If I was in the habit of singing about pensions , I might adapt the Arctic Monkeys’ speculation to our expectations of a pension dashboard. Whatever started out as a noble love story has degenerated into sordid flirtation between the various stakeholders expecting to profit from delivery…
Oh, there ain’t no love, no Montagues or Capulets
Just banging tunes and DJ sets and
Dirty dance floors and dreams of naughtiness
So what has gone so wrong that we are now celebrating the closure of another consultation on what might go on a dashboard five years late with £20bn in lost pensions cash still lying on the dance floor?
What’s gone wrong?
At some point , the dashboard turned from something people wanted and needed (an app to find lost pension pots, combine them and spend them), to a “holistic view of retirement finances” or some such mumbo-jumbo.
To which end we now feel we need to display pots as pensions and DB pensions and State Pensions and we need to include adjustments for McCloud and worry about GMP equalisation –
The generation needing the dashboards were “dancing to electro-bop from 1984 – well 1984”, I was one of them. If you were too, what happened to the pension you started then, do you still have that stakeholder pension your company started for you just before you left? What about that contracted out personal pension you took out like everyone else when that man came round work in 1987? These are the pots that are missing, we never knew who we signed up to and we moved house shortly afterwards and haven’t got any paperwork. It was all such a faff…
If I was singing to lost pensions, I’d sing
I wish you’d stop ignoring me
Because you’re sending me to despair
I bet you’d look good on a dashboard, like a pension from 1984 (I said 1984).
What’s gone wrong is that we’re still no closer to finding that pension than we were ten or twenty years ago. Despite all the promises.
Without a sound, yeah, you’re calling me
And I don’t think it’s very fair
In search of spurious accuracy and a holistic view
Those who guard the data on our pension rights don’t want to share it with a dashboard. There are many excuses but they boil down to one thing, they don’t trust us with our data.
First up, they don’t trust us not to dispute the data, asking questions like we do when we start looking at bank statements. Lots of questions which take time to answer and – if there is no answer – money to get the answer right.
Second up, they don’t trust us to like what we see. A lot of pensions and pension pots aren’t going to deliver what people who think SMPIs are important, worry people are expecting.
And lighting the fuse might result in a bang
Thirdly, people who hold data know that the final answer to the question “what am I going to get” isn’t going to be the same as today’s answer, which means a lot more explaining which really isn’t something most pension providers are geared to doing.
Fourthly and finally for now, pensionphiles dream of delivering a perfect holistic statement of entitlement that will allow people the certainty to plan their future cash flows like life is a non-editable spreadsheet.
Like a robot in 1984.
Life is not like that and most of the stuff that pension experts feel needs to be on a dashboard, doesn’t need to go anywhere near one.
So what’ll look good on the dashboard?
The short answer is not much. Let’s break it down. Do we have a problem with people finding data on….
(1) public sector DB schemes. NO Surely there is data on members apparently not claiming at say age 70 or 75. There must be some – but are there many? Most large DB schemes invest in online portals and spend a fortune finding pensioners. There’s a worry about widows but as the dashboard will not cover pensions in payment, it won’t help much. Otherwise who needs a dashboard to be told you’ve got a public sector pension
(2) state pensions; NO most of the problems here are also with widows. Online access to state benefits already exists, we were supposed to have combined pension forecasts by 2005, nearly 20 years later we still think that first and second tier pensions in one place is going to make a difference – for most people it won’t. Who needs a dashboard to see your state pension.
(3) private sector DB. NO. As above. Maybe a few deferred pensioners will be reunited with their DB entitlements – but how many? Is there a problem here for the dashboard to fix, or is this just best less to pension tracing agencies?
We could lose state benefits ,public and private sector pensions from the dashboard and the public wouldn’t care. Putting DB on dashboards is a “few-fest”;- another example of the pensions industry providing a cushion for the fat-arsed.
(3) Master Trusts and GPPs. YES. Here’s where we have the vast bulk of members and soon the majority of the assets. 30 or so schemes that could and should set up a dashboard tomorrow if they really had the energy and weren’t more interested gobbling each other up. Add to them the big workplace pension GPPs which can’t be used for consolidation but are generally on modern platforms and you have the bulk of what most people want to see on their dashboards – oven ready.
(4) that leaves 2000 single employer D.C. schemes most of which will disappear before any dashboard starts. Ok a few will continue but NO-way do the members of JP Morgan’s, HSBC’s or LBG’s D.C schemes need a dashboard. .
(4) Non-workplace retirement savings. NO Most of the 42,000 occupational schemes are no more than private projects for directors ( SSASs , EPPs etc.).The dashboard should ignore them.
(5) Which leaves us with legacy DC (shitty insurance as a friend calls it) with insurers who are now part of Phoenix (mostly). This is the big YES for dashboards. There are a few other pockets of shiftiness within Aviva, Aegon, LBG and the Prudential but this problem is likely to be sorted internally as these insurers manage policies onto modern platforms with Diligentia , Bravura and so on. At which point we may be able to see them through a dashboard (my estimate 2025-2027).
So what can the dashboard do for you?
Most of the value in the dashboard is in tracking down lost pension pots – which are mainly in “shitty insurance” and in master trusts. We could and should have had a pension finder service set up by now, but it has to wait for the “big holistic view”.
We’re told that the dashboard will give us common protocols for projecting forward benefits , which may or may not make out pots look like pensions.
We’re told that we’ll find a way of predicting what our DB pensions will pay – though how that will be any different from now I don’t know (same with State Pension)
But the big fantasy win, that we can see all our pensions on one dashboard is never going to work out, because as soon as you promise everything in a single view, along comes someone who wants to see a pension in payment, and to see the ISA and GI portfolio and then the buy-to-let income and so on.
So what good will dashboards do – other than finding pensions?
The proper purpose of the pension dashboard is a means to help people combine shitty pension pots (whether from insurers or master trusts).
We have consolidated schemes but not consolidated pots. We can start by making sure we have one member/one pot in each scheme- we’re not there yet.
Then we just have to figure out a way that individuals can combine pots without the dashboard police throwing their toys out of the pram about “transactions”, “profiteering” and “member detriment”. The number of red flags that will be waved will make a United v Liverpool game look lifeless.
It seems we are heading for a dashboard that shows people how complicated their financial affairs are – but won’t help them simplify them.
What is needed (and I hope we get this from the Treasury/FCA in this year’s Queen Speech in May) is a robust approach to guidance which allows those running dashboards to get people combining shitty little pots into proper pots which they can convert to pensions or at least drawdown in a meaningful way.
Then pension pots would do more than look good on the dashboard, they’d start getting spent- properly.