Mark Boyle – Royal London event 2016
Pensions dashboards around the world
Thank you to Steve Webb for inviting me to speak here today. I am the Non-Executive Chair of The Pensions Regulator (TPR). We are the independent regulator of workplace pensions. We are an at arms length body of the DWP – not HMT. So to make clear, I am speaking here today for TPR, not for the Treasury, and not for the Government.
It is a privilege for me to come and listen to other countries who are further on in their pensions dashboard journey than we are here in the UK. Hearing your fascinating reports has given me much food for thought. In the next 15 minutes I’ll outline my thoughts on the position we are in the UK, I’ll mention some of the challenges we’re facing, some of which we’ve heard about this morning, and then I’ll offer a suggestion for a roadmap for the future – a potential course of action to make the dashboard a reality.
First, let me outline the position in the UK
As a number of you will already know, this has actually been a pet topic of mine for some time. It has been clear to me from a broad range of discussions that I have had, including with HMT, DWP, and the FCA during the past two years that I’ve been Chair of TPR, and we all think the dashboard is a ‘good thing’. A dashboard would meet not only a variety of consumer needs, it would also meet several industry and government objectives.
The success of automatic enrolment, which began its roll out in 2012, means that more and more people are saving for their retirement. And these people are mobile, they will move between jobs much more than previous generations. That means they will have more pension pots. And of course they will have more freedoms and options open to them when they want to access these pension pots. That in turn means they will need more information, so they can make informed choices. So the development of pensions dashboard seems a very good option for consumers at all stages of the accumulation and decumulation journey.
A dashboard sits well with wider government savings and pension policy too, particularly the drive to encourage people to take responsibility and ownership of their retirement savings. In its report published only yesterday, the Work and Pensions Select Committee are also recommending that the Government consider what steps to take in order to create a dashboard by 2019.
The dashboard could play an important part in helping to close the savings gap, by showing people clearly how much they need to save in order to enjoy the lifestyle they want in the future. It is generally accepted that the UK is facing a problem of 'inadequacy' – savers are not saving nearly enough, even with automatic enrolment coming in. But many people aren’t aware of how much their pension pot is worth and what level of income they are likely to have as a result. If they could see clearly on a dashboard that their predicted income in retirement is falling short – there is more chance that they will want to top up their pensions while they are working.
And clearly, most of the pensions industry is keen on the idea of a dashboard too – there are benefits for product providers in terms of enhancing trust and building the reputation of their industry.
So we are all in favour of the dashboard – it would be good for savers, good for industry and good for government. Indeed there is already much work going on, with various projects and prototype products already being developed. Much of the technological infrastructure is already in place. However, much of the work going on at the moment is disparate. We agree that there is a real need for somebody – or some bodies - to take a strong leadership role in the direction and implementation of the project.
The Chancellor’s announcement in the budget in March this year that there would be a pensions dashboard by 2019 has injected a sense of energy and urgency into all of our thoughts. This has increased the need for us to pull our thinking together, to find ways of public and private sectors to collaborate to make this a reality.
So what are the challenges that we’re facing?
The dashboard is a complicated project, not least because it means different things to different people. Many of my fellow panellists will recognise some of these challenges and, as we heard this morning, have gone a long way to overcoming them. There is the interaction between state, occupational and personal pensions – and how to corral them together. There is the fact that we will be pulling data from different places, involving stakeholders who have very different points of view. There is the issue of data ownership and data security. And then there is what you might call the 'bells and whistles' problem. For example, in order to provide the 'predictor' element on the dashboard – what projections would we use? What rules of thumb should be incorporated? And what other forms of saving, such as ISAs and equity in property, should be included?
Roadmap to what we think the solution could be
So, plenty of questions and complex challenges. For our part, at TPR, we believe these challenges can be addressed by taking a 'start small; build credibility' approach. Don’t try to achieve everything at once.
One option may be to focus, initially, on those people who are saving through automatic enrolment. These savers generally have simpler pension arrangements than those at the decumulation stage. The automatic enrolment programme, which The Pensions Regulator is leading, has been a huge success so far and it would make sense for us to build on that - to use our experience, knowledge and contacts gained from that process. So we would start with an approach that would give people access to information on their workplace pensions from automatic enrolment. Then, in the future, we could look to adding the state pension, residual and legacy pots, and, in due course, perhaps other forms of savings.
