1. Why the Pensions Dashboard is more than a Data Collection Exercise
24 June 2019

2. Where are we today? Consultation response issued April 2019
“…for too long, pensions have been obscure, hard to understand and inaccessible to many. Pensions dashboards will change this. Simple information, securely provided to your phone or computer will provide key information on a saver’s pension.”
“In the first phase of dashboards’ development, no additional regulations are needed to ensure consumers using dashboards are appropriately protected.”
What can the actuarial profession bring to the party
Comparability of benefits in a consistent manner
Understanding of risk
State pension - straightaway
It should show all DB and DC pensions.
Pensions shown should include pensions in payment
Ideally we think pensions should be shown accrued to some recent date and in current terms. But maybe initially linked to statements/readily available info – so just pension at leaving/scheme specific retirement ages
And actually as we believe that it is important that information shown should be consistent with other sources to promote trust this may have benefits and be information which should be shown anyway.
24 June 2019

3. Phased functionality ‘Find and View’ Dashboard v1
Dashboard v2? Additional functionality – Value of my benefits
Dashboard v? (Many dashboards?)
Find pensions
Collate information
Introduce Dashboard
Click throughs
Current fund values/CETVs
Options and guarantees
Contingent benefits
Fee structure
Risk assessment
Retirement planning
Interactive tool
Investment choices
Decumulation options
Clearly everything that would be nice to have can’t be included on day 1 – risk that you try to do so much that nothing happens
So we think that the dashboard should essentially be phased in with the initial issue primarily being a pension tracing service bringing together all accrued benefits. As on slide. This itself may take sometime especially if legislation mandating provision of data is required and this itself allows for a degrees of phasing across large and small organisations.
However an initial issue like this would allow the infrastructure to be set up and for the dashboard to be introduced to the consumer.
After this the dashboard could have additional functionality added, …
And from then, who knows, …
Pass onto to Glyn now to talk about some of the complications of showing all benefits side by side.
24 June 2019

4. How do we deal with…DB and DC
Defined Benefit
Defined Contribution
Default “decumulation” – scheme pension
Normal Retirement Ages (varying by scheme and often multiple) crucial to interpreting accrued benefit promise
Defined pension increases
Defined survivors’ benefits
Option factors
Market insensitive
Limited choice of revaluation methods
No default decumulation option
Arbitrary Normal Retirement Age
Optional pension increases
Optional survivors’ benefits
Factors less important?
Market sensitive
Expected returns on assets differ widely
Concentrated occupational market, but lots of individual personal arrangements too
24 June 2019

5. How do we deal with…DB and DC
SPA
Add
Initially NRD?
Different pension ages
Initially NRA(s)
Add
24 June 2019

6. How do we deal with…DB and DC
ABC Mastertrust –
Projected Pension - £2,500 pa payable from age 65
XYZ PLC Pension Scheme –
Projected Pension - £5,000 pa payable from age 60
Basic State Pension –
Projected Pension - £6,000 pa payable from age 67
24 June 2019

7. Who sets DC projection assumptions?
Provider-set
Dashboard-set
Builds on SMPI approach, and can be consistent with it
Captures variety and complexity of asset strategies, lifestyling and expenses.
Can cope with scheme-specific features, e.g. guarantees and factors
Requires providers to do projections (at least to retirement)?
Expected return competition?
Reduces provider work
Same expected returns for similar assets
Loses variety and complexity of asset strategies, lifestyling and expenses – and therefore less accurate?
No scheme-specific features
Inconsistency with SMPIs…unless SMPIs aligned with dashboard methodology
24 June 2019

8. Who sets DC projection assumptions?
Future Contributions under SMPI
Can be flat, inflation linked or earnings linked
25 yr old earning £25k pa with an estimated retirement age of 68 currently contributing 10% of salary
No increases
Inflation linked (assume 2.5%)
Earnings linked (assume 3.5%)
£160k fund at retirement
£283k fund at retirement
£357k fund at retirement
24 June 2019

9. How do we deal with…different risk profiles?
Invest-ment
Personal Health
Longevity
Risks
Inflation
Data
Covenant
01 October 2019

10. How do we deal with…different risk profiles?
Needs something that is understandable by the consumer, but who is going to develop and assess this
01 October 2019

11. How do we deal with…guarantees and options?
GARs
Scheme-specific / complex
Scheme-specific lump sum protection
Guarantees & options
Protected pension ages
CDC
Factors
01 October 2019

12. What happens next? Industry Delivery Group
Must ensure areas of the industry who can support the translation/comparability of benefits are well represented
Highlight the importance of consistency across pensions communications
Be clear about future functionality and ensure that building blocks are put in place to support it
24 June 2019

13. Questions
Comments
The views expressed in this presentation are those of invited contributors and not necessarily those of the IFoA. The IFoA do not endorse any of the views stated, nor any claims or representations made in this presentation and accept no responsibility or liability to any person for loss or damage suffered as a consequence of their placing reliance upon any view, claim or representation made in this presentation. The information and expressions of opinion contained in this publication are not intended to be a comprehensive study, nor to provide actuarial advice or advice of any nature and should not be treated as a substitute for specific advice concerning individual situations. On no account may any part of this presentation be reproduced without the written permission of the IFoA.
01 October 2019