At a recent PPI seminar, Laurie Edmans reminded us that he had been responsible for helping Government nearly deliver combined pension forecasts in 2004 – nearly 15 years ago.
I wrote to Laurie thanking him for chairing an excellent event and he wrote back – responding to my comments on dashboards – much of which are included below.
Good luck with the minister etc – as long as something gets going – and ASAP!
Here’s the immediate AgeWage response – which like the response to the CDC consultation will evolve. Please feel free to mail me at email@example.com with your thoughts. I’m not right, but I’ll be a lot righter for your input!
List of questions for consultation
Wider benefits of a dashboard
I. What are the potential costs and benefits of dashboards for:
a) individuals or members?
The PPI tell us that £20bn is missing – lost to consumers because they cannot find their pensions, if this money can be reunited with consumers through a properly operated pension finding system, the dashboard will have succeeded.
The proposals for a single pension finding service are too vague to be costed. To find pensions, there needs to be a way to interrogate the many databases of insurers , SIPP providers and the in and out of house administrators of occupational schemes. A manual search will be very costly, a digital search means having limited access through an API (application programming interface). The cost of APIs can be reduced by the Government standardising the API.
b) your business (or different elements within it)?
AgeWage sets out to assist, guide and equip people for their financial later life. To assist people we need them to find their pensions. Most people can find their pensions themselves but those who have trouble often give up and disengage.
To do the guidance and to equip people for the future we need people to engage. If the pensions dashboards help people to engage then they will help our business. But if people have to wait too long just to find their pensions, they may lose interest. This could be bad for business.
Architecture, data and security
II. Do you agree with:
a) our key findings on our proposed architectural elements; and
b) our proposed architectural design principles? If not, please explain why.
The proposals mistake the way technology has progressed. We no longer live in a world of centralised databases that store data on everyone. Data is spread around. There are ways to find data- they include data scraping, a technique in which a computer program extracts data from human readable output coming from another program. Data is highly problematic, it should not be relied. Instead we need to access data via APIs to databases.
The Government has a role to play here; it needs to set up a system of verification. This is hinted at in the paper but not explained.
The Government needs to create a common API protocol to make it easy for organisations with databases to allow pension finders with verification credentials to find people’s data and get it to dashboards.
Providing a complete picture
III. Is a legislative framework that compels pension providers to participate the best way to deliver dashboards within a reasonable timeframe?
Knowing that compulsion is coming may have some advantage to some organisations. But knowing that it won’t be coming for at least five years (the timetable that the paper sets out), will not be getting those with the data particularly agitated.
We live in a world where failure to meet consumers reasonable expectations is met with immediate reputational damage. Social and conventional media picks up on it and organisations suffer commercial damage. This is more of a risk than the threat of Government intervention in a few years time.
Actually compulsion is less important than the societal need to treat customers fairly. No new legislation is needed to enforce this societal need, it is policed and enforced by consumer organisations and by the tough justice of the media.
IV. Do you agree that all Small Self-Administered Schemes (SSAS) and Executive Pension Plans (EPP) should be exempt from compulsion, although they should be allowed to participate on a voluntary basis?
V. Are there other categories of pension scheme that should be made exempt, and if so, why?
We would partially exempt Defined Benefit schemes from having to display their wares on a dashboard. We know from transfer requests that there is no end to the granularity of detail that can be requested. I would suggest that all that needs to be requested of a DB scheme is the prospective pension at scheme retirement age.
VI. Our expectation is that schemes such as Master Trusts will be able to supply data from 2019/20. Is this achievable? Are other scheme types in a position to supply data in this timeframe?
Most master trusts should be able to supply data pretty well immediately. Some have built API layers into which external organisations can plug. Master trusts should be able to advertise themselves “dashboard ready” – assuming they have built and tested the API for pension finders to use
VII. Do you agree that 3-4 years from the introduction of the first public facing dashboards is a reasonable timeframe for the majority of eligible schemes to be supplying their data to dashboards?
The data architecture is wrongly considered. Schemes do not need to deliver data as you would send a letter or email, they need to make their data for those with verification to get the data. This is what we mean by open pensions.
