In all the conversations about delays, regulation and consultation it’s easy to lose track of what the Pensions Dashboard project is going to deliver. Well we’d like to take it back to that basic point.
What will it do?
The first thing to say is that ‘Pensions Dashboard’ maybe a snappy name, but it’s a bit misleading. It gives the idea that it’s a single website which isn’t the case. It should really be called ‘open pensions data‘. Because that’s what it is. With a ‘pension finder’ service attached.
The basic premise is that anybody in the UK can log into a regulated website of their choosing, and see information about all their pensions, in one place, in real time.
This isn’t possible now. To understand all their pensions, individuals have to go to each provider/employer and ask them. If they’re lucky, each provider will have the functionality to let them view their pension online. But we know many older schemes don’t offer this basic function, so they’ll have to phone the company and if they’re lucky they’ll get one valuation a year.
Of course in order to do any of this, individuals need to know they have a pension in the first place and who the provider is. Mergers and acquisitions over the years can make this challenging. Plus people move house and lose their paperwork with pension information they’d diligently filed for later reading. In other words - they often have a vague idea they have some pensions, but can’t remember where they’re held or even how many they actually have.
And that’s the real magic of ‘dashboard’. Individuals don’t need to remember who their pensions are with. They just need to identify themselves and the hundreds of UK pensions providers will immediately check if they have any. The dashboard will then show what each pension is worth, and other basic information.
Once they’ve located their pensions, their chosen website will be able to help them find out a bit more. These websites will be able to offer projections to retirement, to help customers understand what the total of their retirement savings could be, and when they can access them. And probably most powerfully, tell them whether they’re saving enough.
Some key dependencies
How all of this happens relies on several things:
- Having a system that sends a “do you have a pension for me” message to over 200 pension providers and administrators collates responses and sends them back to the various websites hosting a dashboard. This is the ‘Pensions Finder Service’. It still needs to be built, be able to deal with millions of messages a day and most importantly, be very secure.
- The system will need an agreed method of finding individuals that works for each provider. This is likely to be National Insurance number and date of birth. And of course the providers need to have accurate data for each of their customers. Pensions data held across the industry will need to be reviewed.
- Rules to make sure people who access this precious information about customers act in their best interests. So we therefore need some regulation.
Building this powerfully simple service is not in itself simple. The industry will need to pull together to align 200-plus pension providers and administrators, improve their data, and agree the right way to fund it – along with much more. Who gets to host a dashboard? When will it go live? When will the State pension be on it? How do you compare DC and DB pensions?
All important details but just that, details. It’s vital to keep the eye on the main outcome.
If we get this right as an industry, everyone in the UK will have the information they need to better manage their financial futures. Knowing where they stand now and having the tools to enable them to work out how to get to where they want to go.
Next month we'll discuss how we think dashboard will impact the market for financial advice.