Pushing through a half-baked offering without all the data is an unnecessary risk
“Green light for dashboards in 2019 puts pension savers in the driving seat.” That was the triumphant headline atop a Department for Work and Pensions press release, confirming the flagship project will go ahead as planned this year.
This green light was by no means a done deal prior to the April announcement. Former work and pensions secretary Esther McVey had reportedly been cold on the idea of another big government-backed technology project, presumably mindful of the problems facing the department following the introduction of universal credit.
But following Brexit-backing McVey’s resignation from cabinet and the appointment of Amber Rudd in her place, the dashboards initiative received enthusiastic backing.
In an op-ed for the Daily Express marking the announcement, Rudd was in full-throttle sales mode.
“Dashboards will help people see clearly and simply how much is in their various pension pots – including state pension – and what they can expect to have to live on in retirement,” she wrote.
“This is a seismic shift. For too long, pensions have been an after-thought – something we only start worrying about when it’s too late to adjust what we’re saving to ensure financial security in later life.”
Rudd went on to claim dashboards “have the potential to transform the way we all think about and plan for retirement”, adding: “We expect the pensions industry to bring forward the first models this year.”
I am a fan of the concept of dashboards, but there is very little chance the 2019 reality will live up to these expectations. In fact, there are so many obstacles in the way, I am perplexed at the government’s quasi-religious obsession with launching something, however flawed, within the next six months.
The first dashboards will only have access to data from schemes that offer it up voluntarily. In its response to the consultation, the DWP readily admits all schemes are unlikely to be forced to provide data for three or four years, meaning it will almost certainly not be this government that oversees completion of the project.
Indeed, as things stand, it looks increasingly unlikely we will get the Pensions Bill needed to enact the relevant legislation in 2019 at all.
I have said before that launching dashboards without all the data is a huge, unnecessary risk.
Surely it would be better to build fully operational, consumer-tested dashboards by, say, 2022, rather than pushing through half-baked offerings this year?
In reality, the 2019 “launch” will be limited in the extreme, with the DWP-backed dashboard hastily being developed by the newly created Money and Pensions Service likely to only enter beta testing with a sample of users.
State pension concerns
On top of this, we do not yet know when HM Revenue & Customs will cough up the National Insurance information needed to make state pension details available on dashboards. Several providers I’ve spoken to suggest that, until this happens and the industry has clarity over the data standards required, there is little chance they will make the first move.
The fact current pensions minister Guy Opperman admitted in a recent letter to his predecessor Sir Steve Webb that iffy records mean state pension forecasts are not always accurate might explain the delay.
And then there’s regulation. The FCA will rightly be taking a keen interest in the development of pension dashboards but, as yet, has not set out the parameters within which they will operate. In the absence of a formal regulatory framework, the first users are unlikely to see projections illustrating what their funds could be worth in the future, or how that might convert into an income stream in retirement.
Instead, we are more likely to see basic pension details presented to users, with developments informed by rigorous consumer testing.
This testing will be critical to maximise the utility consumers can eventually get out of dashboards. It should also help ensure any negative behavioural consequences are mitigated before dashboards are made available to the masses.
These are just a handful of the unresolved issues that need to be sorted before dashboards go live.
As a result, what we see this year will almost definitely fail to live up to Rudd’s pre-launch hype.
It is crucial in the coming months that expectations are managed, otherwise the shell-like first versions of dashboards risk being viewed with incredulity by the media and public.
Tom Selby is senior analyst at AJ Bell