Behind the Headlines: What dashboards will mean for consolidators | Money Marketing

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In my early days as a reporter at Professional Pensions I became interested in the concept of pension dashboards. This a place where in theory you should be able to see all your savings in one place.

I wrote in depth articles about the Swedish and Danish experience with dashboards and what they could teach the UK. Most pensions dashboards will be accessible from next year.

The Department for Work & Pensions has confirmed UK pension schemes must start connecting with the pensions dashboards ecosystem from April 2023.

Much of the commentary has focused on whether the project will hit its deadlines and satisfy consumer expectations. There have also been endless technical questions raised about data collection and cyber security.

But one dimension that seems under reported is the effect it will have on pension consolidators. At Money Marketing Interactive in Leeds this aspect was pointed out to me by former pensions minister Steve Webb.

He said the UK has taken a different approach to other countries as we are setting up multiple dashboards. It will not be cheap as you have to be Financial Conduct Authority approved and set up your own dashboard.

Webb thinks we are about two years away from consumers having mass market access. In the run up to do this he believes it is likely the public will be bombarded with advertisements that resemble market street stalls. There will be a lot of frenetic activity with much media coverage and speculation about who has the best dashboards.

The loot up for grabs is vast and runs into billions of pounds. It consists of old, lost or dormant pots that have high charges and obsolete investment strategies. Putting a definitive number on how much money there is for providers to grab is tricky.

According to the FCA the non-workplace pensions market alone has around 13 million accounts and accumulated pension savings of around £470bn. It adds non-workplace pensions are used by self-employed consumers without access to a workplace pension, as well as by consumers wanting to supplement their workplace pension savings or consolidate existing pension pots.

They are almost all regulated by the FCA and consumers may save into a non-workplace pension over time, or have a lump sum they want to invest in a tax-efficient way for their retirement.

The FCA found that non-advised sales had increased from an average of 8% between 1988 and 2012, to an average of 28% between 2012 and 2017. More recent data, from a sample of firms, revealed that 35% of new sales were non-advised in 2019.

The regulator also found that many non-advised consumers buying non-workplace pensions did not find it easy to choose appropriate investments for their pension savings. Some may select investments incompatible with their pension objectives, while others remain in cash, often for long periods. Its consumer research showed that many consumers have a ‘set and forget’ mentality and do not regularly review their investments.

Clearly consumers who have non-workplace place pensions are a prime target for consolidators who can get dashboards right. These providers will also want a return as it will not be cheap to set up their own dashboards or market them. Which consolidators are best placed to grab the loot?

Webb says there are two kinds: new players who have slick marketing, see PensionsBee as an example and traditional institutions such as banks that have brand recognition. If a bank can give consumers easy access to their pensions data it can make a lot of money.

Who might be the losers? Life companies and insurers with vast number of legacy policies on their books.

The one great risk in all this is that the sudden availability of data and easy access to money opens the door to scammers. One thing is clear, the race to consolidate savings will start in the near future.