The one thing missing from the dashboard debate so far has been a robust case for a commercial dashboard. At the Pension PlayPen lunch on Monday , I want to have an open and honest debate about how people in financial services expect to make money out of pension dashboards.
On the face of it, the Pension Dashboard is a philanthropic project delivered by the DWP to a grateful nation using an NGO – the single financial guidance body. Those who expect to do the plumbing are led by Origo – a not for profit organisation. The ABI who have been the principal advocate of a dashboard are similarly a not for profit trade body.
So why is there so much angst about it? The first dashboard will be non-commercial and I have yet to hear from those who want to make money out of dashboards how the commercials will work. This is what the lunch will discuss.
Some starters for ten
The most commonly expressed view is that once people see their pensions on one dashboard they will be inspired to save more to make up for the inevitable shortfall between what they’ve saved and what they ought to have saved.
For those running pension saving policies this sounds like a compelling argument but is there evidence that that’s what people do?
People go to estate agents to find out how much their property is worth more often than to trade up.
I suspect that the public excitement about a pension dashboard is not about finding out their pension shortfall but to value their pension savings to date.
Much as people have called for a holistic view of retirement income from all sources (including state pension), the public’s interest is in the £20bn the PPI claim is lost money and the alarming statistic released by the DWP by 2050 – that unless we buck up our pension finding capability, there will be 50m abandoned pots by 2050.
As with estate agents, I suspect people will be more interested in a valuation of their savings than in a trade up to a holistic financial plan.
The main course
The dashboard presents an opportunity for the big fish to eat the little fish. For people will multiple pots, the logical next step – once the dashboard has found and delivered – is for consolidation.
Just how people will work out who to consolidate to is not clear. But it’s not hard to see that in a commercial environment, calls to consolidate to the pension scheme behind the pension dashboard will follow.
Origo’s slide on how it expects the post SFGB dashboard to look – is quite explicit.
The proof of this pudding is the bill…
The pension dashboard is ostensibly a holistic financial planning tool delivered by a not for profits technology player through an NGO. This is the non-commercial dashboard discussed in the Government’s Feasibility Study and consultation.
But once we’ve had our starters and the main course we get the pudding and the bill.
I don’t think we should be shy about the bill – it’s going to have to be paid and the pension dashboard bill – like the lunch we’re going to have – will see the bill shared between participants.
Now let’s get this straight, you’re not going to pay for a pensions dashboard unless you get something out of it. If the participants are those featured at the top of Origo’s diagram above, then expect those running dashboards to expect not just to be paying for them – but to be profiting from them.
So who will be paying for the SFGB dashboard? Why the public of course. The £5m granted the DWP in the budget to get going with the dashboard will not last long.
Whether there is a general levy on all savers or an even more general levy on tax-payers has yet to be decided. What is clear is that an investment in dashboard infrastructure by the providers needs to be recouped and that won’t be in a non-commercial way.
So come to lunch!
I’ve been running Pension PlayPen lunches for over ten years – always from the Counting House. The format is the same, we eat pies, fish and chips and falafels, we share the bill which usually comes in at £15 a head.
We start at 12.30 but people drift in from 12, we finish at 1.30 but people hang around till 2.
The Counting House pub is 200 yards East of Bank at 50 Cornhill – details here.
We have the Partners room which is at the back and on the balcony.
I’d love to have your company and hope that our discussion will get to the heart of the matter. Knowing how the commercials of the dashboard will work is important to anyone in financial services, but even more if you’re not!