A dash of common sense

As you read this article the DWP’s consultation on the pensions dashboard will have closed and we will be waiting for the response.

The pensions dashboard (or dashboards, as the consultation alludes to), holds the promise of increasing engagement in pensions. Many more people are making regular savings for their retirement following the implementation of automatic enrolment and the choices available on retirement must be bewildering to anyone outside the pensions industry (and probably a good few of us within it!); the need for engagement is clear.

Perhaps the main challenge for the pensions dashboard is to balance a multitude of differing needs whilst keeping things simple.

My thoughts on this are that it shouldn’t try and answer every conceivable question a person might have about their pensions savings.

There is already a lot of information made available to pension scheme members via benefit statements, annual reports and chair’s statements, booklets and newsletters, and websites; the problem is that none of it is joined up. As an aside, in conjunction with the rollout of the pensions dashboard, the DWP may wish to revisit the disclosure obligations on pension schemes and consider again whether a principles based approach would be more appropriate going forwards than the current prescriptive requirements.

Ideally, the pensions dashboard itself will display only basic information about a person’s pensions savings but include links to the contact pages of each pension scheme’s and provider’s website (where there is one), and other useful information sources, i.e. bring the basics together and enable those who want to obtain any further information they need. Jargon, and indeed caveats and risk warnings, should be kept to a minimum. Fundamentally the pensions dashboard should enable people to find out where their pensions savings are held and how much they have saved to date. In order to meet this objective, pension schemes and providers must be compelled to provide data to the pensions dashboard. The suggestion in the consultation that small self administered schemes should be exempt from compulsion seems a reasonable one given the close involvement members normally have with such schemes. I am not convinced that other schemes should be similarly exempt.

Questions such as ‘what are my goals?’, ‘am I saving enough?’ and ‘what are my choices?’ are not so straightforward to answer, and in many cases answers to these questions are likely to need input from a financial adviser.

The pensions dashboard shouldn’t attempt to answer such questions but should point people in the direction of where they might get help to find the answers.

The consultation proposes that the new ‘Single Financial Guidance Body’ should convene and steward a delivery group, drawn from experts, the pensions industry and government, to implement the pensions dashboard. Whilst delivery of a secure and accurate pensions dashboard is of course important, what should not be overlooked is the promotion of the pensions dashboard to bring awareness of it to the millions of people who ought to be engaging with their pensions savings and planning for their retirement.

Perhaps the main challenge for the pensions dashboard is to balance a multitude of differing needs whilst keeping things simple.

The success of the pensions dashboard will in part be measured by the number of users it has, but who will use it if the public are not aware it exists? Perhaps awareness of the pensions dashboard, and indeed the Single Financial Guidance Body, and engagement with pensions savings could be kick started with a public vote on the new name for the Single Financial Guidance Body… or maybe not; we don’t want to end up with the financial guidance equivalent of Boaty McBoatface!

The DWP believes that the pensions dashboard can be introduced this year on a voluntary basis without the need for any new legislation.

Whether or not this is true will depend on the model chosen for the pensions dashboard. In any case, a lot needs to happen in a relatively short space of time if this is to be achieved. Service providers will need to be selected and the operational technology developed and tested. Separately, pension schemes will need to consider whether to participate in the voluntary phase.

Key to this will be what assurances can be provided in relation to the security of personal data that is transferred to the pensions dashboard.

Although it appears that personal data will need to be transferred only after an individual request via the pension finder service, data controllers in relation to pension schemes will need to review and update their privacy notices to make their members aware of the when, what and where of personal data transfers to the pensions dashboard. Pension schemes will also need to work with their own service providers to establish systems and processes for dealing with piecemeal requests from the pension finder service efficiently and cost effectively.

I look forward to using the pensions dashboard in due course, if only to find out I need to save far more than I currently am, if I want a financially secure retirement!

Jane Briggs
Director – Squire Patton Boggs

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