As time ticks down to the government deadline for a pensions dashboard scheme, many pension experts believe it will be hard for the industry to work together to ensure it goes to plan.
In his 2016 Budget speech, chancellor George Osborne (pictured) made it clear he wanted a dashboard up and running soon. The government has given the pensions industry a deadline of 2019 for the system to be set up.
This digital interface, where people can view all their pensions in the same place, should be created by the pensions industry, which should design, fund and launch the scheme, the Budget documents said.
However, despite the deadline, there is great uncertainty about how this will happen. Will all pension providers come forward and provide their data, update their systems and help to fund the initiative?
With different bodies wanting to create the governing standards, it is hard to see how the industry will reach a consensus over how the initiative is run.
David Stevens, head of automated advice strategy at LV=, is a supporter of the scheme and said allowing people to view ‘clear, consolidated information’ on their pensions would encourage them to save more.
‘This makes them less likely to rely on state support later down the line. Better informed consumers, who are saving more for retirement, will also benefit a competitive pensions industry. This is something all providers should be striving for,’ he said.
Despite LV=’s support for a pensions dashboard, some experts believe that, although in principle it is a good idea, it will prove hard to implement.
Michael Johnson (pictured above), research fellow at think tank the Centre for Policy Studies (CPS), said the pensions industry would not respond in a ‘timely fashion’ to Osborne’s request because it was not in its interests to do so.
‘The idea is [the pensions dashboard] corrals everyone’s attention in a common language and that implies standardisation. That is something the industry doesn’t like,’ he said.
‘[That’s because] it means the introduction of transparency, and then people can see how much things really cost.
‘One of the true defence mechanisms this industry has adopted over the last 40 years is to make it very difficult to work out how much things cost.’
Johnson is credited with designing the lifetime ISA announced in the 2016 Budget and has published papers arguing for the UK to move to an ISA-centric savings model, which would replace the current system of pensions and pension tax relief.
‘Putting everything in [one] place where the customer wants it, in a language they understand, is absolutely not in the industry’s interest,’ he said.
Steve Bee (pictured above), founder of Jargon Free Benefits, said the dashboard was an excellent idea, but the onus should be on the government to get it moving first.
‘Call [Osborne’s] bluff and put the state pension on there first,’ he said. ‘Get people’s state pension on there and then put the private one there.’
To support the infrastructure and running of the dashboard, a number of organisations have come forward to begin the process of establishing a set of standards to oversee it.
Last month Tisa said it was creating a company, run on a not-for-profit basis, to govern the creation of the dashboard and was looking for funding from industry figures to back this. The governing company would help parties to share data and ensure they do so in accordance with the open standards it establishes. This would entail all pension providers being subject to the same criteria when sharing data.
At the same time, pension standards body Origo is aiming to provide the back-office support for a pensions dashboard by developing a messaging hub that will allow data from pension companies to be shared on the dashboard.
Origo is also working with the cross-industry body Pension Finder Alpha Project to release a white paper by the end of May that will recommend open standards for data sharing. The paper would include a governance and funding model for the scheme.
Michael Roe, development manager at Origo, said this was not in competition with what Tisa was doing, but he was hopeful Origo’s standards would be the ones the industry adopted. ‘We are expecting the preferred industry governance and funding model to come out of the Pension Finder Alpha Project,’ he said.
Adrian Boulding (pictured above), policy strategy director at Tisa, said Tisa and Origo were supportive of each other’s work.
Tisa is working on a digital identity for pension savers, a tool to find and verify consumers’ savings across all financial services.
‘Origo is fully aware and involved in our work on the digital identity and associated work. Similarly we are aware of Origo’s plans and fully support their development,’ he said.
However, Johnson said having two organisations providing standards for the initiative could lead to divisions when the dashboard was set up.
‘They [pensions dashboards] won’t be able to talk to one another because they are using different standard templates. This is the whole point: you have an industry that is completely riddled with division.
‘I don’t know if you remember 30 years ago, when there was a battle going about the standardisation of video format, when Betamax and VHS were competing to try two different formats. This is exactly the same.’
Claire Trott (pictured above), director and head of pensions technical at Sipp provider Talbot and Muir, said although it was a good idea in principle, the reality of the pensions dashboard would not match the expectations.
She said as a result of many pensions having portfolios that included investments in commercial property and other types of asset that did not have a value that was updated regularly, people would not be able to see the actual value of their pensions on the dashboard.
‘Take a Sipp,’ said Trott. ‘You have a discretionary fund manager (DFM) there that could be buying and selling things during the day. They may be assets that are valued daily, they may not be. [The DFM] is going to have to account for that.
‘Next, the pension will have some unlisted share, valued when they are sold, valued when they are bought. [The pension might have] commercial property, which is valued when bought, and that value could be fluctuating, but you just wouldn’t know.
‘The pensions dashboard, for a lot of people, will be worthless if they have anything complicated in there. It just won’t be up to date.’
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