I designed, launched and sold the first – and still only – Norwegian pension dashboard some 15 yrs ago. “norskpensjon.no” is the pension dashboard service that the Norwegian pension providers, after we gained traction with it, insisted that they should own. It is (therefore) now still – some 10 years later – no more than our initial “minimum viable product”. We avoided “buy & kill”, but got “buy & surpress” …
These are the words of Norwegian pensions champion Asmund Paulsen.
I hope they will not prove prophetic for the UK pension dashboards but I fear that we are already seeing the degeneracy of the Norwegian model.
Today I will talk to a group of insurers about the pensions dashboard. It will not be an easy session as I don’t intend to pull any punches.
We are now 6 months on from the latest relaunch of the pensions dashboard and – other than a tame response to a tame consultation – nothing much has happened. This despite the protestations of the chief protagonists, the ABI, the DWP, MAPS and Origo that we would see a dashboard this year. The chances of that are fading as fast as Brexit and what we get is likely to be as unsatisfactory.
Nothing will happen without bravery
If I could characterise the one quality that the pensions dashboard project is missing – it is bravery.
Here I mean the bravery to speak out against the conventional wisdom of “buy and suppress”.
Those outside the tent, and I think back to previous iterations of the project, have been consulted and mollified, but they have been excluded. When they have questioned what is going on within the tent they have been pushed away.
The pensions dashboard is like a royal court , the courtiers bow and scrape to the Pensions Minister while carving up the kingdom between themselves.
There are only two strategies that the established pension providers are pursuing.
The first is to maintain the status quo and see as little disruption to their legacy books as possible. This enables them to maintain their embedded value, on which their share solvency depends.
The second is to increase new business flows through pensions “project fear”. Project fear in this context means telling people that without radically increasing the contributions they commit to pensions, they will be bereft in retirement. The purpose of pensions project fear is to increase the value of the pension providers to the market, principally (but not exclusively) to shareholders.
It is the solvency of insurers (and now master trusts) that is at stake and it is the boost to future profitability of these same institutions that excites them. The dashboard could be the key to making workplace pensions profitable – a whole lot sooner.
There is no one who is prepared to call this, the court is a powerful persuader to silence.
Hiding behind poor data
We are moving towards transparency in financial services, that is what open banking gives us.
But the pensions dashboard will not be adopting the principles of open banking , laid out by the CMA. Instead it will be run – like the Norwegian dashboard – by those who own the data as a closed shop. We will not be getting open pensions any time soon.
The reason, we are told, that we cannot have open pensions , where dashboards can use the technical architecture of APIs and authentication, each to their own, is practicality.
Those who wish for a centralised system of management argue that having multiple dashboards finding their own data , will increase costs, increase risk and open the doors to scammers. They also argue that it would expose those organisations who own dirty data , for what they are – poor record keepers,
Transparency being the best disinfectant, I would argue that the best way to clean up a problem is to shed light on it, not to keep it hid.
But this is not the view of the court, who argue that we should wait until the data is clean, before it is mandated that we can see it on a dashboard.
The minimum viable product
This phrase is much used by start-ups to mean the least they can build to prove their concept. We have already had a couple of rounds proving the concept of dashboards and they have taken us three years to complete.
It would seem that we are now to have another minimum viable product, produced within the Money and Pension Service which is called “the pensions dashboard”. The Government expects other dashboards to be built as satellites to their minimum viable product.
But nothing will compete with the minimum viable product which will be controlled by a steering group appointed by Government and a Governance Committee appointed by Government and anyone outside those groups will be outside the tent.
The Government Dashboard alongside the quangos that are growing up as part of the pensions court will so atrophy innovation that the pensions dashboard will join Pensions Wise and very like the Money and Pensions Service, as white elephants.
Meanwhile life goes on
I will be happy to be proved wrong. I would very much like a dashboard to restore confidence in pensions. But I see no sign of it being used to do the things people want to do
- Work out the value of their pension pots for the money they’ve saved
- Find a way to bring pots together to make them easy to spend
- Find ways to ensure their money lasts as long as they do
- Establish whether their money is being managed in a responsible way
The ABI and PLSA are so fearful of giving people the information they need that last year they blocked an initiative to show people what – in pounds, shilling and pence – they were paying for their pension pot. The monetary figure was excluded from the single pension statement produced by Ruston Smith and Quietroom and it remains excluded.
Insurers, when given the choice will not disclose to their disadvantage and – when unsure of the consequences – will refuse to take the risk
That is why there is a very real risk that the dashboard will remain on the drawing board for a good time yet and when launched – move little beyond the minimum viable product.
A braver way?
I believe there is a better way to run pensions, a way that allows people to see what they are buying into by looking at what they’ve bought. I don’t think finding pensions is that hard and that modern technology should allow people to ask questions of their various pension providers and get answers in real time.
This “better way” is already emerging in other areas of life- indeed in other areas of financial services.
Pensions would like to think of itself as a special case, but it isn’t. It is part of the retirement eco-system that includes houses, inheritances, business interests and other forms of savings. People are looking to take back control of their retirement finances and are getting lifestyle answers delivered to them through digital technology.
But they are not getting this with pensions.
The pension dashboard continues to be an embarrassment and until someone is brave enough not to be “silent in court” we will go on praising it as a great initiative while suppressing innovation.
Asmund Paulsen is likely to be proved prophetic, unless we face some uncomfortable truths and start behaving with a little more bravery.