Pensions dashboards: Where should the focus lie to make them a success?
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Expectations run high for the pensions dashboards, and range from ‘people will become more engaged with their pensions’, to ‘it will lead to better outcomes’. What can and can’t the dashboards really do when they go live, and where should the focus lie as they near their launch date?
This April, the Pensions Dashboards Programme, the group managing the project first announced in 2016, published a progress update saying it was on track for ‘staging’ from 2023, when the dashboards will be able to offer ‘find’ and ‘view’ functions - the two basic functions they will start out with.
The idea is that consumers will be able to send ‘find’ requests via a dashboard, which will contact thousands of pension providers to search for matching data; any match will then be shown to the consumer. Not all data about a pension account will have to be displayed at the beginning – controversially, costs and charges information was not made mandatory for the dashboards, but providers can show this voluntarily. For pension funds, the project requires that they are ready to connect to the central digital structure of the dashboards and send accurate member data.
Is the pensions industry on board?
At the coalface, the attitude towards the dashboards project can be somewhat ‘wait and see’ but is generally positive. Gerald Wellesley, a professional trustee at Punter Southall Governance Services and self-confessed fan of pensions dashboards, is confident they will get a good reception from users when launched. Their future success “will be driven by the ability to capture all scheme savings and state pension into it”, he notes, hinting at the need for comprehensive and accurate data to keep consumers on side.
Adding functionalities such as transactions “will be a bonus”, he says, as would information on costs and charges –which he says could help drive consolidation into lower cost arrangements.
However, getting the data complete should be the priority, together with a user-friendly interface, he believes. Wellesley is not overly concerned by the initial lack of a transaction function; master trusts “are getting better and making transfers in and out easier, so transacting through the dashboard is less important than it was”, he says, while defined benefit schemes, the threat of scams and the overhang from the British Steel scandal would make any transfers very difficult, however.
But how far have pension funds come with preparations for connecting to the dashboards? For pension funds to be able to comply with dashboard requirements, more still needs to be provided by way of guidance, in particular around data standards, says Nav Donovan, a senior consultant at Pi Pensions Partnership. “Data is key to this programme,” she notes – otherwise users might not trust the dashboards.
The PDP published a set of data standards in December last year, and in April's update said that it will continue to refine these, as well as provide more detailed technical information, urging pension schemes and administrators “to ensure that their data is in good shape, in preparation for onboarding to dashboards” in the meantime.
Pension funds have been working on data quality for a while, Donovan says, and some administrators are already looking at how to integrate their systems with the dashboards, but “all comes down to guidance being clear and transparent in terms of how it is going to be displayed to the end user”.
Conversations about transactions will come later, once the first hurdles have been cleared, she suggests, stressing that an education piece has to sit alongside any transaction functions. This will help people read the information on the dashboard appropriately before doing anything - and crucially, prevent them from being scammed. “It's important that we all play our part in safeguarding all involved," she says.
What can be learnt from open banking?
The timeline of the project, already significantly delayed since 2019, has previously been questioned. In March this year, the Society of Pension Professionals sent a letter to the PDP saying more clarity was needed if the 2023 staging date is to be adhered to. Samantha Seaton, chief executive of open banking and open finance platform Moneyhub and a member of the PDP steering group, believes the dashboards project should seek to learn from open banking in this respect.
Open banking was introduced in the UK in early 2018, allowing consumers to view accounts held with different providers on a single website, giving them a better view on their finances. It covers the nine largest UK banks via the Competition and Markets Authority, but an extension was needed for the ‘CMA9’ to comply, “let alone other banks,” she observes, partly because the project was complex, partly because standards were finalised relatively late.
She says the situation could end up being similar with the pensions dashboards, although she notes that an ambitious timeline is necessary to get the industry started. “My encouragement would be they should try to at least get the core of what you need to do in place. It’s much easier to fill an extra couple of data fields versus actually doing nothing,” she says.
Seaton wants the pensions industry to abandon its preoccupation with what it can’t do and instead focus on the things it can do for savers. “My experience with everything pensions... is that we obsess about a level of detail that prohibits innovation and advancement for the majority of people,” she says.
Consumer focus needs to increase
The dashboards won’t give consumers the ability to do much on the interface – they can look at the data and click through to the provider’s website, whose contact details will also be available. Meanwhile, money apps can give savers a view of all their finances from pensions to mortgages and ISAs, as well as offer services like transactions and budgeting.
This gap in perceived sophistication means the other challenge dashboards will encounter in their first iteration will be the consumer, predicts Seaton. For consumers used to speedy digital transformation by the likes of Amazon, Google and Facebook, merely seeing how much they have saved may not seem like a lot.
“Our expectation as consumers is very fast, we want everything now. My worry is they will log on and [think], ‘I can see all my pension and that’s it’. I worry the consumer might think, ‘So what’?” says Seaton. However, even if consumers may not be overly excited by being shown a number of pension fund accounts, she welcomes the fact that “at least they are getting a way of seeing them all”, something which has so far been lacking.
Another barrier could be high safety levels. Seaton warns that the user journey may be hampered by the security applied to dashboards, which is “another level up from your bank account, which I'm not sure is required”, she notes. “My concern is that it may – and we may have to see how good they can get that user journey – be a barrier to creating an account to see your pensions,” she says. Ideally, consumers should have both top-level security and a seamless user journey, she believes, as security is important if the dashboards become an execution portal.
If dashboards are to engage savers and help them with decision making, communication will also be key. Seaton believes commercial dashboards will be able to do this better than state-sponsored ones, offering personalised videos or even virtual reality to help people picture themselves in retirement.
The dashboards project can learn a lesson from open banking in this respect, too, she believes. The take-up of open banking has been slow, which she attributes to a lack of communication. “More industry bodies that have a good reputation with consumers will need to do more to communicate what it is and why it’s good for them,” she says.
ABI: People must be able to save more or consolidate pensions
What savers need and want needs more attention, agrees Evey Tang, policy adviser at the Association of British Insurers, which presented a prototype dashboard back in 2017.
“More discussions are needed about the spectrum of dashboards and the features that could be made available by the market to fulfil what people actually want on top of the Money and Pensions Service version, which is expected to be relatively basic,” she says, hoping to see this in the next round of regulations. “These features could include modelling the impacts of saving more, retiring later or viewing pensions alongside the user’s other assets.”
If dashboards are to fulfil their potential, customers must in future be able to save more or consolidate their pensions, she argues, with adequate safeguards in place; this could also support the consolidation of the huge number of small pots causing industry and government headache. “If not on dashboards, then it can and will happen on services operating alongside dashboards,” she observes. The ABI has recently started user research on dashboards transactions, to understand user acceptance of these types of functions.
Tang says she hopes that dashboards will be able to withstand, and engage with, wider shifts in technology. This could include more open data and connect pensions to other financial services providers.
“When we interviewed our members and stakeholders this summer, there was a strong desire for dashboards to become a stepping stone for more open pension data. Whether they could do so and embed in open finance will depend on the regulations, system interoperability, and data exportability – so policy decisions being taken now should reflect the need for flexibility to achieve this aim,” she says.
