Suggest a potentially disastrous outcome and follow it up with an alternative that would previously have been highly unpopular, but is then greeted with massive relief. It’s a strategy that has become a standard part of the Donald Trump playbook.
Other politicians appear to be catching on. After initially suggesting the pensions dashboards might be cancelled, work and pensions minister Esther McVey’s vague announcement that the project would actually proceed was greeted with widespread relief, despite a substantial lack of any real detail or clarity from the DWP. Eighteen valuable months have been lost, so how can we get the project back on track and delivering the information savers need as soon as possible?
To start with we need to recognise how much other initiatives have progressed in the meantime. Technology advances far faster than other forms of commerce, so comparing the time lapse in dog years would be more accurate than using a traditional calendar.
The Open Banking project is now very close to delivery and in just a few months will be making far more financial information available to consumers than they have been previously used to.
Open Banking now has a robust approach in place to address data ownership, consent, liability, legal and regulatory structures, technical standards, governance and implementation. These are all issues which the previous pension dashboard project was wrestling with.
It must make sense to use as much of this existing apparatus, which is being accepted as fit for purpose by financial institutions around the world, rather than reinvent a pension industry version just so it can be separate. Building on this existing infrastructure could save months not only in making pension dashboards a reality, but also extending beyond pensions to include the full range of personal finance products, so we can give consumers the truly holistic view they need.
Does it make sense for pensions dashboards trying to launch with all pension providers making
their information available at once, as a sort of “Big Bang”? If so, by the time this is achieved a plethora of other organisations, banks and fintechs will have become consumers’ trusted sources of financial information, ahead of the traditional industry players.
Trying to progress the pension dashboard project in a bubble assuming consumers look at their retirement planning separately from their financial life is a strategy that must be doomed to failure.
For consumers to be truly able to understand their retirement provision in context they need to be able to see this information side-by-side with their day-to-day financial lives. Pension dashboard solutions that can deliver information in a broader context are far more likely to encourage increases in savings.
There is much work for many DB schemes and other trust-based pension arrangements to do before they can have their scheme information in sufficient order to support dashboard facilities. Rather than seek to push these schemes in to delivery dates which they will, at best, struggle with, and in many cases simply fail to achieve we need to understand realistic timescales for making such information available.
I struggle to think of any pension provider who when looking to provide online access to contracts has tried to put their entire universe of existing plans online in a single project. Invariably such activity is phased. Why then should we have a rush to get every possible pension contract DC, contract and trust, DB and anything else online as a “Big Bang”?
I appreciate that consumer research will invariably say that customers want everything, but they do not recognise the practical challenges this will bring. Which is worse – delivering a service which brings together multiple pensions that can’t currently be viewed together with other contracts added as available or a “Big Bang“ approach that takes years longer and gives customers no information in the meantime?
There has been a similar debate about why pensions come first and other investment vehicles such as Isa and GIA should come later. To the pension industry these may be separate, but to consumers they are all part of the same thing.
A phased approach reusing the great work already carried out by Open Banking and allowing pension schemes to join as they are able will, in practice, better serve consumers than attempting a grand pensions industry project.