Fraud warnings over pension dashboard
First published on 03 of December 2018 • Updated 07 of June 2019
Next year is expected to see the introduction of the new pension dashboard – a place to manage all of your pensions in one place. But doubts are already being raised over its security and effectiveness in such a complex market. Article by Nick Green.
This week the government will unveil its plans for the long-awaited pension dashboard, which has been in the pipeline ever since pension freedom was introduced in 2015. The dashboard is intended to provide an online ‘one-stop shop’ for people with multiple pensions (that is, most of us), from which the user can monitor the performance and projected size of pots, track down ‘lost’ pension pots and potentially perform other actions too. Most significantly, the dashboard should allow people to see clearly what their total income will be in retirement, and so prompt them to take the necessary steps to increase their savings if necessary, or seek professional advice.
However, a number of concerns are being already raised about the dashboard, relating to both its safety and its usability. Independent MP Frank Field has written to pensions minister Guy Opperman warning that the dashboard could provide a back door for pension fraudsters, who accounted for some £51m worth of pension and investment losses last year, with the average victim losing £91,000 apiece.
Why a pension dashboard is so useful – and vulnerable
A typical UK worker will accumulate around 11 different workplace pensions over their career. All will be invested in different funds, and some may even be forgotten over the years and never tracked down (some £3bn worth of pension savings are currently unclaimed). A pension dashboard should in theory allow a saver to view all their pots in one place, along with the balance of each one, the funds in which they are invested, past performance and options for accessing the money. With pensions now more complex than ever, such a tool would be a great help to any pension saver making key decisions about their retirement plans. The risk is that criminals may find it equally useful.
Field has insisted that ‘data security mechanisms and regulatory protection must be in place before the dashboard goes live’. The rate of pension fraud has risen sharply since the introduction of pension freedom (which made it easier to access pension pots) and Field is among those cautioning that the new dashboard could be another point of vulnerability. He has suggested that the government should ensure a secure authentication portal similar to its own Verify service to provide the necessary level of protection.
Another concern voiced by Field and others, among them former pensions minister Steve Webb, is the risk of the dashboard falling flat if providers are not obliged to provide customer data. Webb, now director of policy at Royal London, is concerned that a voluntary system of signup will mean that a potentially powerful tool is rendered ineffectual. He said, ‘To make a dashboard work, it is vital that the government legislates to require all pension schemes and all pension providers to take part, otherwise the dashboard will be like a jigsaw with missing pieces. A comprehensive dashboard is likely to take several years to develop and the government needs to move quickly now from consultation mode to delivery mode. Several other countries have had dashboards for years and it is time the UK caught up.’
Not one pension dashboard but many?
The latest indications are that the pension dashboard will be an evolving tool, and may initially come in several different versions that consumers can choose from, depending on their particular needs. However, at this stage there appear to be no plans to force providers to be involved, either in providing consumer data or in revealing the size of pension pots – the government has said it will ‘let industry take the lead’. There is also no guarantee that state pension data will be included on the dashboard, so consumers may not be able to get a complete picture of their income in retirement.
Despite the long and troubled gestation of the dashboard, plenty of industry figures are upbeat about its eventual impact, including Anthony Rafferty, managing director of Edinburgh-based Fintech company Origo. He said, ‘There is no doubt in my mind that pensions dashboards will be instrumental in helping people to become more engaged with their pensions and also their retirement planning. With suitable controls and combined with education, guidance and advice [they] can be a massive catalyst to help consumers prepare for and … enjoy their retirement.’
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