And what do we think the UK dashboard would look like? There are many views on this, and the following is our contribution to the public debate on how the dashboard project might be advanced.
At TPR, we believe we should start from a position that the data representing an individual’s pension entitlements belongs to that individual and they have a right to be able to access it and use it as they wish. So we suggest that the first step should be to agree to what I shall refer to as an 'open data source protocol'. This is most likely to be achieved through an agreement between a small number of leading pensions providers and administrators to open up their data, subject to the strict terms of the protocol, to be accessed by consumers.
Eventually, all pension providers, all administrators, all schemes, will also sign up to the protocol. But let’s start small.
It is vital that the data is accurate and credible in order that consumers trust this information. So part of the protocol must be that participants can verify the accuracy of their records.
Secondly, what of the dashboard itself? Consumers should be able to access their data through an 'aggregator' tool. This will be a statement of what a person’s total pension pot is worth, right now, presented in one place.
Thirdly, it should be a 'predictor' tool – a projection of what a person’s income will be at some point in the future.
Fourthly, we do not think that there should be just one, one-size-fits-all, tool. Consumers at different stages of accumulation and decumulation will have different perspectives, and whilst some consumers will want to access their information through a website, others will prefer to use an app on a mobile device.
So if we really want to engage consumers, the open source data protocol must be accessible via a number of service providers. This could include app developers, or websites, or modelling services. Any service provider will be able to create a tool that suits their customer base – and each of these products will draw on the open data source protocol. So for example Age UK may develop a website that provides information for their members on decumulation options. Whereas a bank that targets graduates may develop an app that is more about auto enrolment and debt management. Both of these will look very different, but each will be drawing the individuals’ pensions data from the same source – through the single open data protocol.
So in our vision the dashboard is unlikely to be one tool. It is more likely to be a variety of applications that provide a person’s pension information in a way that is relevant and useful to them. And they may move between applications as their needs change.
And, let us not forget that many people also want human contact when they are seeking help on complex financial matters. So whatever happens to Pension Wise, TPAS and MAS, let us not forget that a dashboard alone is unlikely to meet the needs of all consumers.
So that’s one potential way forward. But whatever route we do take, it’s clear there is going to have to be a joined up approach from all of us, requiring collaboration and coordination.
It was great to hear Harriett Baldwin, Economic secretary to the Treasury, say last month that she will act as the ministerial champion to support industry in designing and developing the dashboard. At TPR, we believe that we are well placed to help with this and we see ourselves playing an active supporting role to the Treasury in bringing people together, facilitating debate and encouraging solutions that will make the dashboard a reality for millions of savers.
Our work on pensions flexibilities has taught us a lot about how to contribute to a cross-sector, cross-government, consumer-focussed, educational drive. We could help bring together providers, technology and digital experts, even behavioural experts, in a working group. Much could be done for example by bringing in the four largest master trusts and six largest pension providers and administration companies to work together on the open source data protocol.
In the first instance we are suggesting three fairly simple steps. We are recommending these three steps in our discussions with HMT and elsewhere within government:
- Establish a steering group; with both government and provider participation.
- Develop a clear statement of intent from government and the regulators (DWP, HMT, FCA and TPR), all committing to the development of the dashboard. The statement would be government talking with one voice, making clear what our expectations and contributions would be.
- Identify clear ownership and governance, both of the time-limited project to get the dashboard produced, and then ongoing ownership and governance of whatever is created.
In summing up, it’s clear that there is the political and commercial will to make the dashboard a reality. But it’s not within TPR’s gift to do it alone. We do see it happening, and we do intend to play an active role to help make it happen. We need to work together, public and private sector, and we need to take what we can from the international experience and skills that we have been hearing about this morning in order to shorten the development time.
At TPR we see a future where members have a greater understanding of their pensions, a future where savers are more engaged with their pensions, a future where people can see what their pensions are worth when they want to and in the form in which they wish to receive it. We see this to such an extent that we have written into our current Corporate Plan, which was published last month. But it’s a vision that will require all of us to work together to make happen.