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Why the pensions ‘old guard’ doesn’t want you to know where your money is
Years of foot-dragging deny Britain’s workers the key to better savings
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“Failure to meet the deadlines is not an option.”
Those were the words of Nausicaa Delfas, chief executive of the Pensions Regulator, in April on delivering the so-called “pension dashboard” project on time.
It might sound dull as dishwater, but the dashboard has the potential to be a gamechanger for Britain’s savers.
Announced in the 2016 Budget, and initially planned to take three years, a completed pensions dashboard will eventually mean you can view every savings pot you’ve ever had in a single place.
Unlike in the past, today’s workers can have dozens of employers over their careers, but when they move jobs their pensions stay put. One in four people say they have lost track of at least one pension, leaving almost four million “lost” pots – holding a whopping £50bn – according to PensionBee, a provider.
Yet the project has been plagued with missed deadlines, lengthy delays and increased costs that run into the tens of millions of pounds.
Many questions have been asked along the way, with the public, professionals and MPs all demanding to know what the hold-up is. The National Audit Office was even called in to investigate why it was taking so long.
In that time, some have started asking a different question – is the entire industry really pulling in the same direction to deliver a vital public service, or are vested interests sabotaging it from within?
So, why do we need a pensions dashboard at all?
The world of work has changed dramatically over the past few decades. Previous generations were less likely to change jobs, with many spending their careers with one employer. Millions were part of generous “defined benefit” schemes with a set income for life upon retirement.
Others skipped contributions entirely, instead looking to the state pension and benefits to see them through. Even now, over a million pensioner households rely on this as their sole income.
Rising costs, largely due to rising life expectancy, meant firms started turning away from DB and pushing savers into defined contribution schemes. The danger now is that people might not save enough, or at all, for later life and experts already fear a pensioner poverty crisis.
In the early days of the coalition government, a plan was hatched to address this. Auto-enrolment, introduced in 2012, means almost everyone is now signed up to a workplace pension automatically, remaining there unless they opt out.
The effects have been significant. In the first decade, around 11 million people were auto-enrolled. The number of women saving into a pension rose 50pc. Almost £33bn more cash went into pensions. However, with modern workers changing jobs more frequently, it gradually created around five millions forgotten pensions.
As a result, savers may lose out on growth, pay high fees and even forget to claim a pension altogether by the time they retire.
Many in the industry saw this coming, as did the Government, and conversations began about a single place for people to view all their pensions. The Financial Conduct Authority recommended a pensions dashboard in 2014, then chancellor George Osborne confirmed it in the 2016 Budget.
Initially it was industry-led, but when the 2019 deadline came and went, the project was passed to the Money and Pensions Service. Another deadline was set for pension schemes to begin connections by August 2023 and finish by October 2025.
By December 2022, the Money and Pensions Service admitted this was no longer possible. In February 2023, the Department for Work and Pensions concluded multiple factors had contributed, including “a lack of skilled resources and ineffective programme governance”.
By March, former pensions minister Laura Trott had announced a “reset” and a new deadline for connections by October 31, 2026.
That summer, the National Audit Office was asked by Parliament to investigate. Reporting back in April, it confirmed “capacity and capability issues, including a lack of digital skills and ineffective governance” had contributed to delays. It also said the cost had increased 23pc, from £235m in 2020 to £289m in 2023.
Even today, it remains unclear when anyone will be able to actually use the dashboard. But while the delays are indisputable, experts disagree on the reasons why. Some believe progress has been deliberately stalled.
Pensions expert Michael Johnson, formerly investment bank and fellow of the Centre for Policy Studies, is among them. He says vested interests, namely the “old guard” of long established pensions providers, have been intentionally stifling the project for their own gain.
“It was very apparent that there would be significant winners and losers. The old guard, that have and had relatively out-of-date and expensive products, rely on opacity to harness customer inertia. The new guard, basically the online platforms, have been chipping away at the customer base of the old guard for 15 years.
“As the dashboard project gathered some momentum, the Department for Work and Pensions realised that it was conflicted by a lot of commercial interests. It said to the industry, ‘please go away and develop the dashboard and we’ll keep an eye on what you’re up to’.
