I recently had the pleasure of presenting at the Department of Work and Pensions (DWP) annual “Summer School”. Beyond talking about social media and pension engagement, it seems my blog on pension innovations that could make the dashboard irrelevant was quite popular. Of course we got onto talking about options for the dashboard and what would I do if I were in the DWP’s shoes. So I thought I would spell these views out publicly so that others can accept or quibble!
Please don’t build a dashboard
Just because not everyone can supply data on Day 1, does not mean that we should delay or abandon the project
There have been some desperate cries from various media outlets for the government not to “abandon” building a dashboard. Just to be clear: as far as I am aware, nobody has ever asked the government to build any sort of dashboard. The private sector is fully capable of building the technology to support people to see their pensions in one place. PensionBee is already facilitating live pension balances to our mutual Starling Bank customers and various other aggregators are rapidly following suit.
The government is poorly equipped and incentivised to maintain dashboard technology that the private sector is desperate to support. So what should the government help with?
Decide on the priorities
The objectives for the Pensions Dashboards are lofty and they include the following:
- Reconcile people with lost pensions as much as possible (especially those who switch jobs frequently and have been auto-enrolled)
- Help people see all their pensions in one place so they can plan for retirement
- Create engagement around pension savings
Achieving all of the objectives is not possible because not all providers will be able to supply clean data on Day 1. But just because not everyone can supply data on Day 1, does not mean that we should delay or abandon the project. Rather, we need to achieve our priorities in order.
The obvious solution is to start with the first objective to reconcile people with “lost” pensions. These people will happily log in periodically to “find” their “lost” pensions as more providers join because it is a bit like finding free money. They do not need to see everything at once.
Decide who needs to supply data and when based on the priorities
To start with the first objective, the government should compel those who can give data to do so. These will typically be the newer auto-enrolment providers and their data will help reconcile job-switchers with their “lost” pensions. I don’t believe that DB pensions or the state pension need to be part of the launch phase – DB pensions and the State Pension are rarely if ever “lost”. In order to achieve the second objective, to help people see all their pensions in one place, the DWP should then give deadlines to those who must clean. Cleaning should not really be negotiable. Under GDPR requirements, all providers have an obligation to maintain clean customer data. It is not the customer’s problem if pension provider data is (horrifyingly) written down in excel spreadsheets. And finally, once the data is there, we can talk about ways to create engagement and set some parameters for the private sector.
In sum, I would be in favour of splitting providers into “groups”, starting with those who can supply data doing so in 2020 (let’s be ambitious, but also realistic) and staging the rest of the providers over 3 years. Providers can voluntarily choose which group they belong to, bearing in mind their choice reflects their priority to maintaining clean customer data.
Set the groundwork for the data standards, but don’t go reinventing (or in fact building) the wheel
At the end of the day pension data belongs to the consumer and the consumer should have the right to share their pension data with whomever they wish, subject to that person being responsible. This is the principle behind open banking that has required the UK’s major banks to make our data freely available to companies that hold the right permissions with the Financial Conduct Authority. To progress the technical standards behind open banking, the regulators created the Open Banking Implementation Entity (funded by the UK’s nine largest banks) to design the API specifications, security and messaging standards and guidelines for the participants. There is no reason that a similar body cannot exist for pensions.
So that’s it in my opinion. I don’t mean to trivialise what is clearly an important matter for consumers, but I do think it’s important to see the forest through the trees. So here’s to the DWP’s Feasibility Study – let’s hope it’s worth the wait.