The launch of dashboards means that the UK is about to wake up millions of people of the fact that 8 per cent contributions are not enough, while having a potent impact on competition.
The remarks came in a debate on the digitalisation of defined contribution pensions at the Corporate Adviser Master Trust conference in London this week.
Pensions dashboards expert Richard Smith said: “We have to start thinking about income and not pots. You show a 30 grand pot to most consumers and they’ve not got a clue what that means. They want to see what it might mean per month in retirement. Then answer the question – how do I nudge up my contributions? We should start talking about how we deploy commercial dashboards within employer sites, so people can click through to payroll and nudge up their contributions. We all know 8 per cent isn’t enough. We’re about to wake up millions of people to the fact that 8 per cent isn’t enough.”
Discussing the experience of other dashboard countries, Peter Roos, chief commercial officer at Lumera said: “What happens with the added transparency of the dashboard, is all of a sudden, when individuals understand that they can put pressure on providers, even just a small amount of pressure, competition starts working.
“Do it carefully. It is a very potent thing. When the commercial dashboards start, that is when you will get the competition,” he added.
Joanne Fairburn, client director at Zedra, said that public expectations had shifted due to the ease of conducting other financial transactions.
She said: “Once the dashboards launch, it’s going to be critical we have the digitalisation to cope with the kind of follow up questions that come from members and perhaps even requests for transfers. As a trustee, I’ve seen a steady increase in expectations of members, particularly over the last three or four years, driven by access to their banks, access to ISAs on their phones, the immediate answers to questions on different types of savings.”
She said dashboards will encourage consolidation. “The dashboard is going to encourage consolidation by individuals. They’ll look at a spread of pots with different providers, and think: “Well, I’m going to get better value for the money if I move to one.”
“Lots of people are doing it today based on adverts on the Tube or in the press and not necessarily making the best choice about it, because it’s not an informed choice. It might be a great poster, but who knows what is going to do to your retirement income? What I hope to see post dashboard, and particularly the commercial dashboard world, is that people might get more targeted education sent to them so it’s timely and relevant, and therefore they’re more likely to read it, understand and then act on it.”
Smith added that will also help providers help people more, driven in part by dashboards coming under the FCA’s Consumer Duty regulation. He gave the example of two 50-year-old members with £10,000 pots currently looking exactly the same to a provider, but one may have a £20,000 a year deferred DB pension, the other nothing else.
“How that provider talks with those two individuals is absolutely contextual. Once you can see everything the individuals got, you can help them much better.”
Chris Curry, principal, on the Pensions Dashboard Programme, said: “People will see their basic information, but they will want to know more, and so they will be then following up with their providers. Engagement is something we talked about for decades, but the dashboard will start to drive it. It will be a step change for many providers. The Consumer Duty is a really important as well. How are we going to get the right outcome for consumers, not just necessarily the outcome providers might want?”
He also noted that it was a deliberate policy decision not to make dashboards themselves transactional. There will be no button to transfer or consolidate pots. You have to take the information to another place to do that.
“That’s why the words that are showing your pensions dashboards are just as important as the numbers,” he added.