Resolving the conflicts of commercial dashboards – the Lindley report

dashboard ladders

Dominic Lindley, a good friend to this blog has published an important report on pensions dashboards. The key findings are reported in today’s FT.  You can read the original report  here.

Thanks too to Jo Cumbo for picking up on this. The report could easily have fallen on stony ground

So Dashboards must have legal standards to protect savers and they must tell the truth, the whole truth and not disclose selectively.

The concept of “putting savers  first” is not new, it is – as Lindley points out – what trust law requires. It is  enshrined in the concept of “treating customers fairly”.

But there is an equal and opposite pressure on commercial dashboards which will be owned by the providers of the services that we want to consume.

The reluctance of the pensions industry to allow us to spend our savings – “consume our pensions” is evident in the word that it uses when we ask for our money back. In insurance parlance, a withdrawal from a pension pot is a “claim”.

Claims are expensive to administer and diminish the revenue stream from the pot, as  pot revenue relies on funds under management.


Will dashboards be encouraging saving or spending?

The latest HMRC figures on drawdown show a steady increase in the amount we are claiming back from our pensions. But the numbers are still small. £7bn in one quarter may sound big – but it’s less than the average quarterly  transfer from  DB into DB funds. Relative to the £1tr + funds in DC pensions , it is a drop in the ocean.

In his punchy way, Stephen Lowe of “Just”  complains in Pensions Expert that the levels of withdrawals are much higher than the figures show

The HM Revenue & Customs statistics do not tell the whole story, warned Stephen Lowe, group communications director at Just Group: “Billions of pounds of tax-free cash payments are not included in these figures, nor are many other pension withdrawals, such as small pot withdrawals or purchases of guaranteed income for life solutions. Nor do the figures tell us how many individuals have withdrawn money, how much they have withdrawn or how often.”

He concluded: “There is nothing in these figures that ought to make us believe everyone making pension withdrawals properly understands the tax implications of their actions, the restrictions they are now subject to, or the longer-term consequences of withdrawing money.”

The comments are representative of a pension industry that does not see our withdrawing money from pension contracts as either in or their interests.

I suspect it is unlikely that pension dashboards will encourage people to spend their money and that they will focus on our saving more.

I hope that they will however give ordinary people a clear means to organise their spending in retirement in a way that best meets their needs. I hope that people will consolidate into funds with low charges, investment strategies designed to meet their needs and with fast payments of claims as standard. I hope that people will be given the tools to ensure that they do not overspend on tax and underspend on themselves. I hope these tools will include help with the vexed problems of living too long.


Conflicts that can be resolved

Despite my shared concerns with Dominic Lindley, about the potential conflicts of commercial dashboards, I consider the commercialisation of the Single Financial Guidance Body (SFGB) model essential.

Pensions are too difficult for us, we need more than the guidance that a Government body can offer – we need to be given a clear course of action by commercial organisations competing for our money.

The Lindley report looks like a good start in getting commercial dashboards into the pension landscape.

Government needs to tread a fine line between over-zealous prescription which will stunt the development of competitive dashboards and the free-for-all that has prevailed in Australia, to the detriment of savers.

I believe these conflicts can and will be resolved and its good that the debate on how to do that – has already begun.

 

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Resolving the conflicts of commercial dashboards – the Lindley report

  1. Bob Ward says:

    Yes all good and in the right direction. However, I do not see the central Dashboard ‘HUB’ as I prefer, having any axe to grind and there shouldn’t be any lean toward either further accrual or to spending.
    The HUB should be impartial, factual and succinct in its provision of personal pension members’ plans and funds and the choices available.
    The only commercial aspect of the HUB is the joint venture of Providers & Gov contributing to the set-up and for commercial users (i.e. there must be no charge for an individual searching for their pension plans) who apply to link to the HUB (with the appropriate accreditation and registrations) with their own versions of dashboards as separate commercial concerns.

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