George Currie, Policy Lead: Lifetime Savings, PLSA provides an update on the Pensions Dashboard, reporting on how the government is approaching the project
The Government has been clear for some time now that it expects the pensions dashboard project to be “industry-led” and “government-facilitated”. just what this meant in practice, though, was unclear prior to the publication of the feasibility study. with its release on 3 December, the Government’s view crystallised into a set of concrete proposals, which the pensions industry will now have the opportunity to shape over the course of the consultation period.
Central to the proposals set out in the consultation are important design principles by which the government believes the project should be defined. They aim to put the individual at the heart of the process, ensure individuals’ data is secure, accurate and simple to understand, and guarantee the individual is always in control over who has access to their data. These principles provide important safeguards that will be essential to savers’ confidence in the Dashboard.
Confidence will also stem from comprehensiveness, and the consultation outlines a means of achieving a far-reaching picture of people’s pension savings on a single online platform. All schemes, according to the consultation, will be compelled to prepare and submit the data they hold on savers’ pensions to the Dashboard, though it leaves some room for exemptions of particular schemes. This will take place over a phased implementation period.
The government intends to play its part by making the State Pension available on the Dashboard. However, this may not happen immediately, as the appropriate systems may take some time to develop. The £5 million allotted to the project in this year’s Budget will be used, in part, to help to develop the technical solution required to place State Pension data on the Dashboard.
Although it’s clear that the government wants to empower the industry to offer multiple commercial dashboards in the future, the consultation is clear that the project’s initial output will be a single, non-commercial dashboard, hosted by the Single Financial Guidance Body. Before schemes and providers are allowed to offer commercial alternatives, the government will ensure that there is an appropriate regulatory framework in place.
To create a regulatory framework that is fit for purpose, it will be important to ensure that the governance of the project is up to scratch. The governance proposals set out in the consultation indicate that the government has been heavily influenced by the example of open banking and, specifically, the implementation entity that was created to deliver it. Pensions Dashboard governance proposals.
WHAT WE THINK
Our views on the Dashboard project have been shaped by our members. They have told us that there should, at least initially, be a single ‘public service’ dashboard, focused on providing information to savers about their various pensions, and that pension schemes should be compelled to provide their members’ pensions data. Crucial to achieving this will be the presence of a public entity, possibly the Single Financial Guidance Body, in the governance of the project.
Although the industry-led approach worked very well during the prototype ‘proof of concept’ phase in 2017, the challenges of involving the many and varied parts of the pensions sector are real and require a guiding hand. We believe that a strong public sector role in the governance of the project can provide the sort of cross-industry coordination that is required and continue to make this case to the government.
A clear public sector voice in the project’s governance arrangements would also make it easier to include the State Pension on the Dashboard. We have consistently argued that this is essential. For most savers, the State Pension is their biggest single source of retirement income. If it were not to be included on the Dashboard, savers would not be able to “view all their retirement savings in one place”, which was a central element of the original remit of the project.
Funding for the project could be provided directly by the Government, through a government loan, or by the industry. We welcome the Treasury’s commitment to provide interim funding in this year’s Budget. In the long term, our view is that the Dashboard infrastructure and its governance should be funded through an industry levy. This should mean that all those who stand to benefit from the Dashboard, including financial advisers, should play a role in funding it.
We intend to respond to the Feasibility Study with a detailed submission. To add maximum value to the government’s deliberations on the future course of the Dashboard project, we would welcome input from as wide a cross-section of the PLSA’s membership as possible: we’ll be in touch to gather members’ thoughts in due course.