I hope you’re having a good Christmas , this is the third day of Christmas and I’m going to let off steam on the subject of pension dashboards and in particular people who see them as an invitation to criminals to ruin our retirements.
Five years ago, I met a man in a Crisis at Christmas shelter who at the age of 58 had nothing but a few clothes and his identity to his name. So I thought, it turned out that man had several thousand pounds “locked up” in workplace pensions that he thought he had lost because he’d left the job where he built this money up. He had no way to find that money but by good fortune , he got help from someone I knew at Crisis and he used that money to get back on his feet. The PPI reckon there are over £26bn of lost pensions in this country. No criminal would ever think to develop a multi-billion pound heist of our savings, but that is what the British Pension System has (inadvertently) achieved. Those people who argue against open pensions on the grounds of security should be reminded of the dangers of “closed pensions”.
My second gripe against the dashboard bashers is that they invariably refer to the pension dashboard (singular). This is because they are used to a state run dashboards which are joyless events designed to be unhelpful. According to Stefan Lundberg, these dashboards have been designed “not to compete” with existing advisers which means that people are unlikely to “move beyond the landing page” of the state website. This is not what is happening in the UK where, after a year of trialling by the state website, commercial dashboards will be available from the back end of 2024 (the likely dashboard available point) to help people make use of their lost and fragmented savings.
Creating a state monopoly on information gathering has made the Scandinavian dashboards an extension of an already state dominated pension system. People who think that the mono-dashboard is a good thing are likely the same people who wanted Nest as the only workplace pension and are typically wary of the enterprise culture. It would be wrong to dismiss their concern about competition as pensions have not had a great track record of delivering value for money, but it would be equally wrong to throw the baby out with the bathwater, we need enterprise driven dashboards which are genuinely fun to use and compete with each other as delightful to use.
My third and final gripe at the dashboard knockers is that they are overly immersed in the minutiae and unable to see the bigger picture. Terrified of the implications for their Professional Indemnity Insurance, FCA authorisation and public reputation, many good organisations are obsessed by throwing amber and red flags whenever they sniff innovation.
Our duty to the consumer is to help them benefit from the common purpose of pensions, dignity in retirement from an income that lasts as long as they do. To that end, people need an adequate way of getting paid from their various pots without being beset by interviews by providers and MaPS, without being nudged towards financial advisers and without fear that by pressing a button marked “spend”, they are sending their savings to the wrong person.
The headline at the top of this blog , refers to fears that people need to see everything, no matter how complex, to understand their wage in retirement. This is simply not the case. Even if the dashboard available point leaves people with an incomplete view of their savings, people will view the glass three-quarter full. So long as the remaining information is promised to follow , people will happily see their first visit as a work in progress , not their last.
We must remember that the big picture is about people having income to spend in retirement and this is the proper end of all the saving. We do not need a “hoarding” culture that encourages people to be wealthy but over-frugal. Instead, we need to encourage the spending of our savings not just on the essentials but on the good things in life – including spending on ourselves.
This is the lesson being learned in Australia, where those with Super pots are being encouraged to set up inflation-protected income streams, so that the wealth is recycled into the economy engendering the promised good times that the financial sacrifice promised.
The financial services industry is very far from “net outflows” in terms of “money in, money out”. It is a maw into which our savings flow and too rarely return to us. We are a mature society with a guilty conscience that we have saved too little and that we will be a burden on our children. This must change – we need to spend what we have saved to create the conditions for our children to flourish.
The dashboard should become, not so much a measurement of the store of this nation’s wealth as an indication of its capacity to turn that wealth back into cash that drives the economy forward for the next generations.