Pensions Dashboards have the potential to revolutionise consumers’ engagement with their pensions. By making clear where the £20 billion of lost pensions are, consumers will be empowered to take control of their money and better prepared to plan for retirement using convenient forecasting tools. Through open data, consumers will be able to integrate today’s money with tomorrow’s money, resulting in higher contributions and better retirement outcomes.
However, consumer innovation must be delivered responsibly and Pensions Dashboards will only thrive in an environment that provides the appropriate protection for consumers.
Following today’s publication of the Pension Schemes Bill, below are my thoughts on how to deliver the safe and innovative ecosystem consumers deserve.
Enable safe data sharing
The government has been clear that multiple Pensions Dashboards services will exist from the outset and therefore safe data sharing must be enabled from day one. The consumer owns their data and they will wish to share it. It is important that sharing is only permissible with trusted, authorised and regulated third parties. It is a myth that delaying so-called “commercial dashboards” will prevent the free flow of data. On the contrary, if we fail to consider, define and communicate data sharing protocols and expectations with consumers, any scammer will be legally allowed to scrape the data. Scammers thrive in the grey zone.
The Financial Conduct Authority has been tasked with defining the appropriate authorisation mechanisms. It would be a stark anomaly and an unprecedented regulatory arbitrage to require specific regulations to access banking data through Open Banking while allowing any form of regulated entity to access pension data. This loophole should not be allowed to exist and the Financial Conduct Authority should begin to engage on the matter with immediate urgency so as not to delay the launch of public dashboards.
Appropriate information must be displayed on the dashboards to allow consumers to begin the process of pension planning. Our view is that the same information available on Simpler Annual Statements, with the addition of charges displayed in £ and %, will help consumers make the right decisions. Transparency is key and there should be no quibbles from the incumbents, as there are already regulations requiring them to make this information available.
Stronger reforms of non-workplace pensions
After seeing their pension information, consumers will wish to take control of their money and consolidation may well be an appropriate choice. Pensions Dashboards can and should exist in a world of well-governed defaults. The Financial Conduct Authority is currently consulting on defaults in non-workplace pensions. Mandating a single, well-governed, charge-capped default for each and every pension provider will help prevent and mitigate the very reasonable concern that consumers will exchange good workplace pensions for inferior and expensive products.