Pensions Dashboards Programme

Pensions Dashboards Programme

Pensions Dashboards Programme (PDP)

What is it and why is it important?

What do we mean when we talk about pensions dashboards?

Following trails blazed in the Antipodes by Australia and New Zealand (with superannuation and KiwiSaver accounts), the U.K. is a pretty mature environment for pensions. Especially so since 2012’s advent of auto-enrolment (or AE) legislation. 

Simply, AE legislation states that all employers must automatically enrol (get it?) all* their employees into a suitable pension scheme. (*OK, there are some qualifying criteria, but they cast a deliberately wide net, so we will generalise that as “all” for this post. You can read more about the criteria here if you are so inclined.)

The legislation took effect in phases, affecting the largest employers first, followed by medium-sized and finally small ones. Today, all employers – including new ones – are subject to the obligations set out by AE legislation.

What’s the upshot of all this? Well, now all employees will – along with contributions from their employers – save for their retirement, unless they actively make arrangements to stop doing so. Nudge theory tells us we should expect this to result in a rise in pension savings, and it has:

Line chart of % of UK employees with workplace pension (by type of pension) showing Auto-enrolment has been a success

Source: “When a pensions policy is a resounding success, we should say so”, by Sarah O’Connor in the Financial Times

But it’s not only a rise in pension savings: AE obliges employers to enrol their employees in a workplace pension scheme – which is not the same as contributing to an existing pension pot. It means every time you start a new job, you’re probably having a new pension pot opened on your behalf. Everything in it is still yours, but without intervention, someone starting their career with AE in effect and working to the State Pension age could end up with a multitude of pension pots by the time they retire. So: as well as a rise in pension savings, we’re seeing a rise in the number of pension pots, too.

This isn’t an abstract concern. Estimates put the amount of “lost” pensions savings in the U.K. at surprising levels:

  • Over £19bn worth of lost assets

  • Up to 1.6mn lost pension pots

  • An average of about £13,000 worth of assets per lost pot

And these figures are current, long before the retirement of anyone whose employers have been subject to AE requirements for a lifetime of jobs. So the problem looks likely to grow.

Except it won’t! To its credit, the U.K. government enacted the impressive Pension Schemes Act 2021 and the pensions dashboards regulation to follow earlier AE laws, giving us pensions dashboards. Guy Opperman, the Minister for Pensions and Financial Inclusion, rightly describes the initiative as “an essential part of [the government’s] plans to modernise the pensions industry and make it fit for the 21st century digital age”.

Why does it matter and what does it mean?

Chris Curry, the Principal of the Pensions Dashboards Programme (PDP), outlines it better than I can. He says the mission of the PDP is to “to enable individuals to access their pensions information online, securely and all in one place, thereby supporting better planning for retirement and growing financial wellbeing.” 

At a stroke, pensions dashboards will largely resolve the problem of lost pension assets for Britain’s pension savers. It’ll also make life easier for them. Pension savings don’t have to be lost to be a problem, they can just be a plain old pain to keep track of. If you’re a pension saver in the U.K., it’s unambiguously great news.

For organisations facilitating PDP, it’s a big undertaking! A lot goes into the end user – the pension saver – seeing all their retirement savings, from everywhere, in one place. That’s why PDP bills itself as an “ecosystem [that] encompasses dashboards themselves, data providers’ find and view interfaces to the ecosystem, and the central digital architecture”. 

That ecosystem comprises: 

  • Digital architecture, the group of elements that make pensions dashboards work

  • Dashboard providers, the organisations who operate pensions dashboards

  • Data providers, the pension providers who supply the information that appear in pensions dashboards

There’s a lot of great information available on the ecosystem at www.pensionsdashboardsprogramme.org.uk, so we’ll cover those briefly here. (Full technical standards for interested parties are found at https://www.pensionsdashboardsprogramme.org.uk/standards/technical-standards/.)

