The UK’s Department for Work and Pensions (DWP) has closed its consultation on pension dashboards; but concerns have been raised by a workplace pension provider about ‘potential consumer detriment’.
A report published by The People’s Pension is calling for a legal duty to be placed on commercial dashboards to ensure users are protected.
“Government figures suggest that a huge number of people, up to 18 million, could eventually access pensions dashboards. The opportunities are vast but so is the potential for consumer detriment,” said Gregg McClymont, director of policy at The People’s Pension.
“The strongest form of consumer protection is fiduciary law, so we’re calling on the government to pass legislation to place such a legal duty on all dashboards operators.
“We’re also calling for pensions charges to be disclosed on dashboards from the outset, for consumers to have a clear legal right to all their financial data, and for the creation of a Pensions Dashboards Authority armed with a clear statutory remit to act in the best interest of consumers.
“This package of measures can strengthen the governance of pensions dashboards in the public’s interest.”
Increasing engagement
Other concerns raised were the “adequacy” of pension dashboards and the role that the government would have in regulating either a single non-commercial dashboard or several commercial ones.
Peter Bradshaw, director at Selectapension, told International Adviser that “a single dashboard is a great way of engaging people with their pension planning. To make it work, the government would need a huge public awareness campaign”.
“The dashboard would need easy access for users, but have robust data security to defend against hacking and scammers. Multiple dashboards will be developed for purely commercial reasons and could introduce confusion between the basic ‘pension finder’ information and the ‘value added’ elements.
“There is also a risk that dashboard providers stray from making ‘recommendations’ to providing advice without knowing users’ full circumstances,” Bradshaw cautioned.
The Institute and Faculty of Actuaries concurred: “Any tools that help individuals better understand their pension savings would be welcome and using pensions dashboards to display all of an individual’s savings in one place is a step in the right direction in this regard”.
“But dashboards should be seen as the first step towards a bolder plan for communication that aids financial education and truly engages savers with retirement planning. The provision of pensions dashboards will do little to achieve this aim in isolation, and we believe significantly more promotion by the government, employers and pension providers is needed to raise the profile of retirement planning and increase engagement.”
Financial advice still needed
But the government needs to ensure that dashboards do not replace, or are seen as an alternative to, financial advice, warned Austin Board, group head of advice at AFH Wealth Management.
“We’ve been eagerly awaiting the roll out of the first pension dashboards and it looks like 2019 will be the year. It will undoubtedly mark a step change in the financial planning industry, making it easier than ever before for people to review their overall financial position.
“Of course, there will be teething troubles as the system settles into the mainstream but anything that helps people keep track of their money is welcome in my opinion. With more power at their fingertips, investors should take this opportunity to seek advice and ensure their money is working as hard as possible, ultimately helping them to achieve financial goals.”
