Pensions dashboard – for the consumer or the industry?

 

chris sier

Sier

 

Yesterday I suggested that the Pensions Dashboard Summit being held in London was likely to be “feisty” – it was. The organisers chose to put the event under Chatham House rules, as if a debate about transparency can be held under a tarpaulin.

I am restricted in who said what, but I can say what was said. Broadly speaking the room fell into two camps. One camp, which I belong to, decided that as everyone wants a dashboard, we should “just do it”.  The other camp – more circumspectly, considered following DWP’s due process, waiting for the infamous feasibility study (still sitting in Esther McVey and Guy Opperman’s out-trays – six months late on delivery).

Perhaps the best articulation of the “just do it” camp came from one of three wise men who’d arrived from the East (well Denmark, Belgium and Holland to be precise)

These wise men were pretty scathing about our dashboard decision making process (though they may have been deferring to wider decisions in this comment.

With both the DWP and tPR at the Summit it was left to the ABI and to People’s Pension to assert the rules of due process.

As the bloke sitting beside me put it, if we wait for due process on governance, we’ll not just be retired by the time we get our dashboard- we’ll be dead.


Who was breaking ranks?

One person created the debate yesterday, Dr Chris Sier. The Chair had asked the question in his opening statement “who’s the dashboard for, the consumer or the industry”. Sier did not duck it. For him the dashboard was for the consumer and in an impassioned cry to give pensions back to the people who own them, he stated his position.

Providing data on your pension to the place where people are (a properly positioned dashboard) should not be compulsory). But the failure of someone controlling that data to provide it back to its proper owners – the consumer – would be at best immoral and at worst a breach of the Data Protection Act 2018.

For the industry or the consumer?

Chris Sier was breaking ranks in stating what is blindingly obvious to the wise men, that you do the right thing by consumers – or face the consequences.

With the wrath of exclusion, our #1 pension journalist railed against the conference from her desk in Southwark.

Jo’s misgivings were well-founded. The vast majority of the people in the room had vested interest in the provision of a commercial dashboard and it was clear why.


Why the shrill cries for compulsion?

Whenever the pension industry calls for compulsion, it’s compulsion on their terms. The ABI’s view of compulsory participation in the dashboard is that it will accelerate cash flow into insured savings products and away from what we properly call “pensions”.

Talking to the three wise men after the event , it appears that most people who consult overseas dashboards are at the end of their saving journeys. They are people who are looking to spend their retirement rights, whether State, occupational or what they call third pillar and what we call personal.

Not only is the pensions industry wrong in thinking that dashboards will increase pension saving, they are ignoring obvious, dashboards can control spending.

Dashboards can also provide diagnostics on the state of the car’s engine and tell drivers about fuel economy, past performance and whether the current car is fit for future use. None of which was much discussed yesterday.


Who owns the dashboard?

In an astonishing outburst, one delegate criticised those in the room coming to the dashboard debate for the first time for asking such questions as “what’s the dashboard for?”.

Clearly the group of 17 providers who’d answered this question as part of the dashboard pilot project thought they’d nailed it

Pensions Dashboards will enable people to view a snapshot of their pensions, online, via the portal of their choice.

Some industry experts have suggested that pension dashboards may deliver:

  • Better understanding of their likely finances in retirement, based on their current situation
  • Clearer grasp of the need for financial advice
  • Motivation to increase their pension contributions
  • And more inclination to take a proactive role in managing their retirement.

For the industry as a whole, a better informed customer should lead to:

  • reduced administration

  • increased competition on a level playing field

  • greater clarity surrounding the provision and nature of long-term savings products.

This is – I suspect a “business justification” for providers. It is not exactly a consumer charter!

And of course the agenda is very much about reinforcing the insurer’s traditional lines of distribution (this is from the consumer facing side of the dashboard prototype website)

Pensions dashboards will show you what you’ve saved so far. They’ll also show you an estimate of what that may be worth in the future.

For more information you will need to speak to the pension providers direct, to one of the free advice services, or to a financial adviser.

A financial adviser can help you plan ahead and explain what happens if you take some of your pensions as cash or income.

In my view, the prototype was designed by the industry for the industry  as a means of further fee extraction. The DWP are right to question whether compelling us to support such a project is in the public interest.

