- Pensions Dashboards still 3 years away and measures to
improve PensionWise take-up are too weak
- Dashboard acceleration needs data reconciliation and standard
statements
- PensionWise ‘nudge’ won’t be a game-changer, auto-enrolment
is needed to protect more people against scams
Disappointingly slow pace of change for pensions: The Government
has today unveiled the latest in its ongoing series of pension
reforms, designed to improve the way pensions work for customers.
I must admit to being disappointed at the slow pace of change and
fear that increasing numbers of people will be at risk of losing
their pensions to fraudsters, especially during the current Covid
crisis.
Pensions Dashboards not now expected before 2023: Promises of a
Pensions Dashboard for 2020 have been dashed. The Dashboard
Delivery Project has released a new timeline which suggests only
a ‘first version of data standards’ and specification of digital
architecture will be ready this year. The project is still
working on challenges of data security, identity verification and
matching people with their pensions. In 2021, service standards
and design will be developed with chosen suppliers and only in
2022 will the first volunteer pension providers be connected to
any system. Compulsion on schemes to connect to the ‘dashboards
ecosystem’ is not slated till after 2023.
Pension Schemes say they need time to prepare accurate data: The
Government now admits that pension data is not in a fit state to
be loaded onto a dashboard and that schemes still need at least
two years to prepare. Five years after the dashboard was first
promised, and despite many warnings of the data problems, pension
providers and Regulators have made precious little progress on
data accuracy checks or reconciliation requirements. The
Dashboard project relies fundamentally on correct information
being fed in.
Simpler standard statements are essential to customer
understanding: The Government’s proposals for standardised
easy-to-read annual pension statements are vital to help move the
Dashboard project forward. If all pension providers are required
to produce standardised information that can be loaded onto a
dashboard when it is ready, then pension savers will be able to
make better informed choices and plan their retirement income
better.
DWP seems reluctant to ensure significantly improved take-up of
the excellent PensionWise guidance service: The Government also
announced today that it plans to consult on new regulations
requiring pension providers to ‘nudge’ customers to use the free,
impartial guidance service that has helped many people (though
nowhere near enough) make better decisions and avoid scams. The
aim is to make taking guidance ‘a natural part of the journey’
when savers make decisions about their pension pots. However,
research for the DWP last year shows only a tiny improvement in
take-up from just giving a nudge. Telling people about
PensionWise does not do enough and leaves hundreds of thousands
of people one their own, at the mercy of fraudsters and having to
cope with complex pension decisions without knowing the risks.
Without help, most consumers cannot make informed choices: The
Government’s stated goal is to ‘ensure people have the necessary
support and information to make informed decisions’. It
recognises that people need PensionWise guidance, to help
customers navigate the complexities of pension rules and
understand the risks, because once their funds are withdrawn it
is too late. With hundreds of billions of pounds of taxpayer
money having been contributed to pensions from tax relief,
alongside individual and employer contributions, there is a wide
societal interest in trying to help people make the most of their
pension. Unfortunately, however, there are no targets for
improving take-up of the help that can be vital to protect them.
Auto-enrolment into guidance would provide a significant boost to
customer protection: PensionWise take-up is extremely low – only
around one in ten savers use this excellent service and many have
no idea what it is or how to access it. However, those who do,
report extremely high satisfaction levels. it is clear that
people will not book this kind of appointment themselves, but if
pension scheme providers make an appointment for them, far more
would benefit. Those considering taking money out of their
pensions could be automatically enrolled into PensionWise as the
‘default option’ and research from Just Retirement found 90% of
customers would not opt out of a guidance session that was booked
for them. Yet, disappointingly, the Government has rejected this
idea so far. I hope they will reconsider.
Urgent reforms are needed: Standardised annual statements, common
data standards and more PensionWise would give customers clearer
information and make better use of the pensions. These issues
need to be addressed rapidly, not left in the slow lane.
