It’s full speed ahead for the pension dashboard. Providers had better get on board, says F&TRC director Ian McKenna
The pension dashboard has rightly been a recurring theme in this column for as long as the subject has been on the industry agenda. Over the summer doubts arose as to whether this important project would be a victim of changing political priorities following the surprise Brexit result.
A few weeks ago, however, Simon Kirby, the new economic secretary to the Treasury, emphatically stated that the pension dashboard project remained a priority. One message he delivered very clearly was that this would be an open project: there would be no single dashboard and no monopoly. The infrastructure would be open to all companies that could meet the relevant security standards – not just pension providers, therefore, but all types of business.
This is a huge opportunity for the adviser community. How much effort is spent assembling all the details of a client’s pensions into a single report before advice can be given? How much time will advisers save once the industry, firmly guided by the Treasury, puts in place the infrastructure so that consumers can easily access this information electronically? Faced with all this information, where will clients naturally turn for more help?
The most obvious place is to advisers, albeit clients may not all turn to traditional firms. Where a client has an adviser relationship, that will be their natural first port of call. However, it is inevitable that new firms will emerge with new types of advice proposition. Many are likely to be low cost and many will be automated, to a greater or lesser degree.
Corporate advice firms, having been selected by the employer to assist their staff, should be in a prime position to capitalise on this. Indeed, some employers may be willing to pay for or subsidise such services as an employee benefit.
Research by EY earlier this year ranked the UK as the best place globally for firms to set up new fintech propositions. The pension dashboard gives us the opportunity to demonstrate what we can do by combining our exceptional pensions and savings industry with the best of fintech.
In recent weeks I have had first-hand experience of the extent of the Treasury’s commitment to championing this initiative, having been invited to participate as an independent member of the Treasury Steering Group for the next phase of the pension dashboard project. I have witnessed a government department focused on delivering results; this is not a talking shop. They want solutions and they want them promptly.
Some in the industry question whether the Government will be able to corral all pension providers to deliver the data that is essential to a full picture of pension savings, sufficient to make such a service meaningful. I would remind anyone with such concerns that the previous government persuaded all the banks to sign up to the current account switching service, hardly something that would sit comfortably with the way banks like to work. This service has been operating successfully for over 18 months.
If a government can cajole all the banks into such a service, is any pension provider so arrogant as to believe it will be able to exempt itself from providing consumers with the information they need?
Others in the industry have suggested that the project should not be restricted to pensions; in the longer term, of course, they are right. However, bringing together DC, state and DB pensions in a consistent and reliable way will be no small feat. Right now the focus is on pensions. At the same time, the Treasury is promoting the open banking initiative and mechanisms are being put in place to make sure that what is produced is complementary.
Once the ability to deliver such a service for pensions is proven, the scope can be extended easily to other savings products and, indeed, debt, so that in the near future consumers will benefit from full personal finance dashboards that present their entire financial life in a single place.
The Treasury is building a coalition of the willing who want to make this project work. From what I am seeing, the smart pension providers are realising that they need to engage with this work rather than be left behind. Anyone not at the table should look to get there quickly before all the seats are taken.