Secretary of state for work and pensions Esther McVey is reported in The Times today as being on the verge of announcing that the pensions dashboard project, which has been in development for over two years, could be dropped, to allow the Government to concentrate on the rollout of universal credit.
Critics have blasted the decision as short-sighted, saying it will lead to confusion amongst workers attempting to plan for their retirement while holding pots from an average 11 employers over a typical working life. Dropping the pension dashboard would make financial advice more expensive and out of reach for some groups, making financial planning more complex and making it harder for consumers to consolidate their pots into more suitable arrangements. It could also lead to more people having to rely on state benefits in retirement, as planning for private provision and engaging with pensions generally would be more difficult.
Asked by Corporate Adviser whether the pensions dashboard project is still live, a DWP spokesperson said: “We are not in a position to comment right now.”
Jack Dromey MP, shadow pensions minister says: “The Pensions Dashboard is a welcome step towards better financial awareness and planning for the public; it commands cross-party support. It is vital that it remains independent of industry and any conflicts of interest.
“When even the industry is telling them that the dashboard should be kept in public hands, the government should be listening.”
Origo development director Michael Roe says: “Keeping track of multiple pensions can be difficult for many people. Having the Dashboard to give them a single source of pensions data, including their state and their private pensions will lead to better decision making. In an ageing population that is important as it can take pressure off the State.
“The intention was always for the industry to fund and deliver the project, to provide the pension data and to establish a Governance Body. Government was required to provide State Pension data as it forms a large part of many people’s retirement income. Government was also to investigate a regime for compulsion.
“Industry can certainly still take the Pensions Dashboard forward and the technology has been proven by Origo and its partners to scale for 15m consumers. However, the best outcome for consumers was always a Government / Industry collaboration.”
Aviva head of financial research John Lawson says: “As an industry, we could try and do this ourselves, but government backing is essential for three reasons. Firstly, many schemes and providers will not supply data without being required to do so. Secondly, state pensions make up more than 40 per cent of the retirement income of the average Brit, so excluding state pension would reduce the dashboard’s usefulness. And finally, public sector pension data is needed to form a complete picture for people who have worked in both the public and private sectors.
“I hope all the hard work that has gone into the pension dashboard over the past couple of years isn’t going to be thrown away.”
AJ Bell senior analyst Tom Selby says: “Pensions might be sat in poorly performing investments or subject to high charges that erode their value over time. It was hoped that allowing people to see all their pots in one place would encourage them to engage with their retirement pot, seek better value for money and clearly understand how much more they need to save for later life.
“Ultimately if the project is abandoned then the problem of pension pot proliferation – which will only get worse following the roll out of automatic enrolment – will still need to be dealt with one way or another. It might just be that a Government department burned by the painful introduction of Universal Credit has simply got cold feet over another major IT project.
“There is also a broader issue here of trust between the Government and the pensions industry. It was the Government that told the industry it needed to develop a workable Pensions Dashboard model and deliver it by 2019. Huge amounts of time, effort and money have been dedicated by Association of British Insurers members to make that happen, with wide engagement from platforms, charities, advice firms and others.
“If the DWP is now going to pull the plug at the eleventh hour then the industry will legitimately question whether involvement in future such projects is really worth it.”
LEBC director of public policy Kay Ingram says: “We believe that the Dashboard has the potential to transform consumers’ engagement with their pension plans, the potential to cut the cost of regulated advice, and to protect consumers from scams too.
“Private sector Fintech companies and the pensions industry can deliver this and DWP should support that.”
PLSA policy lead: engagement, EU and regulation James Walsh: “The dashboard would be an essential tool for savers when tackling the minefield that is retirement saving and it’s vital the Government sticks to its word. With the average person now estimated to have 11 jobs over their lifetime, there is the potential for millions of lost pension pots in the future which would mean savers losing out. The dashboard would be crucial in helping people keep track of their money and may even encourage people to save more.
“The pensions industry is strongly behind this initiative and we fully expect the Government to continue leading on the dashboard as its creation is vital in helping millions of savers have a better retirement.”
Sanlam UK head of commercial Elliott Silk: “Following the arrival of auto-enrolment, I think that it’s crucial that we continue with the launch of the pensions dashboard. As people change jobs, which they do ever more frequently in today’s world, they are placed into a pension scheme chosen by their new employer because there is not the option for employee’s to request that money is paid into their existing plan. This means that a new pot of money is created on which they need to keep tabs and it is highly unlikely that the employee will transfer across the accumulated sum from the previous plan as the value will be relatively low.
The People’s Pension head of policy Andy Tarrant says: “At a time when 14 million people are at risk of not having enough to live on when they retire, it’s astonishing that an initiative aimed at helping millions of people to live comfortably in retirement, could be seen as a distraction by government.
“The government should be doing everything possible to help people plan ahead. With one in five people across the UK having lost track of a pension, the Dashboard will help ensure people keep track of all their savings, have all the information needed to make the important decisions about their financial future, and will allow them to watch all their retirement savings grow and compound over time, helping them to understand what their retirement might look like.
“More than seven in ten people have told The People’s Pension that they want to be able to see all of their pensions in one place. The dashboard has real potential to revolutionise retirement planning for millions of people across the UK and we urge the government not to u-turn on their previously strong support for the initiative.”
Aegon head of pensions Kate Smith says: ‘Ditching the dashboard at this point makes little sense and will ultimately make people’s retirement planning harder. Auto-enrolment means that every job comes with a pension and keeping track of multiple pensions has proved difficult for many people. Having a single source of pensions data, that tells people what they can expect from both the state and their private pensions should significantly boost people’s engagement and lead to better decision making, and less reliance on the State.
“The pension industry stands ready to go ahead with the dashboard and constant delays and procrastination have been unhelpful in the extreme. There was never any intention for the government to fund this project, it was always going to be financed by the industry, the question was exactly how?
“First the HMT, then the DWP, had taken on the leadership role, and we hoped that the much-promised feasibility study would give an indication of the direction of travel and setting out the government’s expectations. We had always believed that there should be multiple dashboards, rather than a single dashboard provided by a government agency, such as the single public guidance body. This would overcome many of the Ministers’ concerns.
“With the government’s ban on cold calling delayed, this could prove to be yet another blow for the nation’s savers.”
Royal London pensions specialist Helen Morrissey says: “Even the suggestion that the work and pensions secretary could pull the plug on the pension dashboard project is extremely disappointing. The dashboard has the ability to boost engagement with retirement planning and to abandon the project now risks letting down millions of savers. What is all the more puzzling is that this is a policy that has received support from Treasury while pensions minister Guy Opperman has repeatedly said the dashboard will happen and urged the industry to back the project. We would urge him to do all he can to persuade the work and pensions secretary to continue with this important policy.”
