The Government is today launching a consultation on Pension Dashboards, aimed at improving people’s understanding and engagement with pensions. The proposals include:
• An industry led delivery group, convened by Government
• Government will work with the delivery group to integrate State pensions with Dashboards
• Government to legislate to compel pension schemes to provide data to Dashboards ‘when parliamentary time allows’
Tom Selby, senior analyst at AJ Bell, comments:
“For months the Pension Dashboard project looked set for the scrapheap as the Government fretted about the design of the new system.
“The fact Number 10 has thrown its weight behind the plans can only be a good thing, while confirmation state pension data will be made available is a step in the right direction.
“However, without legislation in place requiring all schemes to participate the early rollout will be limited in the extreme. While modern platforms and pension providers competing for new customers will want to get involved, older schemes operating outdated technology will likely need a kick up the backside.
“In the age of instant online banking, people rightly have high expectations of financial companies. In this world a half-baked Dashboard risks being discredited from the start.
“The Government needs to be clear with people about what the Dashboard they see at launch shows them and what it will be missing.
“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.
“It would also be extremely useful if information on costs and charges was made visible in a clear and prominent way, putting clear blue water between those offering value for money and those charging savers through the nose. However, such developments might be a little ambitious for the initial phase of the Dashboard.
“We also need to remember that, while building the Dashboard is an important step, this is not ‘Field of Dreams’ – if we build it, they will not necessarily come. To foster genuine engagement individuals need to be given timely information in a simple, clear way they can relate to, rather than heaps of unintelligible documentation that inevitably just ends up in the bin.
“The mid-life MOT project being piloted by the DWP is a good start but much of the documentation produced by providers is driven by regulation.
“We therefore need a sweeping, cross-department re-think of communications rules so companies have the flexibility to engage with savers in a simple, straightforward manner. Only by working in a joined up way can we genuinely hope to stir people out of retirement apathy and into action.”
