The pension dashboard project is gaining real momentum – and looks set to address a wide range of issues currently restraining the supply of information and advice says F&TRC director Ian McKenna
Today’s announcement of the delivery partners for the pension dashboard pension finder prototype represents a significant step forward. Dashboard services, which government has made clear all pension providers will be required to support by 2019, will make it far easier for consumers and their advisers to access detailed information on all their pension savings.
This will not only make it easier for consumers to understand their potential retirement income, but also reduce costs for advisers by making it far easier to access the information they need to give advice. This is an enormous opportunity for corporate advice firms as it should become far easier to provide advice to individual scheme members as details of all their other pension arrangements will be far more readily accessIble.
This is a good opportunity for me to share my thoughts on how the project is progressing, both from my perspective as an industry commentator, and as an independent member of HM Treasury’s Steering Group for the project.
The most significant change in the project in the last six months has been HM Treasury’s insistence that a federated approach should be used to enable the widest possible constituency of organisations from pension providers, advisers, fintech start ups, or indeed any other organisation that can demonstrate the right credentials and professional standards, to be able to deliver dashboard services. This will catalyse innovation and provide consumers with choice, so they can select the dashboard that best suits their personal needs.
Work is currently focused on the delivering a prototype “pension finder” service to prove it will be possible to aggregate pension values and related information from a diverse constituency of pension providers. This will include defined contribution, defined benefits and state benefits all in a single service. The prototype will be delivered by the end of March 2017 so that during April and May it can be shared with organisations who would provide consumer facing services based on the information aggregated through the finder service.
Over 20 firms responded to the invitation to tender for the current work packages. These responses were then put through an independent and transparent process to select the partners who would be best able to assist the project in delivering the prototype and grow the constituency the project can support. While six firms have been selected as immediate delivery partners, the project team will be looking to work closely with all the organisations who responded in order that they can each be given every opportunity to engage with the delivery of the subsequent live service.
There are many challenges still to be addressed before pension dashboards can be successfully delivered. Developing these services provides perhaps a once in a generation opportunity for the industry to work closely with government, regulators technology suppliers and consumer bodies to address a wide range of issues that currently constrain the ability to supply information and advice savers need at a cost they can afford.
The Treasury is playing an invaluable role in bringing together all the necessary parties and persuading them in a friendly but firm manner that they need to face up to challenges and work together to resolve them. Having such sponsorship from the highest levels of government is working as a powerful catalyst for change. A number of additional pension providers have recently joined the project, notably Fidelity from the platform community as well as closed book providers Phoenix and Abbey Life.
The inclusion of two software suppliers who are actively engaged in the defined benefit community amongst the delivery partners should also make it easier for such schemes to support dashboard services economically.
There is already widespread recognition amongst pension providers that they need to engage now in order to be ready to deliver the full service by 2019. Any pension provider that does not already have a pension dashboard team in place is going to be putting themselves under unnecessary pressure to support dashboards and miss the opportunity to contribute their thinking as key decisions are taken during 2017/18.
Issues that have been swept under the carpet or put in the “too difficult” box by pension providers for years will finally get attention. In the past there were always other things that were more important than delivering easy access for consumers to all the data advisers need to provide informed decisions.
Now the Treasury has made it clear all pension providers will have to meet the high standards pension dashboards necessitate, such prevarication is no longer an option, even for closed book providers and others who have not previously made easy customer access to information a priority. Only government, which holds the option of legislation, can really force organisations to prioritise in this way – they are starting to do so very effectively.
While the delivery of the full service in 2019 is some way off, there will be some benefits arising from project activity far sooner. I see the smarter firms, both advisers and providers already identifying what opportunities can create for them and putting in place strategies to deliver some services before the end of 2017.
What is your pension dashboard strategy should become one of the most valuable questions for employers to ask their benefits advisers next year. Today’s announcements demonstrate why it will be important to have an answer.