Ducks and dashboards
Getting your 'ducks in a row' is one of those phrases we all know the meaning of although its origin is obscure. It was not a phrase coined by Shakespeare (always the first place to look when trying to find the origin of a phrase) but seems to have emerged later and probably as a reference to a mother duck and her ducklings. That said, other contenders for its origin include wharf side cargo bins, various sports or the metal weights used by engineers to define a curve. No one seems to know - but we do all agree that to get our ducks in a row is a good thing.
The pension dashboard came into public policy when, in his last budget, George Osborne announced that the industry would design, fund and launch one by 2019 (very kind of him). That said, the concept, arguably, was based on the earlier idea of a virtual aggregator that emerged during the pot follows member/hard aggregation debate three or four years ago.
The concept is simple; a member should be able to log onto a website and see all their pension provision in one place. In being able to, they will be able to plan their retirement more effectively and may even consolidate some of their pots to improve efficiency.
Responding to the clarion call of government (and under some pressure from the Treasury) the industry leapt to the task under the leadership of the Association for British Insurers.
Now, let me be clear: the dashboard is a good idea providing it has its ducks in a row - it must be clear what problem it is trying to solve, it must be secure, all singing, all dancing and all inclusive.
The problem. For all sorts of reasons members don't have adequate retirement incomes. For me, the dashboard should make it simpler for them to do so.
Security. The project team is, not surprisingly, all over this one. I'm not an informed consumer, but I understand the security will be missile grade.
Inclusive. The dashboard concept only works if it gives members a view of their total provision. Early signs, however, are that the first version will not. Most critically, it will probably exclude state pensions (a large chunk of most peoples' provision). Inclusivity will, also, only work if there is compulsion. Schemes will not volunteer to do the work to join in.
Ability to make informed decisions. The dashboard will not only have to give members enough information, it will have to do it in the right way. At the top level this should be simple (recognising complexity at the point of production doesn't mean it can't be simple at the point of delivery). Members don't need to know about investment returns and costs - they simply do not have the data available to them to decode this - all they need to know is what they are on track to receive and that they are getting value. A simple traffic light system, on total income and value (based around the work done by defined contribution trustees and independent governance committees) should be enough. Incidentally, in due course, it should also become more expansive. If the dashboard could become a holistic personal financial planning dashboard, or even linked to personal banking, it would get far more attention.
Functionality. Inclusive well-presented data, however, will not be enough. The dashboard must make it simple for people to take action: whether to consolidate their pots or increase their contributions. If they have to go elsewhere, they won't.
The dashboard should not be launched until it has all its ducks in a row - even if that means later than 2019. If it is, it will quickly lose the interest of the consumer - it will, we could say, become a lame duck.