I have not had time to follow the parliamentary debate on the Pensions Bill but I’m grateful for Jo Cumbo’s tweets and will pick up on them. Firstly, it is good that we have a House of Lords with people in it – Ros Altmann, David Willetts, Jeannie Drake and Brian McKenzie who care enough about complex issues like CDC and the Pension Dashboard to debate them.

The Pensions Dashboard

In the House of Lords yesterday, Jennie Drake said she was concerned the Pension Schemes Bill did not “lock in that a pensions dashboard is for the public good, and that the best interests of pension savers are not to be traded off against the interests of financial providers.”

— Josephine Cumbo (@JosephineCumbo) October 23, 2019

I am on the opposite side of the debate from Jennie here but understand where she – and friends of mine like Gregg McClymont – are coming from. Nationalising the pension dashboard as part of the Money and Pensions Service will be a noble public venture and like MAPS and the combined pension forecast, it will render the pensions dashboard a part of the pensions infrastructure. The Combined Pension Forecast was five years in the failing, MAPS looks like it could out-sprint the CPF , becoming obsolete before it has even published its strategy.

That Said both Jeannie and Brian Mckenzie recognise that there is little trust in the pensions industry not to screw up dashboards.

Baroness Drake added: “I am sure that this House will want to debate that issue with the Government at some length.”

— Josephine Cumbo (@JosephineCumbo) October 23, 2019

We have a thriving tech sector in this country. We are world leaders at Fintech and we could be a world leader at Pentech if Government would give the likes of Will Lovegrove, Romi Savova and Sam Seaton the chance. Guy Opperman has given Chris Curry every opportunity to deliver a Pentech dashboard and after four years of miserable failure in the hands of the DWP, it is time they were allowed to get on with it. Which is why I say to Jeannie – and Gregg –

“you’ve had your chance to deliver a dashboard and failed- move on.

That said, Jeannie’s challenge is the right challenge, we need the kind of independent oversite of the dashboard, we had for open pensions. That oversite should not come from a Governance committee packed with the pensions “home guard” but from outside. “Home guard” sounds harsh but the  PLSA conference showed me, there is little understanding of the big dashboard risks within the pension community. Those risks are to do with meeting customer expectations on the big things like finding pensions, not worrying about the minutiae like actuarial assumptions within projections. The rules for Open Banking were created by the CMA, the rules for the standards governing data transfer in the dashboard should equally come from an expert and independent source.

CDC and intergenerational fairness

David Willetts – like Jeannie Drake – hit on the key issue with the Royal Mail’s version of CDC.

On the Govt’s proposals for Collective DC schemes, Lord Willetts said:

“The danger is that the rights of existing pensioners are protected and the adjustment is all borne by younger workers. The regulatory regime set out in this legislation needs to tackle that problem.”

— Josephine Cumbo (@JosephineCumbo) October 23, 2019

Again we have a senior politician getting to the nub of the matter and again the answer to the question he is raising lies in the rules – governance – of the road.

You cannot legislate fairness, fair treatment of the various groups of people passing through CDC is a matter for trustees to devise and implement and I am quite sure that there will be groups of CDC pensioners and savers who will argue that they are losers.

The Royal Mail scheme is as ambitious as CDC will get. It aims to create a single scheme that allows postmen to build up a target level of pension and for that pension to be paid to them and their families for so long as they are on the planet to receive it.

If Royal Mail can get it right, other schemes may find it easier, especially if they restrict the scope of the scheme to the provision of scheme pensions from the purchase of a DC pot or pots at retirement.

As with the Pensions Dashboard, the pensions industry has jumped ahead of itself, worrying about this implication or that, when what is needed right now is a private sector initiative to get off the ground so that others can innovate around it. As with the dashboard, the amount spent on the initial project will be recovered later from adoption by commercial entities – I have no doubt that the multi-employer DC master trusts are already licking their lips.

We should not be worried that CDC falls into the wrong hands, any more than we are worried that the dashboard falls into the wrong hands. The progress of internet banking – the precursor to open-banking, suggests that what is needed for both the dashboard and CDC to work, is for us all to feel more comfortable about our pensions being fungible – interchangeable.

The idea of fungibility

What the dashboard should do for people is to allow them to interchange their pension pots for a wage in later life that suits them. So rather than them feeling they have money with various people, they feel they have control of their money and how it is spent. The pensions dashboard should put people back in control of their later life financial affairs allowing them to create a financial plan with full information on choices.

While the Pensions Dashboard organises our later life financial resources, CDC should become a way of interchanging investment pots into a wage for life.

Both the pensions dashboard and CDC share this transformative capacity, they change what was hard into what could be easy. This is the idea of financial fungibility. The idea is the interchange of a single resource – money – from one state to another – can be beneficial to  its owner without detriment to society.

Welcoming the dashboard, CDC and this debate.

In something so transformative as the dashboard and CDC, there are bound to be fears, fears of detriment to savers and detriment to one generation caused by over-payments to another.

The rules governing the dashboard and CDC need to be put in place by parliament and that is what is happening in the Pensions Bill.

Debate on that bill needs to be had , not just in the House of Commons and the House of Lords, but wherever there is interest.

Sadly there is too little real debate going on, which is why I am writing this blog. I have my position, I am pro the private sector being involved in dashboards and pro the commercialisation of CDC. But in both cases, I want this to happen in a controlled way and not in the way we have seen the pension freedoms implemented.

It is frustrating that it is taking so long to get legislation in place but we have to respect there are other priorities in Government and stand in the queue. However pensions are now at the front of that queue and we are ready to see buttons pushed so that we have a pensions act in 2020 with CDC and a pensions dashboard in it.

On target for CDC and a pensions dashboard