Open Sesame: Unlocking the truth about the pensions dashboard

Last weekend was Pension Awareness Day and we’ve just launched our own campaign to encourage younger workers to Love Your Pension. But we know it’s not enough to urge people to do the right thing – the industry needs to make it easier for them to engage with their pensions and feel ownership of these valuable funds. Part of the answer is making information about pension saving much more accessible. Next month we’re holding an event on Open Pensions, and we’re committed to working alongside Government to deliver a pensions dashboard. Here, I set the record straight on some misconceptions about the dashboard.

“It’s too complicated to ever work”

The following countries have functioning pension dashboards: Denmark, Sweden, Norway, Israel, Australia, the Netherlands, France. Many other countries have approximate technologies. Whilst the UK may have a more complicated system of pension provision, this is no excuse.

There are two main elements to this objection. Firstly that there is a lot of bad data out there in the pension system, and secondly that small schemes will be unable to connect. Whilst there is some truth to the complaint about bad data, schemes and providers have a regulatory obligation to correct this data, and if anything the dashboard should be a helpful catalyst in getting this work done sooner rather than later. The point regarding small schemes has already been addressed by the prototype project. The suggested ecosystem has a role for ‘Integration Service Providers’ which will act as the conduit for schemes that will not build a direct connection. Most pension schemes already have outsourced administration.  

“The ABI and DWP only want there to be one dashboard”

Wanting there to be a government run pensions dashboard is not the same as wanting there to ONLY be a government run pensions dashboard. Consumer research conducted by the dashboard project suggested that some consumers would be more likely to trust the technology if it was delivered by government. However, there was also recognition that some of the additional services savers would like to see available on a dashboard will need the technical expertise and innovation only the private sector can bring. The two are not incompatible and people should be given a choice over whether they access their data via, for example, the new Single Financial Guidance Body or via a brand such as a pension firm, bank or financial adviser.

“Industry will do it on its own without legislative change”

Another popular claim is that there is no need for the government to legislate for pension providers to share data. But this would let down consumers. Retirement decisions are difficult and people need a complete picture of their assets, which means mandating involvement by every type of pension scheme and provider. In Denmark, without legislation, it took their equivalent 10 years to reach 90% coverage. If we’re still talking about how to get data online as we near the 2030s then it will be embarrassing for everyone.

“No one will use it”

This is a statement that has been used about the ATM, online banking and even the automobile. The popularity of start-ups like Monzo, MoneyHub and PensionBee show that consumers can be empowered by easy access to their financial data, and that is what the dashboard infrastructure will give them. Consumers surveyed as part of the dashboard prototype project were excited by the potential of the service and were enthusiastic about using it. As an industry we claim to want people to engage with their long term savings and, to quote Nobel Prize winning economist Richard Thaler, if you want people to do something make it easy.

To register for next month’s event, “Open Pensions: the future of saving?”, please click here.