The collective intake of breath that greeted the eventual publication of the Government’s feasibility study and consultation paper was palpable.
Now – a week on – perhaps we can stop congratulating each other and get on with delivering a service that people need and want.
There are two outstanding matters to be addressed
- There are £20bn DC assets lost and unclaimed today in Britain
- There are going to be 50m abandoned pension pots by 2050.
At a Governmental level , these matters spell trouble for a retirement savings system.
For pension providers it spells an increasingly expensive claims experience
For ordinary people it means frustration and delusionment with a savings system that seems keen to take their money and not to give it back.
Off to see the wizard!
This morning I am off to DWP HQ for a workshop on how the dashboards will be delivered. Except dashboards plural won’t be available in any meaningful way for 3-4 years after the pilot dashboard is up and running – and the pilot won’t be up and running till the back end of next year at earliest. I have heard these timescales described as challenging – given that the dashboard project kicked off in 2016 – I disagree.
If you could find your pensions, the dashboard could give people a chance to do something about abandoned pots, but finding them doesn’t look particularly easy.
Although there are plenty of numbers in the consultation document – nobody really knows how many pots are out there. We know that NEST has 7.1m, Now 1.8m and People’s 4m. The IGCs typically look after 1m pots and there are around 25 of them (including the GARs which should be IGCs. That leaves the unchartered waters – the 40,000 or so DC single employer DC schemes, the £400bn of non-workplace “legacy”DC and the SIPPS which are about the one part of the system that should be getting advice.
Finding pensions is going to be tough and it can only work if data is being mined in a productive way. It’s been nearly two years since Mark Falcon of Which wrote this excellent article on how to do open banking
What is clear today is that the challenges in terms of data sharing needed to find pensions are very similar to the challenges the banking industry was facing then,
The essential message of the paper was this
The most effective way to promote competition is to ensure independent ownership and control
This call (and many like it) led to the intervention of the Competition and Markets Authority and to the break up of cosy relationships between those in the payment business.
The Pensions Minister – in his paper – repeatedly references this work but confusingly suggests that we can learn the lessons from Faster Payments – only once we’ve made the mistakes that Open Banking avoided.
Of course Pension Ministers are wizards, they can change things – and change things for the better. I’m going to the DWP this morning to see a Pension Wizard and I’m going to point all this out.
Dashboards that can help
I’m also lining up a meeting with the new CEO of the Single Financial Guidance Body – John Govett.
He’s now got the tricky problem of having to deliver a service that people want , not the service that the financial services industry seems to think they need.
My experience with TPAS is that what most people want – when they seek guidance is assistance in finding pensions , guidance as to what to do with them and the equipment to get on and do the job.
Dashboards that can help will do all these things, but a dashboard that doesn’t help will become an albatross around the SFGB’s neck.
The consultation is sub-titled “working together with the consumer”. It is not entitled “how the pensions industry and Government can maintain the status quo for a few years more”.
I will prevail upon Mr Govett to look beyond the end of the ABI’s nose for solutions to his problems. The SFGB is a delivery mechanism, it should not be turned into a governance body. The SFGB should be looking at new solutions to old problems , not old solutions to problems that don’t exist.
To this final point, the industry consensus that dashboards are a way to increase the amount people save is totally wrong. The dashboards are a way to help ordinary people find and then spend the money they have saved. Like with TPAS, the vast majority of pension custom that the SFGB will get will be from people close enough to retirement for pensions to be real.
We do not want to be told to save more (opt-out rates for the over 50s are the highest of any cohort), we want assistance guidance and the equipment to spend our money.
So I will be telling Mr Opperman and Mr Govett the same thing. We want our dashboard and we want it now. We don’t want it delivered old skool, we want it delivered proper digital. We don’t want lectures on saving more, we want equipment to spend better.
The campaign for proper dashboards is just beginning.