When will the pensions industry and, more importantly, its members, clients and customers get access to the pensions dashboard? The answer is not until 2023 at least.
In October 2020, the Pensions Dashboards Programme delivery group, which draws its members from the pension trade bodies, consumer groups and the data/fintech world set out a timeline, that would see pension providers and schemes begin to be compelled to link their customer and member data to dashboards from 2023.
It has been a long time in the planning – first announced in the 2016 by then Chancellor George Osborne with a launch due in 2019.
Obviously, it has not launched yet. But the wheels continue to turn on the project and with continued political backing.
The current pension minister Guy Opperman made this clear in a recent Work and Pensions select committee appearance, as he outlined how it fits with the government pensions strategy which along with work on statements is to make things ‘simpler’.
“That is why we are trying to make simpler statements. That is why we are doing a dashboard; we take the paper version and make it much easier to understand, and I think that is genuinely what we are doing. We take the online version and make it much better and take what is effectively 43,000 schemes, 22 million workplace pensions and reduce that into something that is accessible from mobile phones, laptops and so on,” he said.
He did suggest the dashboard was probably the biggest current government IT project. “It is a ginormous undertaking, but it will be transformational in the same way that a banking app has transformed banking and a savings app has transformed savings. The ability to have a pensions app that is universally accessible will make life so much easier and will make people engage on a much better basis,” he added.
Consultancy the Lang Cat’s director of public affairs Tom McPhail says: “There was some doubt for a while, but there’s enough momentum behind it now, enough political commitment to it and also enough willingness across the industry.
“The first version is going to be like one of those wild west movies sets – the cowboy riding down the street passing the shop fronts. When you get around the back, there are bits of wood propping them up – just a frontage. The first iteration of the dashboard may look something like that. That sounds like a criticism, but it’s not. It’s a recognition this is quite a hard thing to build. It will take time to develop out all the problems and deal with all the objections, building the data feeds, working out how the pension records fit, and how you connect the stuff up.”
Indeed, to gain an insight into what the minister means in terms of ‘ginormous’, a look at the Pensions Dashboards Programme timeline is instructive.
It suggests we are in the developing and testing phase, moving into a voluntary onboarding and ongoing testing this year and next, staged onboarding with dashboards available in 2023 and from 2024 – perhaps optimistically – the achievement of ‘business as usual’.
There are many layers to this including selecting architecture and identity suppliers intended to support an identity testing environment in early summer next year. The staged compulsory ‘onboarding’ begins in spring/summer 2023.
Other hoped-for milestones include the publication of guidance for dashboard providers due this year. There will be testing with voluntary dashboard providers including the government guidance service MaPS and ‘at least one’ commercial provider in early summer 2022, more voluntary providers joining in the autumn of 2022, and with an eco-system for all authorised dashboard providers operational soon after.
The plan envisages that an integrated service provider market will emerge providing solutions to transferring information from host administration systems and databases to the eco-system driven by the onboarding of large schemes.
The plans are accompanied by lots of consumer testing throughout the process while a regulatory framework for both dashboard providers and for pension providers should be established next year.
It is worth noting that the call for input from the PDP raised many concerns about the timetable. In July, the PLSA while broadly supportive, was sceptical.
It said: “Because there are so many significant areas of uncertainty, assumption and dependency, PLSA members find it extremely difficult, or are unable, to estimate how long they will need to be ready to connect to the central pensions dashboards architecture. PDP may have heard from a minority of schemes and administrators that they assume they could be partially ready to connect to the dashboards’ ecosystem in 12 to 18 months.”
The PLSA suggested that because final data requirements would not be set in the regulations before early 2022, proposals for staging starting in April 2023 with completion before the end of the year looked “highly ambitious”.
Corporate advisers by and large remain supportive with some frustrations.
Barnett Waddingham partner Martin Willis says: “Dashboards have been a very long time coming and despite positive developments in recent years, it will be a while before they act as ultimately envisaged with all benefits on there, not just those that are easy to add.
“There is definitely a need for them. Auto-enrolment and then pension freedoms have created a world where people don’t know where all their retirement savings are and even if they do they don’t know what to do with them. Dashboards will help savers understand what they have as a whole and how they might use this. If – and it’s a big if – they are implemented well, they could take understanding pensions from an analogue to a digital world.
