It’s been many years and there’ve been several delays since the idea of pensions dashboards was proposed.
For those not close to the program, it would be very easy to have lost track of what will be delivered when they eventually go live. So what’s the aim, and what does it mean for you? Let’s take a look.
Pensions in one place
The basic idea is really pretty simple. A customer can go online and see all their pensions in one place. The system will find their pensions for them and show them what they have, what they’re worth and provide a projection to what this may mean at retirement. It will also include their state pension information.
Frankly we have nothing like this now in the UK.
As we all know, it’s a real pain for customers to understand their pensions savings as a whole. They don’t remember what pensions they have or with whom. Some of their pensions still don’t offer details online. If they do they need to go to each firm’s website individually.
Finding lost pots
At the heart of the project is the need to find pensions. You’ll know that people lose track of their pensions all the time.
They move house and forget to tell their pensions providers. They get married or divorced, they move abroad for a bit and so on.
While there are pensions finding services out there now, they’re not really effective enough. They don’t find close to 100% of people pensions. And can take weeks to get a response. So a new system that will be able to find far more pensions in seconds is going to be a major improvement.
Telling people what they have
What clients really want to know is “How much is it worth at retirement?”
For Defined Benefit pensions the pensions dashboard will provide the estimated retirement income, for Defined Contribution it will have the estimated income and the current pot value. In a major improvement, DB schemes will have to provide information calculated in the last 12 months.
There will of course also be contact information for the scheme / provider, and links to further information.
The real power, however, will come with the ability to provide a total estimated income for all the pots. This can start to answer the key question “Am I saving enough for retirement?”
Dashboards, plural
While the Money and Pensions Service will offer a pensions dashboard it will not be alone. There will be dozens at least.
The Financial Conduct Authority is creating a new permission to host a 'qualifying pensions dashboard' service. Firms will have to show they abide by regulations that will be finalised later this year. What this means is that every major pensions provider in the UK is already considering if they will offer a pensions dashboard on their web and mobile services. I would expect most will.
But you don’t have to be a pensions provider to host a dashboard. You just need to get the regulatory approval. So I expect employee benefits platforms, banks, personal finance apps and others to all look at hosting a dashboard. Who knows perhaps the Daily Mail or Telegraph might put them in the money sections of their websites.
And of course financial advisers and planners could host their own.
Follow-on services
For those interested in hosting a pensions dashboard it’s not just about displaying the data to the customer. The power can lie in using that data to offer new services to them. The FCA is being pretty cautious about what ‘post view services’ they will allow, but there’s definitely scope to offer them.
While a ‘consolidate all pensions to us’ button will be out, at least initially, a firm can help in other ways. Does the customer understand what savings they have? Is there a shortfall in their savings against their retirement expectations? The options grow quickly once you sit down and think about them.
In my next two articles I will look at why dashboard has taken so long to deliver and what the impact may be for advisers.