I’m happy to announce that today I will be joining The Pensions Dashboard Industry Delivery Group, giving consumers a louder voice in the creation of Pensions Dashboards. We’re looking forward to bringing our years of experience to the table, and we’ll be doing all we can to ensure the project is delivered successfully for the benefit of consumers.
At their foundation, our view is that the full vision of Pensions Dashboards must be delivered by two concurrent movements:
The creation of the Money and Pension Service’s “pension finder service”, which will effectively replace the government’s current pension finder service by providing more accurate and timely information to consumers
The furthering of the UK’s world-leading Open Finance system, which will extend Open Banking-like protocols to pensions, enabling consumers to share their data with trusted third-parties
Let’s start by running through some of our thoughts on the “pension finder service”.
We must deliver a pension finder service that’s fit for purpose
Above all else we believe that the pension finder service must be delivered swiftly and incrementally. Consumers cannot be kept waiting for decades for a “big bang” approach.
Sensible increments would include “year from” staging; for example all pensions established on or after 1 January, 2012 should be part of the first wave of compulsion. This rule achieves the benefit of incorporating the largest master trusts and other new providers who are most technologically prepared.
The State Pension should be included in the first wave
In addition, this approach also has the benefit of consumer familiarity, as consumers will be most able to recognise potential data gaps (rather than staging by pension scheme size, which would require consumers to be familiar with pension provider market shares).
As a result of staged compulsion, the State Pension should be included in the first wave. This should ensure that the majority of consumers have something positive to see on their first visit, and are encouraged to return. We also believe there should be no exemptions from compulsion, as the rules of exemption will be difficult for consumers to understand.
On a more technical level, the pension finder service should collect email addresses. Emails could then notify customers who opt-in to periodically check new data additions, so that they stay engaged.
Pensions Dashboards logins must use a digital ID standard
Elsewhere, Pensions Dashboards logins must use a digital ID standard that enables more than 80% of the eligible population to log in on a first attempt. The government is currently consulting on a digital ID framework which must be adopted for the pension finder service. It would be wise for the Steering Group to develop a “Plan B” consisting of key authentication factors - name, address, national insurance number, date of birth - should the Digital ID not be available in time for a public launch.
Finally, the pension finder service should give the minimum useful information, so as not to delay the launch. This must include:
- A policy number
- Year-end balances
- Charges in %
- Charges in £ for the last 12 months
- A link to the provider’s website where the consumer can obtain more information
This information, and in particular charges, are already consistent with the information pension providers are required to provide under current regulations.
Ultimately, the successful implementation of the pension finder is crucial to the success of any dashboard. However, it’s essential not to neglect the importance of Open Finance and data sharing.
Why Open Finance and data sharing have a big role to play
While the Pensions Dashboards will help consumers find their lost pensions, the vast majority of pensions are not lost and consumers need to be able to share their pension data safely and effectively, in predictable ways.
Many consumers are required to post their valuable financial information
As things stand, many consumers are required to post their valuable financial information around the country using “letters of authority” and “wet signatures”. These practices are inconsistent with modern behaviour and also potentially with the law. While the Money and Pension Service’s pension finder service is being enabled, so too will protocols for safe and efficient pension data sharing.
Thankfully, it is expected that Open Pensions (led by the Financial Conduct Authority’s work on Open Finance), and the pension finder service will converge over the next few years. We will support all efforts to align Open Pensions as closely as possible to Open Banking, so as to give consumers a consistent experience across financial products.
We will support all efforts to align Open Pensions as closely as possible to Open Banking
Consumers will wish to share data from the pension finder service directly from the major providers, and they should be allowed to share this data with trusted third-parties. From this lens, it is appropriate not to think of pension dashboards per se, but to think of pension dashboard services that are facilitated through data sharing.
Indeed, one does not necessarily need to display all of the data from the pension finder service in order to help a consumer and it is quite possible that data from the pension finder service will be used selectively.
For instance, if a comparison service for defined contribution pensions exists, it will not necessarily need to show all of the available information on a consumer’s public sector pensions. It is therefore important that the appropriate principles-based regulation exists, to ensure pension dashboard services are mitigating potential consumer detriment - without stifling the innovation consumers need to plan for retirement.
In our opinion, it is crucial that the major pension providers are required to electronically provide detailed pension information about their customers to trusted third-parties (as the pension finder service will only provide a minimal amount of information).
This information should include:
- Balances
- Charges in £ and %
- Net contribution histories
- Tax top up histories
- Exit fees
- Current Sedol / ISIN / Other investment codes
- 5 year past performance of the relevant investment
While the ICO guidance and GDPR laws must be adhered to at all times, trusted third-parties must also be authorised and regulated to access this information by the Financial Conduct Authority, using existing permissions that enable access to banking data but delineating pensions as a separate product. It would be inconsistent with the current regulatory framework to require authorisation of banking information providers, but not of pension information providers. Stronger permissioning will also facilitate data storage, a requirement for the development of consumer-oriented services and indeed a requirement for many regulated activities.
Stronger permissioning will also facilitate data storage
Controlled testing of commercial dashboards will be essential, but it is equally important that dashboards and dashboard-associated services are allowed to evolve with consumer demand for assistance. Ultimately, if the pension industry can modernise our data sharing practices and the government can provide a pension finder that’s fit for purpose, we will have the foundations in place to deliver the full vision of the Pensions Dashboard.
