Dashboard is not just about legacy products
Being steeped in the development of the Pensions Dashboard as we are at Origo, I pay keen attention to the articles and arguments around the subject. It has been noticeable that recently the number of articles out there has increased, no doubt in anticipation of the publication of the Department for Work and Pensions’ (DWP) feasibility study.
Despite a report in The Times that Secretary of State for Work and Pensions Esther McVey allegedly wants Government to step back from the initiative, we still believe that a Pensions Dashboard backed by Government but run by the industry is the best way forward. It would give consumers the best of both worlds, their State Pension information, previous employment pots and private pension values all digitally, on one screen.
If confirmation was needed about the significant demand from consumers to know what their retirement income will be, a recent Freedom of Information Act request made by Professional Pensions revealed that 4.5 million State Pension forecasts were viewed between 1 April 2017 and 31 March 2018. We have calculated there are 15 million pension holders in the UK who could immediately benefit from the Dashboard when implemented. So nearly a third have already requested information.
Reading the recent articles, one of the points that strikes me is that most of the focus has been on legacy products, the pensions belonging to those in the run up to retirement (age 50-65). That’s an understandable focus since the Dashboard has the potential to throw open the doors on pension information that people have been unable to easily access, or too difficult to locate, or they had simply forgotten about. And, of course, once people see what they have – or what they don’t have – they can better engage with their retirement planning and take the action needed.
However, few of the articles I have read have focussed on recent and future pension savers – and yet these are as important as the legacy savers. Auto-enrolment has brought in more than 9 million* people into the pensions fold since 2012. Many may have already changed jobs since they auto-enrolled and given that they may have several jobs during their working career – 11 is the number most often cited – keeping track of numerous pensions could be as irksome for those just taking out pensions as it is for those who took them out three and four decades ago.
Arguments for why the Dashboard would fail often cite the issue of legacy policies, some still on paper / microfiche, which supposedly cannot easily be digitalised and so automated in order to respond to Pension Dashboard requests. Whilst we believe the industry is far more equipped to deliver legacy data to the Dashboard than some people suggest, this should not be an argument for new pension arrangements, which should be able to deliver all the data consumers require to keep abreast of their savings and to make appropriate decisions.
Indeed, we have been working with other technology experts and digital-savvy providers who see great opportunity in the Dashboard to better connect with their customers and provide a better service as well as win new business.
My point here is that to argue against Dashboard, based on the legacy data issues, is to ignore the power and good it can do for the younger generations, those who are newly enrolled or who will take out pensions in the future.
The alternative is to stick with the status quo – where all the responsibility is laid on the individual to navigate his or her way through the pension landscape gathering individual bits of data piecemeal and trying to make sense of it all. That, I would argue, is neither good for the consumer nor the industry.
This article was first published on the Professional Pensions website on 30 August 2018.
* Latest reported figure as at December 2017