Data sharing standards and cleansing of the data itself will be essential to the success of pension dashboards says ITM executive chairman Duncan Howorth.
So, the prototype for what will eventually become multiple pensions dashboards has arrived. Getting this far has been no mean feat for the small group of tech companies, providers and ABI to demonstrate in a short space of time that these dashboards can function in practice. But was this just a theoretical exercise or does it mean that the moment when consumers will be able to see all their pension pots in one place is only a short time away?
The answer is both yes and no. The biggest indicator that fully functioning dashboards could be nearing the horizon is the success of industry collaboration. Efforts made so far clearly show that it’s possible to work across different data systems, technology infrastructure and multiple industry participants to create streamlined dashboards. This is perhaps the first time that different facets of the pensions industry have proved that real progress can be achieved by working together.
However, the ‘no’ begins to creep in when we start to consider the significant work that still needs to get done by both the industry and the Government if the Dashboards are to go live by 2019. With the industry having done its bit initially, the Government must now play its part in setting out a framework for how the Dashboards will become a reality. Here are some of what we see as the key next steps, with issues and questions that the Government needs to address.
What does the commercial model look like? We already know that Treasury will not fund or pay for building a service, so a plan for a private sector solution needs to be established. That being said, the Government will create a framework for this, although the industry is currently waiting to know more about when and how this will take shape before it can move forward.
How will regulation and consumer protection work? Will the current steering group morph into a regulator for the dashboards, or will dashboard operators need permissions under the Financial Conduct Authority?
Will we get full industry engagement? This is as much a matter for industry as it is for the Government. It goes without saying that it’s a big step to go from 17 volunteer contributors to having every provider of some 60 million pension pots engaged and providing access, without which the dashboards will inevitably fail. It would be far better for providers to voluntarily participate instead of forcing the Treasury’s hand which may, in the end, find it necessary to mandate involvement. We would argue that being “forced” to provide consumer benefit isn’t the smartest reputational move. So, the sooner all parties get involved, the better for everyone.
And that brings us to data. The dashboards will only be of real value to consumers and their advisers if they can access current, full and complete data. Connecting the sheer volume of pensions data out there is a crucial challenge that has almost certainly prohibited pensions dashboards from being developed sooner. As a technology partner for the dashboard prototype, ITM has been working to integrate data and create data matching standards that will be key for pension schemes of all shapes and sizes to make their information available, economically.
The reluctance to engage with the dashboards that has been coming from some quarters of the industry is likely to be a result, at least in part, of underlying issues with poor and often outdated legacy data. But, again, the system will only succeed if the pensions industry is prepared to work together to agree processes and implement data sharing standards. At present, the sector is a long way from being able to achieve this, making investment in data quality an essential investment that will need to take place on a significant scale over the coming months and years. Watch this space.