative has been a success in allowing HMRC to digitalise the payment of tax and improve the accuracy of collection and the speed of enforcement.
It is now embarking on GDPR which it hopes will better protect the consumer from being swamped with unwanted marketing or attacked by scams.
Both initiative address problems that go beyond the scope of the private sector, RTI is about improving state revenues and GDPR is about civil liberties. I find it hard to create a similar justification for further intervention in the creation of portals to aggregate the data from our various sources of retirement income.
The recent history of auto-enrolment suggests that when called upon to impose a single protocol by which data was passed from employer to provider, the Government stayed out of it. What has emerged since are multiple types of API and CSV data transfer systems which – one imagines- will rationalise themselves over time. There remains a strong argument that Government could and should have intervened at the outset of auto-enrolment and implemented something akin to the PAPDIS standard, but in 2010, technology was not where it is today.
The sad fact is that – save in under-developed countries – as Estonia was and many African countries are, the state has great difficulty in imposing any kind of data standards for private industry, precisely because of the speed of change of technology.
My fear for the Pensions Dashboard is that by the time a set of protocols emerge, a new way of doing things will have emerged that will make them obsolete.
Where has there been private success?
I can see two initiatives from the financial services industry in my small part of the market, that have made a difference. The first is the work done by IDEA in creating a common way to administrate investments so that money is deployed to assets faster. This initiative happened because Legal and General got tired of waiting for consensus and created a market around itself.
The second is the Origo pension transfer club which operates a transfer standard meaning that between club members deals are done in about a fifth of the time were the club not used. Origo was set up by the ABI and the insurers and seems to be doing a very good job. I have been urging more master trusts to sign up to it (Peoples are there, Smart and NOW are nearly there and NEST is thinking about it).
A third initiative, the pension passport, is reported in the FT today. The passport, trialled by insurer LV – and much promoted by Tom McPhail, is a super one-pager which gives people with simple pots a green light to aggregate money without the need of financial advice. It is warmly to be supported.
I am currently struggling to release a pot of money with Zurich to join the rest
of the money with L&G. I have to fill out lots of disclaimers confirming that I know not of any impediment etc.
I have to get two sets of paper forms and send them to the right people and once I have waited a few more weeks , I hope that I can stop paying Zurich 4.25% pa for doing what L&G do for 0,1% pa.
It should not be this difficult, if my Zurich benefits had come with a passport, I am sure that I would have had all my money in one place at my 55th birthday, now nearly a year ago!
Where can we look for hope?
If all the pension dashboard had hoped to do was Plan A (create the protocols by which data aggregation could happen) then I was onside. This was how it was laid out to us by Simon Kirby (ex MP) in the Aviva Digital Garage last year.
Plan B looks a non-starter to me. I’m not saying my lot wouldn’t play (First Actuarial are fairly confident about the quality of our data and we aren’t technology luddites), however we would resist compulsion – as would all organisations with an obligation of good faith to members , trustees, employers and their rights.
We look at areas in the private sector where aggregation is occurring and we see plenty of slick organisations such as Pensions Bee, Evestor and Neyber making great strides. Portals such as MoneyHub already exist. Software providers such as Altus, Intelliflo and pensionsync are providing the technology for IFAs , payroll, schemes, insurers and the DWP to talk with each other. RTI is developing within the private sector at a rate.
Talking with former NEST supremo, Tim Jones at a CSFI event this week, I heard of the advances in cryptography that could allow for a new generation of data management products super ceding and indeed by-passing the block chain.
I don’t pretend to fully understand how these technologies will be applied , but I am quite clear that whatever Government builds for 2017 will be an anachronism by 2020.
Hope springs from the selective adoption of new technology applied to a proper understanding of what ordinary people want. The dashboard and the passport should be friends as they both help people to do what they need to do, organise their finances in retirement. We hope that the single guidance body – the revamp of TPAS, MAS and pension wise, will be able to properly promote dashboards and passports before too long.
Portals and pensions
I feel for those involved in the dashboard projects, especially for good people like Yvonne Braun of the ABI and Margaret Snowden of PASA. The dashboard is a good thing that will have collateral benefits in improving data quality and the speed at which pots follow members. The dashboard has the right aims and getting common data standards is a good thing.
However, I think that Plan B is unworkable and that calling for compulsion is an admission of defeat. I do not support compulsory data transfer. Portals are a means to get better pensions but they cannot become an end in themselves. We urgently need better pensions now, especially because of the new freedoms.
The ABI are – in calling for compulsion – diverting attention from where the dough is going – the pension. This may suit the ABI who have consistently blocked any innovation in pension payments , but it does not suit ordinary people who are less interested in portals than in having a good retirement.
Portals are for show but are ephemeral, pensions are for dough and for sustenance.