London, 01 October 2020: Today PensionBee, a leading online pension provider, has released a new report with Plaid, an Open Banking data network powering thousands of digital financial apps and services, exploring the potential for Open Finance in pensions, and calling for regulators to prioritise the initiative before other sectors.
‘Open Pensions and Open Finance: building a better future for UK savers’ highlights how Open Finance can help shape the way millions of UK consumers engage with their finances. In addition, the paper calls for the introduction of Open Pensions to help consumers improve financial decisions and plan for a happy retirement.
The report’s findings suggest that Open Pensions can bring more immediate value to savers than the government-led Pensions Dashboards project, which has one near-term use case – to reunite consumers with ‘lost’ pensions. Instead, ownership through Open Pensions is a distinct and urgently needed policy objective that will drive consumers to take advantage of more digital tools, and prepare for and manage their retirements.
In ‘Open Pensions and Open Finance’, which has garnered support from the UK fintech industry body Innovate Finance, PensionBee and Plaid call on the FCA to recognise that Open Pensions and the Pensions Dashboards are for different target groups and should be allowed to develop in parallel rather than sequentially.
The report launches on 1 October, the revised deadline of the FCA’s call for Input on Open Finance (1). The consultation aims to explore the opportunities and risks arising from Open Finance to better understand what is needed to ensure it develops in the best interests of consumers.
To read the report in full, visit Innovate Finance: https://www.innovatefinance.com/reports/open-pensions-and-open-finance-building-a-better-future-for-uk-savers/
Clare Reilly, Head of Corporate Development at PensionBee, commented:
“Lack of engagement with pensions is a ticking time bomb for UK society. If we don’t address this early enough, millions of people could retire into poverty with no guarantees the state can support them. Of all the possible verticals to be brought into Open Finance early, pensions needs to be staged first by every measure: consumers are being asked to take responsibility for their retirement, but yet still have no access to the basic standardised information required to make decisions, like charges or performance. Pensions are the biggest financial asset people have (after a home) and the only vertical where making a small change now can have a big impact later. By mandating pensions to go first in Open Finance, the FCA can bring the urgent regulatory intervention savers need, in a data format they understand, early enough to make a difference.”
Kat Cloud, Policy at Plaid, commented:
“Open Banking paved the way for consumers to take control of their finances, but it didn’t go far enough. Open Finance is the next step; it will open up more sectors for innovation – and, ultimately, bring consumers more choice, convenience, and ease when it comes to managing their finances. In the UK, there is no other sector that could benefit from open finance than pensions. More and more UK savers run the risks of retiring into poverty because of the lack of resources available to help them understand and use their pensions properly. Open Finance can change that but we need regulators to set out the next steps.”
Iana Vidal, Head of Policy & Government Affairs of Innovate Finance, commented:
“We have seen exponential growth in Open Banking with over 2 million customers now using these solutions to manage their money. As we look to widen the benefits of this innovation through Open Finance, this new report makes a compelling case for an approach that starts with pensions, as the area of highest impact and reach within the financial services sector. With millions of adults now regularly saving into a pension, we should be using innovative FinTech solutions to help people make informed decisions about their financial future, and this report provides policy makers with a clear roadmap to achieving this.”
Note to editors
Please note PensionBee’s CEO, Romi Savova, sits on the Pensions Dashboards Programme Steering Group and these are PensionBee’s views, not the views of the Money and Pensions Service.