For what seems like an eternity, the pensions industry has been debating the dashboard, and all the benefits it will bring to consumers. The dashboard has the potential to revolutionise how people engage with their retirement income – by making it easy to view all their pension entitlements in one place, whether statutory based, trust based or contract based. In most other walks of life, the implementation of this type of system would happen with little or no disruption. But pensions, as we know, is an industry like no other!
Roll forward three or four years and John eagerly logs onto the dashboard. Pension from first job is there, tick. Yep, there’s that pension I transferred from my second job to the s32 - tick. I can see my current pension - tick. But hang on a minute, where is the pension from job number 3, I can’t see it? I’m sure I never did anything with it?
The Department for Work & Pensions (DWP) has confirmed that the government has given the go ahead for a pensions dashboard and has given schemes a three to four-year window in which to get their data ready to go live. So what’s the problem I hear you say? Well look no further than our old friend, the data! Despite schemes having this three to four year window to get their data ready to feed into the dashboard system, there is a concern that data requirements could get increasingly detailed and complex over time, meaning there is an even greater need for improved pension scheme data.
Cracking the data issues
Data sampling indicates that 25% of data is incorrect with known errors. It will take a long time to correct this data so that it can ultimately be used by members to find their pensions. Research has already confirmed that people will not tolerate an incomplete dashboard. In many instances, pension schemes will need to reach out to members to validate the information that they hold. In other instances, data structures, including the technological backbone, will require a complete overhaul.
Every pension scheme and provider will need to put in place a technology solution to expose their customers’ data to dashboards. If you have data quality issues, you will need to complete a cleanse exercise, so the pensions can be found and understood.
Aside from data, a whole ecosystem of technology components must work together within a sophisticated digital architecture behind the dashboards. The Money & Pensions Service (MAPS) is defining the principles to procure all these components, and has established the Pensions Dashboard Programme (PDP) to take forward the design and implementation of this architecture. This doesn’t sound like an overnight job either.
The pensions sector in the UK is overdue a technology driven revolution and the dashboard may well be the catalyst for accelerating the pace of this change. Advances in technology should drive transparency, bringing improvements in administration and member communications while lowering costs. But only if we can crack the data issues.
Pensions Minister Guy Opperman has written to pension schemes to gather evidence on how ready they are to submit good quality date for the future introduction of the dashboard. He has previously warned that schemes that are not data-ready will face "draconian penalties”, whatever that might mean! He says he wants to galvanise the approach of the industry, stating that the need for a pensions dashboard is stronger than ever. Good luck with that one Guy! Many others before you have tried and failed to get the industry to take data seriously.
Invest for success
I believe the gamechanger will only come about when schemes and providers can start to quantify the benefits they will get if members are able to access their pensions data via a dashboard, and thereby reduce the volume of queries coming their way. Why would you not invest in cleaning your data now if you can see the payback down the line? And, taking it a step further, if members can then self-serve direct from the dashboard, obtain quotations and instigate payment of benefits, the payback is even greater. Not to mention the vast improvement in member experience.
The above will only be possible if all schemes and providers engage constructively. There is no doubt that those who invest the time and resources now on getting themselves dashboard ready will reap the benefits further down the line. Which means that John, and millions other like him, will start to trust and understand the information being made available to them, and feel empowered to make more informed choices about their pensions.