Darren Philp says while the DWP's response to the pension dashboard consultation is a step forward, there is still much to do to ensure success of the project
Last week, we got the long-awaited Department for Work and Pensions (DWP) response to the dashboard consultation. Even though it's taken a little while to get to this point, there is much to applaud in the DWP's document. There is still a lot of work to do, and many hurdles to overcome, but it sets the scene well and gives the dashboard a good chance of success.
Things I particularly liked included:
- The government's commitment to legislate for compulsion for all types of pension provision. This is a must if we are to give savers a complete overview of their pension savings.
- The staged approach to getting schemes and providers signed up to the dashboard. This makes sense from an implementation perspective, although I would like to see all schemes support the ‘find a pension' functionality as soon as practicably possible, as this will bring the dashboard to life for pension savers while we wait for schemes to provide comprehensive data.
- The confirmation (again) that state pension data will be on the dashboard, although, like others, I think it is a mistake for that not to be on the dashboard from day one.
- The commitment to multiple dashboards. I am supportive of the Money and Pensions Service providing a non-commercial dashboard, but it is also important to allow other players, with members' consent, to use the data to provide services to savers to help them make the best use of their retirement savings (there is a but…… more on this below).
- Initially a single pension finder service will be built, but the DWP is keeping an open mind about the architecture over the longer term.
So, there is much to like! But there is also cause for concern. As always, the devil in these things is in the detail. The thing that concerns me most is that while the DWP are open to multiple dashboards, they will only let financial conduct authority-authorised firms provide dashboards initially.
Now, I can see why the government has come to this conclusion. It is important that dashboards are well-regulated and meet certain standards. This is something that is paramount for maintaining consumer trust and confidence. However, there has been much talk of master trusts being among the initial schemes to provide data to the dashboard. By my reckoning, the government will want master trusts to do this on a voluntary basis, at least initially, while they pass the necessary legislation for compulsion. But why would a master trust rush to provide data when it can't provide a dashboard? I'm sure master trusts will be among the first to be compelled to provide data, but if the government wants to get things off the ground in a voluntary way, have they really thought through the incentives?
And why should initial dashboards solely be the preserve of insurance companies, when master trusts have been at the vanguard of delivering the government's flagship AE programme?
Not only does this not make sense from an incentives point of view, it also creates an unlevel playing field. Arguably, the master trust environment is a better place to start with the rollout of wider dashboards, so it begs the question: Is the government missing a trick? Yes, there are some words in the consultation response about new regulatory permissions if needed, but why put up an unnecessary barrier for master trusts to be part of the dashboard revolution? Personally I think this is a big mistake and one that needs to be sorted out if momentum behind the dashboard is going to be maintained.
Overall it's a good response. It is very much glass half full. But the glass could have been even fuller, and I would urge the government to think again on this crucial point. It is important for the success of the project and I would argue important for the member, which is what the dashboard is all about.
Darren Philp is director of policy and communication at Smart Pension
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