After months of speculation, the UK’s Department for Work and Pensions (DWP) has published a pension dashboard feasibility study.
A pension dashboard would allow people to access all the relevant information regarding their retirement via an online platform. The aim is to “put people in control of their data” and gather information from multiple resources into one place, the DWP stated.
Pension experts have warmly welcomed the consultation, which follows a period of seeming governmental immobility since the project was first proposed. The consultation is seeking views on how the dashboard(s) will function and what it will look like.
Nigel Peaple, director of policy and research, Pensions and Lifetime Savings Association, said: “The publication of the feasibility report is a significant step forward for the dashboard project.
“Pensions dashboards will be an essential tool to help savers plan for their retirement. There are a number of important questions which will need to be worked through, such as on governance, compulsion, regulation, the timetable and funding.”
Both state and privately-owned dashboards
Under the proposal, both private companies and the government would have their own dashboard – designed, developed and owned by the companies and the government, respectively.
The first pensions dashboard is expected to be established in 2019, with multiple dashboards introduced in the following years subject to the necessary consumer protection being in place, the DWP stated.
The current plan is that they will all be monitored by the Single Finance Guidance Body to ensure a safe and secure delivery from the different companies.
The multiplicity of dashboard, the DWP explained, is to “improve choice for customers, allowing them to use the dashboard that most meets their needs”.
‘A hotbed for scams and fraud’
However, some experts remain sceptical about this feature, as the dashboards could become a “hotbed for scams and fraud as they will have reams of pension wealth information all in one place”, warns Jon Greer, head of retirement policy at Quilter.
He added, however, that “it is sensible that commercial organisations’ use of dashboard information will be a regulated activity to ensure high conduct of standards”.
Lack of information
Others, like Tom Selby, senior analyst at AJ Bell, drew upon the lack of clarity regarding what information will actually be shown to the dashboard users.
“The biggest danger is that people will make poor decisions based on incomplete information – this situation must be avoided or the long-term damage to individuals and trust in pensions generally could be huge.
“How retirement income information is presented to people will also be critical in ensuring those who utilise dashboards are spurred to action. In an ideal world pensions would not just be presented to people as pots of money but also converted into retirement income estimates they can actually relate to.”
Similarly, Steven Cameron, pensions director at Aegon said: “In the early stages, where there are gaps, it is essential people are helped to understand where these are, so they don’t base future plans on incomplete data.”
Retirement planning for everyone
Nonetheless, the findings were welcomed given that the introduction of a dashboard would, partially, eliminate the disparity between those who can afford financial advice and those who can’t, said Liz Field, chief executive of Pimfa.
“We have been clear throughout that the existence of a pension dashboard would act as a vital tool in helping individuals plan their retirement, as well as potentially reducing the initial cost of advice for millions of individuals who may feel they are not wealthy enough to benefit from regulated financial advice.
“Today marks a step in the right direction for government pension policy and finally begins to connect the dots between automatic enrolment and freedom and choice in particular. The government deserves an enormous amount of credit for listening to industry and largely delivering a workable model that can contribute to delivering good consumer outcomes in the future.
“[However], we would urge the government to make a firm commitment rather than expectation of the inclusion of state pension entitlement.”
The consultation closes on 28 January 2019.
