Need to know:
- The dashboard project will start voluntary testing next year.
- Data accuracy and security are key challenges.
- Third parties such as banks and investment platforms will launch their own version.
The pensions dashboard initiative is working to establish a central location for people to view all of their pension pots on one website, including their state pension. The idea is to help people understand what pension provision they have made, so that they can make better financial decisions, particularly in the run-up to retirement. The dashboard should also help people reconnect with lost pension pots.
Project timeline
The project, which now falls under the Money and Pensions Service (Maps), has been subject to years of delay since it was first announced in the 2016 Budget. However January 2021 saw a major milestone in the release of the data standards for pension providers and schemes to follow. Voluntary onboarding and testing is scheduled to start in 2022 and staged onboarding from 2023, when pension schemes and providers will begin to be compelled by law to connect to the dashboard system. The first phase will provide a simple ‘find and view’ service with individuals having to contact their pension providers directly to obtain more information.
Chris Curry, principal of the Pensions Dashboards Programme (PDP) at Maps, says: “Since the concept of dashboards was first announced by the former Chancellor George Osborne, there has been a lot of debate around their scope and ambition. Launching dashboards with fundamental ‘find and view data’ that will allow people to find their pension pots and the amount they have in each, is the first priority.
“We understand that the sector wants this to move at scale and speed with dashboards being able to go beyond this, but given the complexity of the project and the high number of pension schemes in the UK, it’s crucial we get the basics right first.”
Maps set out a timeline in 2020 and anticipates dashboards onboarding to commence from 2023 onwards. Curry says that while dashboards are themselves a simple concept, delivery is complex and reliant on collaboration between the PDP and many other organisations across government, regulators, dashboard providers, pension schemes and providers to complete actions at a specific time.
Helpfully, however, 80% of the 80 million pension pots in the UK are administered by the largest 100 providers.
Dashboard data security
Delivery faces several challenges, particularly data accuracy and data security, such as online identity verification and matching individuals to pension records.
Pension scheme data is often dirty. “Most legacy pensions, and even new auto-enrolment pensions, are full of data errors which the industry has not yet been required to audit and rectify,” explains former pensions minister Baroness Ros Altmann. “Because of the complexity of pensions, it is not always easy to do this and the regulators have not previously insisted on independent data audits, or mystery shopping exercises and random sampling, to drill down into data accuracy. This is starting to change but until the data are reliable, a dashboard itself may not be useful for consumers.”
The Pension Schemes Act 2021, which is required to oblige providers and schemes to supply data, is due to get Royal Assent in early 2021, but more detailed regulations will need to specify both the data that has to be supplied, and the rollout order, such as whether to roll out big schemes or auto-enrolment schemes first, or defined benefit (DB) or public sector schemes last.
“This will take months,” says Steve Webb, former pensions minister and a partner at LCP. “The dashboard project has a lot to sort out, for example, what is the most reliable way of ID verification to avoid people’s data going to the wrong people? Who is liable if someone gets sent inaccurate data and acts upon it? How are they going to deal with the fact that the pension statements we currently get aren’t strictly consistent with each other.”
Webb suggests that one of the biggest challenges will be user testing to make sure that the information is supplied in a way that is meaningful to the end user; for example, how is a £30,000 defined contribution (DC) pot summarised alongside a £2,000 per year DB pension with annual index linking? “What if different bits of the pensions can be drawn at different ages – do you standardise to a common age, or simply expect people to add together a pension due at 60, one at 65 and one at 67,” he says. “Once it is up and running, the pensions dashboard will be a great tool for savers, especially in a world where [someone] can end up with a new pension every time [they] change job. But we should not under-estimate the challenge of bringing this data together and presenting it in a meaningful way.”
There are also qualms about third-party dashboards being used to sell financial products. The government is committed to encouraging innovation, and many commercial providers will be interested such as banks, which are already showing people multiple accounts on one app, pension consolidators, fin tech firms, and investment platforms.
“Originally, there was to be one overarching public free-to-use dashboard,” adds Altmann. “In the meantime, many private companies are now gearing up to have their own dashboards. I fear that the public service dashboard could become redundant if private firms are able to launch at the same time and there is no marketing of the free public one.”
Pensions engagement
Employers should be able to use the dashboard to encourage employee engagement with their pension offering.
“Having visibility of pensions in one place will increase employee financial wellbeing by engaging employees, as well as acting as a catalyst to take action,” says Francis Goss, director, Organisational Wellbeing Consulting, Gallagher Benefit Services and steering group member.
“Research by [Bank of America, published in September 2020], found that 62% of employers feel direct responsibility for their employees’ financial wellness, up from 13% in 2013. This trend will continue as employers recognise that supporting the financial wellbeing of their people benefits both employee and employer.”
Read more:
Nigel Peaple: Pensions dashboards will give people more control over their savings
