So far, so good – a user’s view of the Pensions Dashboard
Fiona Tait, technical director, Intelligent Pensions takes a look at the prototype of the Pensions Dashboard and what it means for adviser firms
We’ve been talking about a pensions dashboard for a long time but until now there has been nothing to see. So the prototype version recently unveiled by the dashboard project team is a welcome step forward for consumers and their advisers.
What is included?
The prototype is not based on real data but it incorporates the ID verification, pension finder system and potential output that we might see in the final version.
ID verification will be based on the gov.uk system and will comprise a unique log in and password combination. This is essential to ensure that the service is not vulnerable to fraudsters or companies looking to farm out contact lists. However, authorised advisers will be able to access the system where their clients give them permission to do so.
Having logged in, the consumer then has to give permission for their personal data to be shared with the pension finder system. The finder system will contact the individual pension and service providers who will respond with information on any benefits which they hold for that individual.
There are two schools of thought on initial scope of the system:
1. The dashboard will be of no use unless it provides sufficient underlying information to make it meaningful
2. The dashboard should start with basic information from as many parties as possible then build on that.
The current approach is in line with the second option, which will make it more likely that a wider range of providers will be able to join in at launch. The project team are working with the DWP, and both public and private defined benefits schemes to ensure at least basic information is included.
What will we see?
The prototype shows a clear list of the pensions belonging to that individual and a single figure showing projected income at the selected retirement age of the arrangement (see example below).
The accumulated pensions are shown in terms of income, not pot size. This directs the consumers mind to the primary purpose of pension savings, which is after all to provide replacement income in retirement.
The final design may not mirror this version and eventually there are likely to be several different dashboards with their own landing pages and individual branding. The objective however is to have a consistent layout, at least in relation to an agreed set of core information.
What won’t we see?
The initial system will not include non-pension assets. More pertinently it will not include crystallised plans, details of any guarantees or product features that would be lost on transfer or information on ongoing contributions. These features could, and probably should, be added at a later stage together with links to advice and guidance services.
What are the challenges?
The prototype is not based on real data, and the final version will have to deal with an estimated 20 million pension pots. The absolute acid test will be whether the 30+ insurers and 300 different administrators who provide that data can do so accurately. If we get “rubbish in, rubbish out” the system will lose all credibility.
There is also the issue of how the information is presented. If the final version continues to illustrate the pension in income terms there will have to be a consensus on what assumptions can be used. Furthermore, will the user be able to amend the assumptions to better reflect their retirement goals? for example changing the age of retirement or basis for calculating the retirement income. We are told the Regulator is taking a close interest in the project and can expect that they will have some input on this.
Progress to date has been possible because of an extraordinary collaboration between The Association of British Insurers (ABI), 16 supporting insurers and scheme managers plus 6 technology providers, many of whom are direct competitors. A working balance between consensus and individuality is necessary to ensure this continues.
Last, but not least, the service needs a constant steer from the government, who are the project sponsors. A new administration could decide to change focus and indeed momentum has already stalled as a result of the election purdah.
What affect will it have on advice?
This is not something that advisers can ignore. Whilst the natural reaction might be to assume the dashboard is for those who don’t have advisers, the reality is that you are almost certain to have to interact with it, or at the very least handle information that it has provided.
It also delivers the potential to offer more cost effective advice services, based on the premise that clients can do more information gathering themselves.
If you’d like to see more there is now a website: https://pensionsdashboardproject.uk which provides information on how the project is set up and how they are progressing.
Visit the Intelligent Pensions website