The Pensions Dashboard took an early step towards availability today with the publication of its data standard. This is more an expression of what the dashboard won’t do than what it will. What it will do day one is “find and view” and day one is dependent on enough pension databases being in the dashboard ecosystem to satisfy Government that people are getting a complete view of their pension entitlements.
The video the Pension Dashboard Program has produced to show us how this will work manages our expectations well
About time too!
Accompanying the video there is an important document laying out what pension scheme administrators must do to become dashboard ready. This document can be accessed here
Although the PLSA and others are calling this a “wake up call” for scheme administrators, there is nothing within the data templates that should come as a surprise. What is surprising is that we had to wait over 20 months (since April 2019) for the delivery of this data standard.
A common way to find pension entitlements
The pension finding service that the dashboard will adopt is very simple. Stage one will simply identify that there is a pension right for the individual and once this has been validated , stage two will determine what that right is.
A common format to view pension entitlements
There are things to like about the approach that is being taken. Most importantly, the dashboard will show all pension entitlements as income entitlements using “estimated retirement income” (ERI).
This is quite different to the way that pension pots are promoted on investment platforms where pension entitlements are now thought of in capital terms. While some of a pension pot can be taken as tax-free cash, the majority of a pot is designed to be taken as a lifetime income. As most people will have a mixture of “wage for life” income pensions and pension pots, capable of being exchanged for income, it makes sense to display people’s entitlement to pensions in terms of their estimated retirement income (or as we would say – their AgeWage).
Some small moans
Pension Bee’s Clare Reilly, commented:
“It is a shame to see that information on charges has been excluded from the initial data standards guide, however we will continue to campaign for information on costs and charges to be included in the mandated Simpler Annual Statement, and look forward to working closely with the Department for Work and Pensions in the development of the regulation for Simpler Annual Statements.
Consumers need to be able to easily and consistently identify what they have paid for their pensions and compare fees across all of their pots via the Simpler Annual Statement, the Dashboard and, soon, Open Finance. Data is the key to unlocking engagement with pensions – and charges are a vital part of that.”
Clare’s right but there if the price we pay for immediate co-operation is a stay on transparency, then this may be a necessary trade-off
But this is a redefining moment – pensions are back as pensions
What is also important is that the pensions dashboard is ring-fencing pensions from personal wealth and reporting on it in isolation. Financial planners have got used to using terms such as holistic to describe people’s retirement situation, tying pensions to income from rental property, business interests and from assets held on wealth platforms either directly or through funds.
The approach adopted by Chris Curry and his team excludes all this extraneous noise and focuses on income arising from pension saving – whether entitlements come through national insurance, membership of defined benefit workplace pensions or through pension savings accounts (workplace or otherwise).
In this ring-fencing, Curry and the Government are being bold – the temptation to load the dashboard with unnecessary modelers has been resisted, as has been the risky enterprise of making the dashboard a financial hub for investment and banking products.
Out of frustration may come fruition
The months since April 2019 when the setting of data standards was announced have been frustrating for me and many like me. I wanted to build a business around a dashboard , offering guidance to people who could for the first time see their retirement income in one place. I had been given a reasonable expectation that this facility would be opened in April 2019 but I will be pleasantly surprised if the “dashboard available point” is as soon as April 2003.
But at least – when it comes – it looks like coming in the right direction. The fruition of the dashboard may be late but it will be welcome whenever it comes.
The solid and robust plans in place for dashboard architecture should allay the fears of Jeannie Drake and others in the upper house who see dashboard as a digital menace. Guy Opperman’s determination to make it a success is obvious in his piece today in Money Marketing, the dashboard is too critical to Opperman’s second term of office to be allowed to fail.
Importantly, the dashboard is – alongside CDC – one of the few genuine advances we are seeing in pensions at present. Excited? I am.