“We are all individuals” is one of those phrases when spoken by everyone at once that is innately funny! Though we are many , we are one body.
I was reminded of the paradox by one of my nurses who wanted to discuss the wording of the sacrament (she is a Catholic and I am a Methodist). I guess she has a much more collective approach to the communion of saints than I do- though we are one body.
I was asking for an individual response to the bread and wine, she smiled at me and said “I am dogmatic, there can only be one view”.
Reading the pension dashboard call for input, I realized that this clash between individual choice and the need for a common data standard is a similar, if not rather less passionate dialectic.
The language that will be used by the pensions dashboard is strange, and a little forced. Instead of opting for “saver”, the dashboard will talk of its consumers as individuals
Many different terms are used across different parts of the pensions industry to describe a person who is entitled to benefits (i.e. money) from particular pension arrangements.
For example, an individual logging on to a pension dashboard might simultaneously be a deferred member´ of a Defined Benefit (DB) pension scheme, a “non-contributing member´ of a Master Trust (MT), an “active member´ of a public service scheme, and a “policyholder´ (“in force´ or otherwise) of a personal pension plan. We need an umbrella term to describe a person who has one or more pension entitlements and we have settled on Individual as it sits well with different types of pension (i.e. better than do Member, Policyholder, Customer, Consumer or Citizen, which are all, to some extent, sector-specific).
But it is not quite as easy as that. There is difficulty in the phrase “pension entitlement”
Research shows that individuals struggle to distinguish between the different types of benefits that different pension arrangements provide (for example, Defined Benefit (DB) per annum incomes, Defined Contribution (DC) pots, and so on. We’ve therefore decided to use the generic term Pension Entitlement to describe the different types of monetary benefit an individual can derive from a pension arrangement (which could be a future retirement income, future draw downs, cash lump sums, and so on).
Here the word “pension” is stretched too far. People may have difficulty differentiating a pension pot of £25,000 with a pension of £25,000 but they by conflating the two into “entitlement”, the dashboard’s language could be reinforcing the confusion.
The difficulty with the terminology is in words like “difficult” and terminology”. Not one of the nine phrases in the dashboard glossary avoids a polysyllable of at least three! There aren’t any simple words like “pot” and “saver”. In going for a universal language, the dashboard has settled on a language for experts. The worry is that the pension dashboard will be phrased for the lawyer not the layman.
As with “individual”, “inclusive” is a polysyllabic and it is not a word that practices what it preaches. “Inclusion” is a concept that is exclusive to people with a certain way of thinking, a taught way of thinking.
The Pension Dashboard Programme’s call for input refers us to the two papers produced by the Pensions Dashboards Programme “Data definitions – working paper – April 2020” and “Data scope- working paper – April 2020“. Apart from the similarity in title, the papers share the same content and in particular the finding that people are unlikely to be satisfied with a dashboard that shows anything less than all their pension entitlements. This is one mantra of the consultation.
But it competes with the DWP’s targets for quick delivery of what we could call a minimum viable product. To keep enough flexibility in the system to move forward, the Dashboards Programme has come up with the concept of the Dashboard Available Point which is the moment in time when dashboards become sufficiently inclusive to be viable with the public
The DAP is somewhere in the grey box above and is going to be the source of constant argument between the dogmatists who believe it can be imposed from above and individuals who will argue that they can be the judge of when they have enough on their dashboard to start using it in a meaningful way.
The paradox of inclusivity
The dogmatic approach to inclusion is based on a fear of people acting on incomplete information. If for instance an IFA is audited by the FCA, they will be held to account for the completion of a factfind. If an IFA cannot prove he or her knows all relevant information about the customer, advice may be deemed invalid. The fear of regulatory sanction or civil litigation drives thoroughness and this is one of the reasons that financial advice is outside the affordability of most individuals.
If someone is told that their dashboard will be 90% complete in 9 minutes and 100% complete in 10 weeks, which does he/she consider the dashboard available point?
In a highly regulated world the answer will tend to 10 weeks, where there is pension freedom, then 9 minutes might be the dashboard available point.
There is currently a debate in parliament over whether commercial dashboards should be allowed to integrate with the non commercial dashboard data and the conclusion is that there should be a 52 week lag meaning that if the MAPS dashboard available point is say 2024 then the commercial dashboards would be integrating in 2025.
These are long lockdown times and in the meantime, it is likely that a range of fintechs will be offering the services of the MAPS dashboard – privately
These goals cannot be exclusive to the MAPS dashboard, they are common goals of all who aspire to help others with their pension affairs, including TPAS, company pension managers, call centers and digital pension applications.
Nor can there be exclusivity on the phrase “pension dashboard” as this is something that advisers and the non-advised will create for themselves in advance of the DAP.
It will be over 20 years since the idea of a pension dashboard (then a combined pension forecast), was first promised by Government. Getting to a point where experts stop arguing about definitions and scope is something devoutly to be hoped for.
Having read both working papers thoroughly and often, I can see no reason why we cannot move forward quickly.
Unless , that is, we strive for an nonviable inclusivity which excludes millions needing a dashboard over the next five years, from the information they need.
We need a dashboard for the layman, to date we have had a debate dominated by lawyers.
Responding to the call for input
It’s important that the dashboard is not left to the lawyers, it is a dashboard for the people and we should have our chance to input. We will be responding with more detailed thoughts on scope and definitions. If you want to – here is the link