“Given this has been discussed in one form or another since the advent of auto-enrolment and we’re still over a year off having the first iteration this could definitely happen. There are many different parties that need to come together on this initiative, and it really needs buy-in from all schemes to work as well as possible. This is reflected in the potential benefit to members though and hopefully it succeeds. The complexity of the project also demonstrates the need for a central drive to both compel the provision of the data and establish a robust governance framework”, he says.
There are, however, fiercer critics of the process, how it has stalled and what could have been achieved.
Financial Technology Research Centre founder Ian McKenna says: “They seem to have forgotten that the original delivery date was 2019. This is going to arrive at least four years late and has been pulled apart by various vested interests. A paranoid consumer lobby thinks it should be done for free, that very valuable work can be done by highly qualified people, and they shouldn’t charge for it.
“Equally the big master trusts are petrified by this. There is a problem with the trust community. They don’t understand that it is not their money. People should be allowed to get a better deal.”
In contrast, there are also some big providers giving very strong backing.Aviva head of savings and retirement Alistair McQueen says: “We are very close at Aviva, to the mindset of the minister. We see the critical importance of it and the need to make it happen. We want it to go live in 2023, recognising that 2023 would be a staged approach. We would challenge our peers in the pension industry – don’t let the perfect be the enemy of the very good. Sometimes our industry is brilliant at identifying tweaks, quirks and issues that might not make it the perfect solution. If we can keep our expectations at day one relatively simple, we believe we can then make great progress.
“We need to manage expectations. It will not be a switch-on from day one. It must begin in 2023 but will take a number of years to get to the ultimate destination. Aviva is fully on board.”
McPhail couches things in terms of the scale of the task. “Open banking was a massively expensive project. It got delivered, but the first iteration was pretty clunky, and there aren’t that many banks in the UK. Every bank account follows the same protocol, six-digit sort code, eight-digit account number. Every bank does the same thing.
“Pensions doesn’t have that protocol. Every pension scheme, every pension administrator, every insurance company, all have their own way of defining the records. An interface over here has to connect with the pension schemes over there. It has to somehow interrogate that database in a way that identifies the right job.”
McQueen concurs regarding comparisons with open banking.“People quite often put the dashboard next to open banking. I think that it is incorrect to do so. This is more complex than open banking which invites and allows us to share our banking data with others. The dashboard is not just a sharing tool. It is a finding tool, a hunting tool. The scale and complexity of the pension sector is beyond anything in banking. The challenge is great, but the need for it is even greater,” he says.
This is, arguably, in contrast with McKenna’s view who sees other areas of government
taking a different approach. The Department for Business, Energy and Industrial Strategy’s smart
data strategy will bring in legislation allowing government to compel sectors to provide data using secondary legislation, thus avoiding the pitfalls of the pension sector which had to “be dragged kicking and screaming
to support the dashboard with the threat of compulsion”.
He adds: “I think from a practical perspective, open finance will deliver a better solution without all the constrictions placed on dashboards by vested interest. Indeed, a pension dashboard that only looks at pensions is helpful but not that great.”
McKenna suggests a “form of pension dashboard useful to millions of people under 40 could have been delivered four or five years’ ago”.
He adds: “From talking to people at the major AE players, we could have built a form of dashboard in less than six months. The problem was having to include the baby boomers. The whole project let down millions of people under 40. On the 10th anniversary of auto-enrolment, we have got young people with four or five pots, and they can’t see the collective value of them.”
Box: Staging Plans
Wave one involves 1000+ memberships and would start in April 2023 and run for up to two years.
Wave two involves schemes with 100 to 999 members and would not commence until the bulk of large schemes have successfully connected (unlikely before 2024)
Wave three involves small and micro schemes of 99 or fewer members. It is
linked to the establishment of an integrated service provider market.
Wave one is divided into three cohorts.
- Cohort one: master trusts and FCA regulated providers of personal pensions starting spring 2023.
- Cohort two: defined contribution schemes used for automatic enrolment during 2023.
- Cohort three: all remaining occupational schemes with 1,000+ memberships (in order