If there is one pension policy initiative that has grabbed popular support, it is the delivery of pension dashboards.
In 2018 we nearly lost the dashboard and it took till earlier this year to get legislation in place meaning we will get one eventually. But when? This blog is about the latest timeline which the Pensions Dashboard Program is asking for view on. Unfortunately the industry view is better slower. This blog looks at what’s new and asks us to engage with the risks of going slow.
The Pension Dashboard – what’s new?
The Pension Dashboard Program has published its latest thinking on delivery times for the Pensions Dashboard.and asking for input from the pension industry and consumers.
The PDP has recommended that staging should comprise of three waves. Wave one will include the largest schemes with 1,000+ members, wave two will include medium schemes with 100 to 999 members, while wave three will include small and micro schemes – 99 or less members.
It suggests wave one would start in April 2023 and would run for up to two years.
During this wave, it suggests three cohorts. Cohort one will include master trusts and FCA-regulated providers of personal pensions (starting spring 2023), cohort two will include defined contribution (DC) schemes used for auto-enrolment, and cohort three will include all remaining occupational schemes with 1,000+ memberships (in order of size) with the largest defined benefit schemes to on-board in 2023.
…why grind the wheels of pension industry , so slowly.
This unhurried staging timetable has been greeted with enthusiasm by the PLSA and I suspect with despondency by most consumers who have been waiting for a dashboard since 2015.
Is pension data at risk from dashboards or the lack of them?
Open banking is nearly five years old. Last night I listened to a Plaid technical talk explaining how its APIs could unscramble the most complex of banking data and order them to our convenience.
Apparently there is something so special about pensions data that it defies transmission through common pipes.
The pension savings of scheme members are very much at risk not from technology but from the lack of it. The PPI’s estimate that £20bn of DC assets are currently lost is now three years old, that money is lost because it cannot be digitally traced. The pensions dashboard should reunite that money with its owners.
While the wealthy uber-class of which I and Nigel Peaple are two, have the means to employ advisers to find our savings, order them and help us turn them from pots to pensions, most consumers don’t.
So can we do it right and quickly now for the hour is getting late?
Are pensions too complicated for dashboards?
The dashboard was scheduled to be delivered in 2019 and the new timeline, set out by the Pension Dashboard Program in its latest call for input. suggests that it will get underway in 2023 and be fully operational in 2025. Compare this with the implementation of open banking and you have to ask “what’s different about pension and banking data”?
It is often said that pensions are too complicated to be compared with banks but the proposed data requirements on data providers do not seem onerous
This is the information needed for a minimum viable product and not the totality of information that a consumer could reasonably ask for to take decisions on “how much to save”, “how to combine pots” and “how to turn pots into a wage in retirement”.
The limited ambition of the data claim suggests that should be no obstacle for the vast majority of schemes in supplying the data, the issues are whether the data is clean (e.g. right).
My fear – and I have some evidence for this – is that the data is often not right and that what would appear on a dashboard would embarrass the data managers and shock users of the dashboard.
Are pension schemes too numerous to deliver a pensions dashboard?
The second complaint of those who would like to further delay the implementation of dashboards is that people will not be satisfied until they can see all their data on the dashboard from the get-go. This view requires the dashboard availability point to be set at the point where all schemes have “staged” (eg hooked up to the dashboard). But the call for input makes it clear that there is a long tail of small schemes who together add up to less than 1% of the total data.
The numbers tell us that we don’t need to worry too much about the long tail of small schemes. Of the 34,000 data providers that could data on the dashboard 450 look after 94% of the data and those 450 data providers are properly resourced to create an API layer in their databases and make their data accessible.
Is pensions data too precious to be displayed on dashboards?
Just where the risk of endangering people’s data comes from, is not clear. Data can be transmitted in a number of ways but if not delivered through code, it is delivered through spreadsheets which need to be exported and imported via some kind of interface which is considerably more interceptable than an encoded digital signal. Right now, pension data is available via “scraping” and a lot of scraping is going on. Scraping is intrinsically less secure than the transmission of data via APIs ( as envisage by the Pension Dashboard Programme),
My point is that not having a digital dashboard is more of a risk to our data than having one. And if the key infrastructure of the dashboard is in place for one dashboards, it is in place for many.
The argument that we are going too quickly , ignores the fact that we are already planning on being at least 4 years behind the planned implementation of the dashboard which should have happened in 2019. Instead of getting on with designing the infrastructure to find people’s pension pots and report on them, most of the time since the dashboards were first mooted (in 2015) has been spent arguing what we can and can’t see on them and in putting in place governance structures.
The governance is in place but there is nothing to govern, nor will there be for many years , if we wait to hook the 32,000 schemes with less than 1,000 members to the digital grid.
Are dashboards going to be a data free for all?
The dashboards to come will be regulated by the FCA and enjoy the security of an infrastructure of services procured by the PDP and tested by Nest and other master trusts. The belt and braces approach means that we are already going at the pace dictated by the industry and the comments of the PLSA suggest that it is the pension industry – not the savers – who are to control delivery.
This is precisely the attitude taken by the banks prior to the introduction of open banking. Thankfully the Competition and Markets Authority did not listen , but told the banks to get on with it.
The banks did get on with it and so should the large pension schemes, we can leave the long tail to stage two, stage one must be complete by at latest 2023 so we can start seeing 99% of our data on dashboards in 2024 (five years late but better late than never).
Taking 2 years to roll out stage one is just not on. Auto-enrolment staged large schemes in a year and so should the dashboard.
The PLSA’s position is characterized by two words “do nothing”, the pensions industry needs to be told “get ready” (thanks Origo).