Digital architecture

The digital architecture for PDP refers to the suite of digital tools and frameworks the programme will provide to enable participants to meet their obligations. It includes:

  • The pension finder system

  • The consent and authorisation service

  • The identity service

  • The government register

These are all required by one or both of dashboard providers and data providers and act as PDP’s plumbing.

Dashboard providers

While pension providers will have legal obligations to provide relevant information available to dashboards, provision of a pensions dashboard is optional. 

Organisations that do wish to provide pensions dashboards will become dashboard providers – and this carries some obligations. 

Those include:

  • Registering interfaces with the governance register

  • Registering software with the consent and authorisation service

  • Complying with PDP service and technical standards

Becoming a dashboard provider will mean large projects to design and build interfaces (to ensure you have user interfaces and experiences for savers accessing the dashboard). 

Under the hood, dashboards will have to integrate with consent and authorisation services to get user identifiers. They will also need view authorisation and data to populate their interfaces whenever a user session is started, facilitated by PDP APIs.

Although it’s a complex undertaking, becoming a dashboard provider is an opportunity to genuinely empower pension savers to think clearly about their plan for retirement. That in turn makes it a great opportunity for providers to differentiate themselves in a market where consumers don’t always find it easy to make the right choices.

Data providers

Without the data, the PDP can’t happen. That’s why pension providers are obliged to connect to the PDP ecosystem and feed it data in standard format for wider use. 

Data providers will have to:

  • Connect to the ecosystem (similar to the obligations listed above for dashboard providers)

  • Comply with PDP’s “find interface” and the “view interface” standards

  • Be able to receive and respond to requests from dashboard providers to the find interface

  • Be able to receive and respond to requests from dashboard providers to the view interface

  • Meet standards relating to data erasure and regulatory and monitoring requirements

Getting data in order to support the PDP represents an opportunity for pension providers to clean up their data generally – and embed better, sustainable practices for managing it in future, too. Futureproofing is important because pension savers can request their pensions information at any time – so data providers need rolling confidence that their data is accurate and up-to-date.

That’s why PDP recommends data providers start by reviewing the quality of their current data, focusing on elements that could power pensions dashboards for matching (including full name, date of birth, National Insurance Number, email and phone numbers). An organisation can go from there to determine the best way to use their data to participate in PDP.

Summary with closing thoughts 

PDP is the result of genuinely impressive and creative legislation by the U.K. government. It’s a big deal for anyone it affects, and stands to benefit all stakeholders - even if unlocking that benefit means putting in some extra work to understand and adapt to the changes:

  • First and foremost, pension savers will benefit from a clearer understanding of the financial position they are building for retirement – and will be protected from the risk of losing assets.

  • Dashboard providers have an opportunity to enhance their appeal to users by offering them services with real financial and administrative benefits.

  • Data providers can use PDP as an opportunity to get their data houses in order – and keep them there.

You can explore the sources listed below for more in-depth information on the aspects of PDP most relevant to you or your organisation. 

Sources and links

www.pensionsdashboardsprogramme.org.uk

https://www.linkedin.com/posts/pensions-dashboards-programme_pensionsdashboards-pensions-activity-7003009654867828736-FHRp/

https://www.gov.uk/workplace-pensions/joining-a-workplace-pension

https://en.wikipedia.org/wiki/Nudge_theory

https://www.ft.com/content/b9fa384a-2a59-4ce3-810c-64468e4d40aa 

https://www.unbiased.co.uk/news/financial-adviser/billions-lost-in-forgotten-pensions 

https://www.legislation.gov.uk/ukpga/2021/1/contents/enacted

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1049826/the-pensions-dashboards-regulations-2022.pdf

https://www.gov.uk/government/consultations/pensions-dashboards-consultation-on-the-draft-pensions-dashboards-regulations-2022/pensions-dashboards-consultation-on-the-draft-pensions-dashboards-regulations-2022 

https://www.pensionsdashboardsprogramme.org.uk/standards/technical-standards/

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