When we reported in January that the government had confirmed its support for the Pensions Dashboards project, we mentioned that Retirement Line would be contributing to the latest consultation exercise. That has now happened, with our response led by Mark Ormston, Retirement Line’s IT and Administration Manager. Below, Mark summarises the main points of our submission to the consultation.
We have been discussing the Pensions Dashboards project within Retirement Line for at least two years. Throughout this period, we have always believed the creation of Dashboards is a necessary step for the pensions industry.
The obvious overriding benefit of Dashboards for consumers would be the ability to have sight of all or most of their retirement savings in one place. This would simplify their financial retirement planning, and potentially reduce the incredible amount of ‘missing/forgotten’ pension policies (equating to over £20 billion according to some reports).
But there is another huge benefit obvious to those of us involved at the decumulation stage, when consumers turn their pension savings into their chosen form of retirement income.
Consumers can be frustrated at the sometimes lengthy processes and paperwork required when locating or requesting information on their pension. This is especially an issue when they are approaching decumulation. At this time, they often face the differing complexities of each individual scheme, out-of-date valuations and mixed communications regarding their available options.
We would be delighted to see Dashboards that contain clear, relevant and real-time data. Given time for innovation and development, we hope that such Dashboards will quicken decision-making and reduce administration timeframes.
In too many cases, it takes unacceptably too long for funds to transfer across from pension schemes to providers of retirement income solutions. These delays can significantly affect the income level achieved by those choosing an annuity. Some current transfer timeframes do not reflect well on the pensions industry. We would love to see all our clients receive their retirement income within weeks of initiating the requests, rather than the month or two (or even longer) that it can sometimes take.
In our response to the consultation we identified several essential ingredients to a successful Dashboards project and implementation. These included the following:
For similar international initiatives, ‘compulsion was absolutely necessary…to gain critical mass as quickly as possible’. The project team should listen and act on this and provide a compelling clear and realistic legislative framework.
Inaccurate, incomplete, or out-of-date information could result in consumers making poor financial retirement decisions. This would potentially leave them distrusting the Dashboards and the industry as a whole. Success will depend largely on the amount and quality of the available data.
The consultation asked whether ‘certain types of information should not be allowed’ onto Dashboards, in order to safeguard consumers. A list of items that should probably be withheld from the Dashboards would be extensive, so in our response we supplied a list of basic information we felt should be supplied as follows:
We would like government to pay close attention to our last bullet point. The functionality of providing figures should follow a set and universally agreed formulation.
In our opinion, the formulation should be clear and simple enough to be visible on the Dashboards. It should allow the user to understand how the figure being presented has been worked out. Without this, the Dashboard could provide potentially misleading information, resulting in poor outcomes and consumer frustration.
We also disagreed with the suggestion that small self-administered schemes (SSAS) and executive pension plans (EPP) shouldn’t be compelled to be included in the Dashboards. These defined contribution schemes, like others, are transferred on the open market to purchase retirement income products. For policyholders, these funds have important roles to play when looking at their financial retirement planning, so we believe the Dashboards need to have information about them.
Any breaches of data would be disastrous. Therefore, the most up-to-date and best security systems and processes should be used to give consumers peace of mind.
Timeframes for implementation will largely be led by pension scheme providers, and therefore we cannot comment on how long implementation will take. However, we strongly feel that timeframes should be realistic and then strictly adhered to. The pushing back of timeframes or vast extensions will inevitably dent consumer confidence in the project. If one of the findings in the consultation is that more time is required, then it should be given.
We support a phased approach, with an initial launch of suitable useful functionality and additional features added gradually. But we believe that the initial launch shouldn’t be minimalistic: any attempt to produce Dashboards with minimum functionality and/or data could potentially be harmful to the Dashboards’ reputation and future use.
In our opinion, implementation should begin with a non-commercial Dashboard to help build consumer confidence and support. If plans for commercial Dashboards are discussed in the future, they should be heavily regulated so no reputational damage to the non-commercial Dashboard can occur.
In our considerable experience, many consumers have difficulties understanding their retirement savings and the options available. Unfortunately, thousands are also unable to afford advice, or feel uncomfortable speaking with services such as Pension Wise.
In such circumstances, they sometimes turn to their spouse, a family member or someone with more financial knowledge to act on their behalf. These consumers should not have the Dashboards option removed from them, so measures to enable ‘power of attorney’ style arrangements should be in place.
In addition, those who cannot access the online Dashboards themselves (the visibly impaired for example), should have access through other methods. One suggestion would be through relevant security checks and communication over the phone with a team at the Single Financial Guidance Body (SFGB).
We don’t doubt that the Pensions Dashboards project will prove complex and challenging. However, we are also tremendously enthused by the level of support and cooperation already evident across the industry. There is wide agreement that providing easier access to better information has the potential to lead to better decisions and outcomes for millions of consumers.
Retirement Line is the market leader in the annuity market: in the first three quarters of 2018 for example, we facilitated over 1,500 individual annuities, equating to over £80.5 million of funds. We would be happy to offer our considerable experience and knowledge to the project, and would be delighted to be part of any of the Pensions Dashboards delivery or steering groups.
A complete copy of Retirement Line’s 2,200-word submission to the consultation exercise is available on request. If you would like to see this, or have any questions or comments about Retirement Line’s submission, please email Mark Ormston.