I’ll be off on a Boris Bike to Marble Arch in a moment to the Pension Dashboard Summit at the Arum Hotel.
From the opening session , which pitches Chris Sier together with L&G supremo Chris Clarke, this looks likely to be a lively, controversial and even fiery day.
The pensions world is divided between those who want a strong and centralised dashboard financed and run by DWP and those who want the private sector to deliver – perhaps through multiple dashboards. This polarity precludes a third option – hardly anyone thinks we don’t need a dashboard!
I’m pleased to see the conference will be chaired by Simon Kew – who is of course the lead singer in the Pension PlayPen’s house band “the racket of the lambs”. We hope that he won’t have to raise his voice to quite the extremes witnessed at the 100 club (see video below).
What the debate’s really about.
The key issue is whether we can have in “pentech” what the banks have got from “Fintech” – open pensions (alongside open banking).
Two years ago, nobody believed that Open Banking would happen. Today it is a reality. Hardly a day goes by when a new challenger teams up with a banking giant to announce a new venture. I have in my wallet, cards from Metro Bank, Revolute and Starling – I have business accounts with all three!
Open Banking means that I can see through apps like Emma and MoneyHub all my accounts on one screen. It’s handy for me to have more than one bank as I have different needs catered for from different services (FX, pensions, budgeting as well as standard banking services).
It will be the same with pensions. Most 50 year olds are looking forward to something from their workplace pension(s) , if they’re lucky – some will be in pension form , if not – they will at least get a capital reservoir to draw down as they please. On top of this – there is the prospect of a state pension – now greatly enhanced because of the triple lock.
The hope is that – in time – private pension pots will be able to be aggregated as the various bits of the state pension have been aggregated (OAP, graduated, SERPS, S2P).
But before you aggregate you need a pension finding service to put you back in touch with all the bits and pieces you started yourself- or you had started for you by your employer.
Can this pension finding service happen within the private sector- there are plenty of sponsors of this conference – who will tell you it can. The DWP has taken their word for it and intends to hand them the job (even if it holds on to the reins).
What needs to be done
Speaking with Charlotte Clark of the DWP about this earlier this month, she reminded me that handing things to the private sector is the start of the job – not its end. The real work for both the private sector and for Government starts here. Well actually it started in 2016 when Government last passed this on to the private sector (but let that lie!).
I think two things need to be done before we have “open pensions”.
Firstly , the private sector had better organise itself so that it can deliver data from A to B using a common data standard and a common application interface. In layman’s terms, the data needs to sent and received in a common way. Romi Savova of Pension Bee is proposing a committee be set up – by the private sector to agree what this standard looks like. I totally agree, so does Chris Sier (who recently did this for the funds industry with the IDWG).
Secondly we need to have as effective a force to make open pensions happen, as the CMA provided in making open banking happen. The Competition and Markets Authority (by all accounts) did a fab job with the banks- getting them to adopt Fintech. The DWP has a tough job meeting that standard and I’m not at all sure they think they’re up to it. But if they feel they don’t have the resource or expertise, perhaps they could get the excellent people who led the open banking project to teach them how they did it! Alternatively, just ask the CMA to repeat the dose!
These two recommendations, one for the private sector, one for Government are my next steps for the pensions dashboard.
Why this matters to me?
At a personal level, I have aggregated my DC pensions and will only have three pensions going forward -what comes out of DC (or perhaps CDC), what comes out of my DB pension and what I get from the State. It would be nice to see my future income on a single screen as I approach the sixth decade of my life!
But there are many not so fortunate as me. Many have their pension pots spread over a variety of providers – DC occupational pensions, personal pensions , stakeholder pensions, SSAS, SIPP – goodness knows what else!.
It is very important that we give people back a sense of ownership of their money.
This can best be done by helping them to find their pensions
Once we have found the pots, we should be able to help people understand how their pensions have done, whether they’ve had value for money from their contributions and whether there may be a better place for their money going forward.
Another survey was published this week by the FCA which again told us that less than one in nine of us were taking financial advice and only one in three of the people who really should be taking advice, went anywhere an adviser.
Why the pensions dashboard really matters is that until people know what they’ve got, they won’t be able to take advice – in whatever format that advice arrives. I define advice as “the provision of a definitive course of action” or “telling people what to do”.
You can’t really give advice until you know the facts. Facts in a financial sense come from data and data comes through a dashboard.
It really is as fundamental as this. If we want people to manage their pension freedom properly – we have to give them the information on which their decisions can be taken.
We need a dashboard and soon. Let’s hope this Conference moves the debate a little faster!
With so much at stake, look out for an action packed day – and some feisty moments!