Should it take 3-4 years (from the point where the non-commercial dashboard is ready) for provider databases to be open for inspection –
No. Though some data is in bad state (and needs to be cleansed), it is better to get on with things now and make it possible for those who have got their act together and are dashboard ready to go first.
Keeping a simple dashboard of those ready and those not would be a useful function of Government. Testing that organisations are dashboard ready would be another useful function. We would like to see a dash for the dashboard – rather than this distant time horizon.
VIII. Are there certain types of information that should not be allowed to feature on dashboards in order to safeguard consumers? If so, why? Are there any other similar risks surrounding information or functionality that should be taken account of by government?
The Data Protection Act 2018 allows anyone the right to access their data in a machine readable format. There may be exceptions to this (where the data is a matter of national security for instance) but data relating to your pension – including the timing and incidence of contributions , fund value, prospective pension at SRA and so on – fall within the scope of DPA 18. There is nothing that should stand in the way of someone’s data access request.
IX. Do you agree with a phased approach to building the dashboard service including, for example, that the project starts with a non-commercial dashboard and the service (information, functionality and multiple dashboards) is expanded over time?
No. There is no sense in this. There is no such thing as a non-commercial dashboard. The Single Financial Guidance Body (SFGB) will be run as a business, as were TPAS and MAS. To suppose that SFGB will not consider its goals as targeted on delivery, is to suppose that SFGB will be run on a non-commercial basis.
SFGB is not for profit but so are many financial services companies (Royal London and LV, People’s Pension and NEST for instance. The building of the technology to make dashboards work should be – as the title of the consultation suggests – a matter of “working together for the consumer”.
X. Do you agree that there should be only one Pension Finder Service? If not, how would you describe an alternative approach, what would be the benefits and risks of this model and how would any risks be mitigated?
No. There should be only one protocol for finding pensions, one verification regime, one API. But any accredited pension finder should be able to get the data. Accrediting a pension finder service is not going to be hard. The process has been done with “Faster Payments” and can be done with “Pension Finders”
Protecting the consumer
XI. Our assumption is that information and functionality will be covered by existing regulation. Do you agree and if not, what are the additional activities that are not covered?
The dashboard is doing nothing new, will show nothing new and needs no new regulation. All that should be new is the speed at which data is delivered, this needs the creation of data standards,
As mentioned above, the accreditation and oversight of pension finders will need to be formalised and we recommend that an independent organisation – the Competition and Markets Authority be commissioned to do for pension what it did for banking. Essentially we see pension dashboards as an extension of open banking regulation.
Accessing dashboard services
XII. Do people with protected characteristics, or any customers in vulnerable circumstances, have particular needs for accessing and using dashboard services that should be catered for?
It is inevitable that some people will struggle to use pension dashboards. Not everyone is or wants to be computer literate let alone phone literate. Simple matters like using a computer keyboard are beyond some people. Some people still have trouble accessing the internet.
All of these issues should not prevent us getting on with it.
XIII. The department has proposed a governance structure which it believes will facilitate industry to develop and deliver a dashboard. Do you agree with this approach? If not, what, if anything, is missing or what workable alternative would you propose which meets the principles set out in this report?
Applying 20th century governance to 21st century problems is not a good idea. I see no reason why the governance structure proposed in this document will be fit for the present let alone the future. We can look at open banking for answers. Build the service and build the governance service to meet the problems that arise. Do not build the governance in anticipation of problems that may never happen.
A greater agility is needed in the conception of dashboard governance.
Costs and funding
XIV. What is the fairest way of ensuring that those organisations who stand to gain most from dashboard services pay and what is the best mechanism for achieving this?
The consumer pays, that is the rule of business. The key to the dashboards success is for the consumer to pay as little as possible. That means keeping levies down by managing the finding of pensions and their digital display as effeciently as possible.
The idea that you build an infrastructure over years before launching is out dated. You test and build as you go along and discover your costs as you progress. You find out your users and apportion costs accordingly. You don’t determine cost apportionment till you know your costs and your users.
XV. Do you have any other comments on the proposed delivery model and consumer offer?