Data standards have been published for a government-championed initiative aimed at enabling citizens in the UK to better understand their pension finances.
The Money & Pensions Service (MaPS), an arms-length body sponsored by the Department for Work and Pensions (DWP), is looking to make what are known as ‘pensions dashboards’ a reality in the UK by 2023 – a development that would bring the country in line with nations including Australia and Sweden.
The Pensions Dashboards Programme (PDP) is seeking to enable citizens to access all their personal pensions data – including information about their state pension – via a single digital interface. Goals include helping citizens to reconnect with ‘lost’ pension pots, as well as better understand their finances and plan for retirement.
The PDP’s newly published 94-page guide sets out the information that all pension providers will be obliged to supply to ensure that data is consistent.
Legislative journey almost complete
The data standards’ publication follows the PDP’s release in October of a timeline that revealed a target of ‘from 2023’ as the launch date. Its timeline emphasised that this ‘is an indicative timeline that will be further refined during the next six months’.
The pensions dashboards initiative was first announced in the 2016 Budget, when the government proposed the launch of a pensions dashboard, designed and funded by the industry, by 2019. But progress has been slow. The pension schemes bill, which includes a section on pension dashboards, is only now the final stages of its parliamentary journey.
Chris Curry, principal of the PDP at MaPS, told Global Government Fintech this week: “We are hoping for the bill to get royal assent in the next couple of weeks, and that will provide the legislation that will mean all pension providers will need to provide information in line with the data standards we have just published, in order for pension dashboards to work properly. The key thing for us at the moment is that in order to get the dashboards off the ground is to have the data that will flow through them. The part of the bill that makes it mandatory [on pension providers to supply data] is really crucial.”
It is expected that eventually there will be multiple pension dashboards available to UK citizens: MaPS’ own (non-commercial) dashboard, plus dashboards run by private companies.
“We would expect pension providers and fintech companies, maybe even banks, to want to run them,” said Curry. “We want pensions dashboards to be as accessible to as many people as possible, so putting them where people naturally go [existing brands online], instead of expecting them to go somewhere different [to a standalone new website].”
ID verification among challenges
Speaking to Global Government Fintech, Curry said that one of the major challenges for the PDP is that the UK’s pensions market is significantly more “fragmented” than in countries that already have pensions dashboards, which include Denmark, Belgium and Israel.
“The UK has pension schemes dating back to the 1960s and 1970s still in existence and a large number of pension providers – there are something like 40,000 schemes that we need to get hooked up to the pensions dashboard. In other countries it’s in the 100s, so we [the UK] have a very different type of challenge,” he said.
Publication of the data standards follows a ‘call for inputs’ last summer that saw 61 responses. “We have the first iteration [of the standards] out there. It will evolve over time. It gives the industry as much notice as possible as to what they need to do,” said Curry.
Looking ahead, Curry said that identity verification was an important challenge for which a solution needs to be found. The PDP, a 40-strong team within MaPS, is reviewing responses from a recent ‘market engagement exercise’.
“I think every other country that has a pensions dashboard has some kind of national digital ID scheme or universal identifier that they use to match up individuals with pension entitlements. We [the UK] don’t have that,” he said. “So, making sure we have a robust, reliable and trusted identity verification service that isn’t too onerous for people to use [is important],” he said, adding that his team planned to work with government and private sector to “make sure that we get the best ID solution – and make sure it’s flexible enough for what is likely to come in the future”.
“Almost certainly there will be some form of national digital ID in the UK and we want to make sure that when that arrives we can take advantage of it,” he added.
Curry also said that 2021 would see a stepping up of testing and research with consumers. “The last thing we want to do is disappoint people in the sense that after the first time they use a pensions dashboard they never come back,” he said.
Re-uniting people with forgotten pensions
The UK’s push towards pension dashboards has parallels with the (also government-championed) efforts to encourage so-called ‘open banking’ – the sharing of banking data, with an individual customer’s permission, with third-party providers such as fintech companies – in that it is using technology to help improve people’s knowledge and engagement with their personal finances.
But Curry said there are also important differences. “Some of the people we expect to use pensions dashboards may be unaware of what relationships they have with [pension] providers, whereas with open banking it’s usually through the provider with whom they already have an established relationship that they then access open banking,” he said.
“Ultimately, you can see that in countries where dashboards are up and running, ideally using similar technology and data standards to open banking, you can then start to bring them together, which is where we get to [the broader concept of] ‘open finance’. But in the first instance, the really important use-case of pensions dashboards is just to re-unite individuals with pensions and money that they may not realise they have,” he said.