After writing about the minutia of the pension dashboard consultation yesterday, I got some interesting feedback on social media from people who are a generation too old to have a proliferation of pensions. Most of the feedback was in the form of questions, which I have woven into this blog,
Older people;s perspectives are helpful. I have collected them into four essential issues that people seem to have.
Q1. Why is the Government running the dashboard?
Yesterday, I got Pension Bee’s perspective on what is happening in their world, where consolidation is a key issue
PensionBee, reveals that customers over the age of 40 have, on average, £37,100 saved for retirement. These savings have been accumulated by consolidating, on average, two pension pots with the provider, in addition to making extra contributions. In contrast, PensionBee’s younger customers (under the age of 40), have, on average, £11,200 saved for retirement, yet have also consolidated two pension pots.
This consolidation is happening without a dashboard and without the nudge of Pension Wise or any Governmental intervention. Is consolidation a problem that the market (not a public dashboard) will resolve organically? Do we need Government intervention?
Q2. Will the dashboard lead to more prosperous retirements?
What is the estimated pension income in 2040;- (1) with (2) without dashboard? Put another way “will pensioner income increase because of dashboards?”
What is the total of pension pot assets for people (1) who are collecting their pensions? (2) who are not? “Does a dashboard help pensioners with managing drawdown?”
Where is the analysis of the number of pots people will have in 2040, following all the consolidation that the dashboard creates? Will the dashboard simplify people’s management of their retirement income?
Q3. Do we actually need a pension finding service?
When DB schemes have mostly consolidated to insurers and superfunds – or are huge, how much of a lost assets problem will they have?
And who is missing out on lost D.C. pots and why can’t schemes find their members?
Are public sector unfunded schemes a problem that the dashboard can help with?
How many don’t get their state pension and why . Do dashboards help?
Do dashboards help people find pension credits?
Q4. Will the dashboard include the excluded or be ignored? .
It is hard to be a naysayer. The dashboard, like auto-enrolment , seems to be the rights move from a behavioural point of view.
But there concern is whether a dashboard will actually work for the people who are outside the current reach of advice and guidance.
I do get that providing people with a single summary is nice to have and feedback from the continent, where dashboards have been around for some time, suggests people use dashboards/
But the less ambitious dashboards on the continent , primarily validate the retirement systems in those countries. These systems provide much higher degrees of social security in later age than in the UK. It is not hard to like what you see, when it is a good news story.
Will UK dashboards act as a wake up call or will they be ignored as the offer of Pension Wise is being ignored – by those who are primarily dependent on state benefits?
And is a dashboard much help to such people, if it doesn’t lead them to a default course of action, if it doesn’t deliver the two things they have been told to expect- a tax-free cash sum and extra pension?
A sledgehammer to a nut?
The cost of building a dashboard infrastructure is relatively small. This is not an HS2.
But the cost to schemes and insurers of compliance looks like being high. And compliance will divert resource away from other projects, such as the promotion of badly needed in retirement solutions for DC pots.
There is evidence that much of what is needed to happen with regards to consolidation, is happening outside the dashboard. While pension finding is an issue, a generation of younger savers are using firms like Pension Bee to manage the consolidation of their pots without a dashboard.
As time goes by, the innovation of the dashboard looks increasingly obsolete, the longer the delays, the more likely the dashboard is to arrive with its own obsolescence built in.
Meanwhile, a handful of master trusts increasingly own the small pots arising out of auto-enrolment while a handful of insurers and superfunds will manage older people’s defined benefit pensions. The State Pension , billed a “welcome bonus” to the dashboard – is already available online – offering current values and a view of the future,
I notice that Professional Pensions’ Buzz questionnaire is asking readers whether their enthusiasm for the Pension Dashboard is fading. I wouldn’t be surprised if many in and outside the pensions industry are getting dashboard fatigue.
This needs to be factored into the delivery strategy of the dashboard. The danger of delivering a dashboard availability point after 2023 is that by then , the world has moved on.
By then, the sledgehammer that we envisaged in 2015 may not even crack the knotty problems we face in the second half of this decade.