“This was naïve because what the industry did is basically staff the various steering committees with people who were part of the old guard. DWP faced a problem because they were in need of people with expertise. Those people in the main worked for the old guard and therefore it didn’t take them long to realise they had a lot to lose here.
“The dashboard has become a proxy battleground between the old industry providers with predominantly workplace pension customers, and the more retail-focused investment platforms. The biggest force in play is the business interest of the old guard trying to protect their workplace pension franchises.”
Mr Johnson also took aim at the Association of British Insurers (ABI), the trade body of many pension providers.
“The ABI did its level best to sabotage the dashboard. The vested interests of the ABI and its membership were having a deleterious impact on the project.
“It’s a pretty grim tragic story.”
The ABI hit back, with a spokesman describing the allegations as “absurd”, “entirely inaccurate” and an “insult” to its extensive work on the project.
They said: “We pioneered the original dashboard prototype, published research to make the case for legislation, advocated for the project during political turmoil, and have consistently championed it every step of the way. We and our members continue to push for dashboards to be made available to the public as quickly as possible.”
The ABI’s Dr Yvonne Braun, added: “As the NAO report states, capacity and capability issues within the programme have caused the delays. While this is disappointing, it is wise to work these challenges through and prioritise delivering the project safely.”
Nigel Peaple, of the Pensions and Lifetime Savings Association, another lobby group, is on the dashboard’s steering group. He said: “I think it’s complete nonsense that the timetable has been delayed by the industry. The cause of the delay was within the government-provided part of the system, the central digital architecture.
“It is a huge and complex task. You’re involved in gathering data from literally tens of thousands of schemes with complex data related to different types of pension schemes. It was always a big ask and a complicated programme. It was always going to take some years.”
Former pensions minister Sir Steve Webb also spoke out against Mr Johnson’s claims, pointing out that small pots were not profitable for providers in many cases.
“The pensions landscape is littered with tiny pension pots. In a world of caps on charges, those pots are loss-making for providers. So actually they have a strong incentive for dashboards to happen and trigger consolidation so they’re no longer handling micro pension pots. As a result, most pensions providers would like to see dashboards launched asap.
“[Conservative] ministers simply didn’t grasp the complexity of the project. They haven’t understood the diversity of the pensions landscape and just the technological challenge.”
However, other experts add to the idea that there could be other motivations in play.
Tom McPhail, of financial consultancy The Lang Cat, said: “I think everybody agrees it would be good to have a dashboard. I think undoubtedly there are lots of people in the industry who would rather they didn’t have to think about this. They’ve got their day job to get on with, they’ve got to keep the lights on. For them the dashboard is a distraction, an inconvenience, a cost.
“For some of them it is a case of foot-dragging. It wouldn’t be surprising if some firms were leaning towards an outcome where ‘wouldn’t it be great if the whole project got derailed’. In fact, it’d be surprising if it weren’t the case.
“Publicly, everyone in the industry would say it’s a great idea. Privately, they would say it’s a right pain in the a--. It wouldn’t surprise me if people are just quietly, deliberately slowing things down, but I have no evidence that that’s actually the case.”
A national dashboard is certainly not impossible, even if questions remain over how long it should take. Countries like Belgium, the Netherlands, Israel, Sweden and Australia have managed to implement one. Denmark’s has been in operation for 25 years.
Mr Johnson added: “Some really basic fundamental lessons have been ignored and those lessons are readily available from the international experience of other countries. What grates with me is to the extent we think we’re a leader in financial services. Compared to the progress made more than a decade ago made by other OECD countries, we’re way behind. It’s just embarrassing.
“There needs to be a real sense of steely determination by an individual in a senior position who owns the project and is operating on a burning platform to see it happen.”
In her speech, the Pensions Regulator’s Ms Delfas went on to say “the stakes have never been higher – shortly, savers en masse will be interacting with their personal data as never before”, before pledging to quiz providers on their progress and take action where necessary.
It’s true that the October 2026 deadline remains in place for providers and the pensions watchdog certainly sounds like it means business. But this date doesn’t apply to the actual launch, so no one knows when people will be able to use the dashboard.
It leaves plenty of time for more mistakes, costs to rise and the number of lost pots to increase – all of which means ordinary savers are losing out.
If there are sinister intentions at work, it could also offer more opportunities to slow the project down, or even halt it permanently.
The stakes may indeed have never been higher. The question is, for who?