The Pensions Dashboards Programme is running two separate webinars to provide additional insight into the staging recommendations. If you are interested in the lot of the consumer, you should try to join.
Register for: Introduction to the pensions dashboards ecosystem – June 8 at 10:00
Register for: Recommendations on staging – June 9 at 11:00
And I hope that you will answer some of the ten questions in the PDP’s call for input which can be accessed from here
I feel your frstration and share it, but the reality is that pension data records are so full of basic errors that it will take at least a couple of years, if not more, to sort them out. We have seen with GMP reconciliation just how long it takes to undo past mistakes. And even in auto-enrolment pensions, there is no legal requirement for employers to select schemes that are suitable (they just need to select a scheme that meets the a/e standards), and no penalty or even proper checks and reporting obligations on employers, pension schemes or administrators to confirm they have ascertained the amounts paid for each worker are correct. This could have been done as soon as the Dashboard was mooted, I’ve been talking about it for 5 years or more, have tried to amend two pieces of pensions legislation in the Lords to require data accuracy checks, reports and penalties for errors remaining uncorrected, but nothing was accepted. The Pensions Regulator and DWP have only just started looking into data in the past few months in any meaningful way, we know many schemes get Net Pay and RAS contributions mixed up and pay the wrong amounts, but there is no mandatory check on data accuracy yet. All the Regulator has seemed to worry about is whether an employer is paying. Not whether they are paying the right amount, or have chosen the right kind of scheme. Until there is an industry-wide initiative to correct past errors, the Dashboard data will not be reliable, whether it is MasterTrusts or any other scheme. My work with Pensionsync showed me first hand how many errors are being made. PArtly this is because of the lack of digital standards, Australia mandated those and it did make a difference. We are years behind where we should be and the sooner we start addressing the data issues, the sooner any kind of reliable dashboard can help consumers. Who will pay for this work? How will it be organised and by whom? These are important questions. So far, workers just trust that their payslips and pension statements are correct, because the system is so complicated most people have no hope of ascertaining whether the pensionable pay, tax relief, employer contribution and band earnings calculations have been done correctly. With open banking, you know what you paid in and can see if there are errors much more easily. With pensions, that is really more of a challenge and it is a shame it has taken so long with data errors accumulating week after week, compounding past errors that have gone unchecked and uncorrected in an unknown number of cases.
I agree with you that there is a data cleanliness problem, looking at the fields that need to be cleansed , it’s hard to see how some can be sorted by the provider who may have no way of locating an address. Isn’t it simpler and better to make it clear to members that there may well be issues with the data which need to be sorted collaboratively. this can start with easy things like mistakes with ninos, addresses, DOB and move to harder issues around contributions. I would like to see a way for consumers to challenge providers to prove they have done a check on the reasonableness of the data, this can be achieved using internal rate of return calcs and benchmarking them against an appropriate index.
I fear that most errors are currently unknown unknowns meaning that delaying a scheme from submitting data via API is just prolonging the agony, we need a deep intake of breath, a little courage and resource committed to putting things right when things go wrong – see the DWP with state pension entitlements at the moment!
Cheer up! It will happen …but when?
Twice this week you have featured the PLSA view as being intransigent. As a ‘Pensioner’ I don’t criticise them because ‘do it once – do it right’ is, for me, reasonable. If it went wrong, they might have to answer for it to their clients, shareholders etc.
Having spent some years involved with BSI Technical Committees, progress would ‘crash’ with disagreements regarding e.g. tolerences or screw-threads. Unlike Germany where products have to be manufactured to a recognised Standard, they don’t in the UK – just safe. To get round such snags, meetings would be set up with such parties to seek their views, reasons etc and what it would take for them to comply. Often successful, occasionally not.
Baroness Altmann’s comments above seem quite comprehensive in regard to the various snags involved and may well be what is behind the PLSA ‘resistance’. To them and others of that mind, may well be the questions of who is going to prepare it all, run it and sort out any of the snags resulting and…will it be worth it? If it is that which they need resolving, then, perhaps, they just need someone to comfort them regarding the benefits etc they would be missing.
At least Baroness Altmann seems optimistic, so fingers crossed and good luck!
Losing pensions is easy. I have personal experience of two near misses…
Years ago I almost lost one because I thought the refund of all my unvested contributions was the end of membership but it turned out there was a bit of GMP left. If I’d moved house before the unexpected statement landed I would never have known of its existence.
Secondly a provider kept getting no response to numerous emails and gave up contacting me. Although my email address in their file was correct it was being repeatedly mistyped by the sender! Had I not chased they might not have bothered contacting me again, despite having a correct postal address. I am no longer with that provider.
I used to think lost pensions were the fault of the members not advising providers of address changes but I now understand that it can equally well be the providers fault.
I despair at the PLSA attitude. If the dashboard is incomplete it won’t make things worse! Whilst some lost pensions will still be lost, some will be found and the known pensions will still be known even if omitted from the initial dashboard. Better timely but incomplete, than complete but delayed to the point of uselessness.
I think the PDP should crack on and even the final, supposedly complete, version should include notes on what to do if you think a pension has been omitted.
I’m staggered by this timescale given how large employers implemented AE in 2012 and RTI a year later. All I hear is the cry of ‘but we have legacy systems in the pensions industry’, to which my response is ‘well that maybe your commercial decision, but with decisions come consequences’. A government policy to reunite members with their pensions and explain what their charges are being spent, or if it’s not partly on updating legacy systems, should not be held to ransom and have to go at the pace of the oldest system. Can you imagine employers being able to delay AE, RTI or UC, in this way, in fact RTI was speeded up because of UC. Whatever the timescale unless data standards are mandated data will never improve and members deserve better.