The pension scoreboard project seems to be gaining momentum. The Money and Pension Service (MaPS) dashboard itself is in alpha stage testing end-to-end journeys and the DWP and FCA have both opened and closed their consultations on the draft regulations.
The largest defined contribution plans, master trusts and FCA-regulated pension providers are expected to start “rolling in” from April 2023, with a proposed 30-year delay.e June 2023.
But what does this mean for advisors and what do we need to do over the next year to prepare for the arrival of the pension dashboard?
Find lost pensions
It is well established that many consumers have lost track of their retirement pots. In 2018, the Pensions Policy Institute found that over 6.6 million people in the UK knew they had “lost” at least one pension pot.
Since these are people aware of a lost pension, we can assume that the actual number of lost pots is likely to be much higher. Even when the pots aren’t lost, the FCA’s Financial Lives survey indicated that few people know the value of their pension or have checked it in the past 12 months.
The likely outcome of making the Dashboard available is that UK consumers will be able to find pension pots they had forgotten about or lost access to and regain control of those money pots.
This will increase the amount of assets advised by existing advisory clients, as well as the number of people seeking advice.
Being able to offer an effective, inexpensive, and robust advisory service will allow you to capture some of the new businesses coming into the market and retain those who are already customers.
Retirement Dashboard Plans
Initially, the MaPS Pension Dashboard will only be able to find and display benefits not yet paid, showing both accrued and projected pension values, calculated in accordance with the Defined Contribution Statutory Illustration (SMPI) , with the aim of supporting better retirement planning.
Although other dashboards will become available over time, a key feature of the MaPS Dashboard is the ability to allow a trusted advisor to access the details of these benefits on behalf of the user, so Familiarizing yourself with how the MaPS Dashboard works will be an important part of the journey towards integrating the Dashboard into your daily work.
Some clients will have done the work for you, but I’m sure others will ask you to do all the research on their behalf.
Regardless of how the match happens, as an advisor, you’ll need to be able to respond quickly to client requests for reviews and recommendations based on their now larger pool.
Advisors will need to be efficient at accessing the dashboard, performing research and obtaining the information needed to assess the risk profile and pricing structure of lost products against their existing managed portfolio. This will help identify where consolidations or pension transfers would be helpful.
Ensuring advisors know their current technology will be key, while having reporting templates in place will help ensure that the advice you give is sound, effective and appropriate.
The consolidation of pensions itself will remain a manual task as the initial version of the dashboard should not allow actions to be taken within it.
However, in line with the rollout of pension dashboards in Australia, this functionality is being offered for the future, which should reduce administration effort and help ensure consistent portfolios at the click of a button.
Likewise, in a world of stochastic modeling, you won’t want to rely on SPMI projections to guide your clients’ retirement plans. Instead, you’ll need technology that can allow you to quickly add those missing pots of cash into cash tools and put the cash to work to ensure a customer’s financial journey remains on the right track.
The Pension Dashboard opens up real opportunities for financial advisors, with technology inevitably advancing to bring quality financial advice to more people. Companies that start planning now will have a real head start on the future of financial advice.
Steph Willcox is Head of Actuarial Implementation at Dynamic scheduler
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