It’s only been a few weeks since the Government announced its plans for a pensions dashboard but it might have been an age. In the fast moving world of Brexit, all is ephemeral and unless you’ve got a way to keep your idea in the public eye, it falls to the bottom of the “most read” list and into oblivion.
It is good that Andy Davis of Prospect has written about the dashboard and revived some interest between Government PR events.
This is what he told his readers this month
What have I got and where is it? These are arguably the eight most important words in the pension universe. The questions look simple: finding answers is anything but.
People move jobs. They build up bits of occupational pension with different employers, some public-sector, some private. They may have personal pensions too. Then there’s the state pension. And now that millions more people are saving into workplace pensions through auto-enrolment, the problem is growing. Working out what you have and where is a pain for the few who even try.
Pensions are hardly glamorous at the best of times. But if it’s all but impossible to see what’s going on with yours, that makes it even harder to overcome the central challenge they present—persuading people to engage with a question that is so easy to put off to another day.
Some years ago, so-called “pot follows member” pensions were discussed: the idea was that we would take our savings with us when we moved jobs, keeping our affairs simple by having only one occupational pension pot. But this would have been complex to implement and was dropped by Pensions Minister Guy Opperman last April on the grounds that “now is not the right time.”
The plan now—as reiterated by the minister here—is to create an online “pensions dashboard.” This will use technology to assemble data automatically from the schemes we belong to and give us an overview of all our savings, along with a forecast of what they will be worth when we retire. It’s a great idea—and an example of how technology could make financial services more comprehensible for millions of people. Similar initiatives have already launched successfully in several other countries, as new research from the People’s Pension scheme demonstrates.
But make no mistake: creating a UK version will be expensive and will take years. We have an extraordinarily complex pensions system with tens of thousands of private and public sector workplace schemes, plus millions of personal pensions. Most occupational schemes have multiple, ancient IT systems that will struggle to provide the data feeds that the dashboard will demand. Cleaning up all this data and making it usable is a Herculean task.
The first dashboard is supposed to launch this year, which looks hopelessly optimistic. And who will fund it? The beneficiaries will be the scheme members and they will ultimately foot the bill through the charges they pay to their scheme administrators. The dashboard clearly needs to happen but given the complexity of the task, the risks of cost and time overruns are huge. This could get messy.
It’s a gloomy picture that takes as read the Government’s inability to get a good idea over the line in a timely fashion.
There is of course another way, which is to allow those who want to build their dashboard, to get on with it and create the pension finder service for themselves.
This would not need a lengthy procurement exercise , nor would it need a committee of the great and the good meeting in the newly renamed Pension and Money Service (or is it the other way round).
What would it need?
Andy’s article is clear – it needs funding. Funding happens when there is a clear return on investment or when the pips are squeaking – as they did before the launch of auto-enrolment when the Government last lost its nerve and created NEST.
The Government’s refusal to give up the dashboard to the private sector (despite saying it was going to again and again) tells me that what the dashboard needs – private money and private entrepreneurs – it just won’t get.
So the people who brilliantly conceived and delivered open banking won’t bother with the dashboard.
The people who could create a pentech dashboard from within pensions , will be frozen out.
And the Dashboard project will stay where it has been for the past three years, in the hands of a small group of policy wonks from the trade bodies, who have no entrepreneurial instinct whatsoever.
What build the canals and the railways and fired the internet – continues to drive innovation, It is the innate capacity of people to do things.
It’s called market forces and they are the only things that will get the dashboard to happen.
If you want proof of concept, look at how our crowdfunding is going. If you want to understand why change has to happen , watch this short video.