The dashboard cannot serve the 10% of people who take financial advice, it must serve the 90% of us – who don’t. Right now – the pension dashboard is owned by people who are interested in profit maximisation of their organisations and their supply chain.

This has to change.


Will Governance make a difference?

Gregg McClymont – who spoke yesterday – has a quite different view from Chris Sier’s “Just do it”. I suspect he thinks Dr Sier quite mad. I suspect that so do the ABI/IA/PLSA and all who sail with them.

You can read Gregg’s views in Financial Adviser, he would hand the Governance of the dashboard to the yet to be created Single Guidance Body (or whatever they re-brand themselves). This is likely planning to build a skyscraper on a swamp. It may never get off the ground and if it does, it will sink beneath its own weight.

The governance model for open-banking (something we heard a lot about yesterday) was light on governance and depended on “test and see”. The agility that Fintech brings is just that, a way of testing what works with ordinary people – rather than assigning a purpose to the dashboard (see above) and building to satisfy the purpose (aka provider business justification).

Establishing the McClymont Governance model would almost certainly play into the hands of the pensions industry and exclude the consumer – as Jo Cumbo saw the consumer excluded yesterday.

Governance – in the sense Gregg wants it – will sink the dashboard without trace.


Is there a governance model that works?

I’m sure there is and I’m sure it will emerge from “test and see”. To presuppose what that is, as almost everyone in the room – wanted to – would be a big mistake.

People will voice their fears about the handling of their data and a governance model should be built around the research of Experian who tell us that 72% of the public do not trust their financial data to be shared.

Experian sponsored the conference and constantly shed light on the consumer’s viewpoint. Like Chris Sier, they saw the answer in testing what worked for ordinary people. Sier’s vision, to test the dashboard hypothesis in the controlled environment of an FCA style sandbox, is the only credible governance model I saw yesterday.

If we are serious about building a dashboard for consumers we should not “just do it” we should “do that”!

Gregg

Gregg McClymont

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to Pensions dashboard – for the consumer or the industry?

  1. Adrian Boulding says:

    Well said Henry. The Dashboard project, while it was still Treasury sponsored, did look at whether Data Protection Act provides enough compulsion, or could be extended under regulations to to identify enough compulsion, but the legal advice was no and that fresh primary legislation is needed

    Adrian

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  2. The Dashboard is in danger of becoming a stand-alone solution; even if no-one agrees what the problem is. It’s not; it must be recognised as one piece in a jigsaw.

    “…. they are ignoring obvious, dashboards can control spending.”

    I hope not. Deciding what, and how, to spend on just one piece of a jigsaw is another path to failure. I agree that the ‘what have I got’ information will be more important to most people than ‘what am I possibly going to have’ but the ‘what have i got’ (and the ‘what am I possibly going to have’) is a lot more than just the pension.

    You’re absolutely right Henry, when you say that the value of a dashboard is greatest for the 90% who won’t get, and can’t afford, financial advice – but – they’re also the people for whom their pension savings may not be the most important part of their financial position. The 10% probably have much bigger pots and housing wealth so their own provision is the bit that really matters to them. Many of the 90% have small pots and pay rent and so state pensions and support are much more important to them.

    For them a ‘wage for life’ is unachievable (at least at a living wage level), what they are interested in is ‘an income for life’, or n many cases ‘money for life. By that I mean the whole picture which includes pension savings but also state pension entitlement, state benefits, other savings, tax liability and all the other things which make up their bottom line.

    A dashboard fits into that but not on its own, especially not as a tool used on its own to make decisions. Its value lies in providing the data that can be added to other information to make a broader, properly informed, basis for planning and decisions. Putting on my Cassandra hat again, I repet that for many people taking a regular pension income may be their worst option and, if that’s what a dashboard is designed to do, then it may be ill serving the people its meant to help.

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  3. henry tapper says:

    Gareth, I agree with your statement “for many people taking a regular pension income may be their worst option and, if that’s what a dashboard is designed to do, then it may be ill serving the people its meant to help” . For the richest and poorest in society, flexi-cash may be a better solution. There is an opt-out from any default and there are de minimis rules that allow those with very small pots (or pensions) to commute or cash-out without penalty.

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