Written evidence submitted by Richard Smith, Independent Pensions Dashboards Consultant (PD0001)

 

 

             

Background on witness

 

  1. My name is Richard Smith, an independent consultant with a variety of roles across the UK’s very long-running pensions dashboards initiative, two recent roles being:

 

 

 

 

Summary evidence narrative

 

  1. With dashboards, there’s a lot to say!  I’ve focused my evidence on key issues I believe will be of greatest interest to the Committee: I’m very happy to expand at the oral evidence session on 5 March.

 

  1. Key points I make in this evidence are:
     

 

 

 

 

Consumers’ emotional reactions to dashboards
 

  1. Pensions dashboards have incredible promise for millions of UK working age people.  Around half the working age populations in the countries I visited in 2023 now use dashboards several times a year.

 

  1. I have been privileged to personally witness testing with real consumers of both the UK industry prototype dashboard in 2017, and, in 2023, the extensive testing undertaken by fintech Moneyhub.

 

  1. With pensions and retirement, the vast majority of your constituents are “detached, complacent and afraid” – the main finding of DWP-commissioned research by Ipsos Mori, published in 2023.

 

  1. But in testing, when they bring this fear to dashboards, I’ve seen consumers’ visceral positive reactions, saying things like: “I’m so scared about pensions, but this tool is great. When can I use it?”

 

  1. The previous government wisely went even further and made legislation enabling this dramatic increase in consumer awareness and positivity to become a possibility in numerous places, i.e.:
     

 

The pensions dashboards ecosystem

 

  1. To understand the overall pensions dashboards technology ecosystem, imagine an hourglass:

 

 

  1. My 3-minute independent explanatory video brings this to life and has had excellent feedback.

 

 

The numerous advantages of FRPDs

 

  1. FCA Regulated Pensions Dashboards (FRPDs) have a range of unique benefits for consumers:

 

 

  1. The last of these advantages, action, is critically important due to the UK’s pension inadequacy.

 

 

Invisible inadequacy – consumers unaware, but total ERI makes it visible

 

  1. The main issue with UK pensions is that most people haven’t got enough.  There are second order issues around whether you should bring your pensions together, and how to optimally spread your pension provision sustainably across your retirement years.  But the key need is to have enough.

 

  1. “Pension adequacy” is difficult to define and measure and is very personal.  Some of the range of estimates which have been made, sourced by Daniela Silcock Pensions Research, are:

 

 

  1. Despite many industry reports on inadequacy, for most UK citizens inadequacy is invisible. An adequacy target would help consumers, but government’s review on this is currently paused.

 

  1. DC pension providers lead their communications with a DC “pot value”, but the monthly income in retirement that a DC pot might generate is typically less prominent in communications.

 

  1. Dashboards are designed differently, in response to really low levels of consumer understanding.  For each pension found, dashboards lead with a monthly estimated retirement income (ERI).

 

  1. Some more engaged users will explore each of their different pensions on a dashboard, but usage statistics from the continent show the vast majority will only visit one page to see one data point.
     
  2. Total ERI is the one thing most consumers want to know, totalled across their State Pension, DB, DC and other pensions.  My short highlights video shows how continental dashboards lead with total ERI.

 

  1. If all the industry research reports above on inadequacy are correct, then very many consumers are going to have a nasty shock when they see their monthly total ERI displayed on a dashboard.

 

  1. For consumers, dashboards finally end the invisibility of inadequacy of their retirement provision.
     

 

Consumer action needed urgently, but MHPD doesn’t support action

 

  1. Because the total ERI many consumers see will not be enough for them to live on in retirement, they need to take remedial action, and very soon.  This means increasing their pension contributions.

 

  1. FCA Regulated Pensions Dashboards (FRPDs) can support such consumer action, e.g. with low-friction click-throughs to employers’ payroll systems enabling workers to increase contributions.

 

  1. But the government MHPD will not support such action.  How does MHPD plan to support the “inadequate total ERI shock” moment, when user testing with real consumers starts this Spring?

 

  1. In the continental European countries which only have one dashboard, this has been less of an issue because of their “Bismarckian” pension systems with relatively higher Pillar 1 (State) provision.  The UK’s “Beveridgian” system is only designed to keep people out of poverty, not to keep them in comfort.

 

  1. The UK’s consumers need action-oriented FRPDs precisely because of our inadequate system.

 

 

Broad, personalised, innovative support: Open Finance, Open Banking, Targeted Support

 

  1. In testing, when consumers see their, often inadequate, total ERI from their pensions, they ask: “What else have I got to live on in retirement?  Please can you show me my ISAs and other money alongside”.

 

  1. Through existing Open Finance (OF) connectivity, FRPD operators can show their customers their other (non-pension) assets alongside their pensions, for a truly holistic financial picture.

 

  1. Many consumers don’t know what their expenditure might be in retirement.  FRPDs which are Open Banking (OB)-enabled can connect to current accounts to analyse peoples’ current personal spending.
     
  2. Looking forward, FRPDs will drive innovation.  Continental dashboards have continually evolved post-launch for decades.  An example in the UK is FCA’s targeted support using dashboards data.

 

  1. The FCA consultation on its pensions targeted support proposals closed last week, in an attempt to bridge the gap for consumers between generic guidance and full, paid for, regulated financial advice.  Targeted support only really becomes highly effective for consumers if providers have easy visibility of their customers’ total careers-worth of pensions.  So to fully achieve the hoped for consumer benefits of targeted support, FCA Regulated Pensions Dashboards (FRPDs) need to happen.  But will they?

Will FRPDs actually happen? – government’s ability to provide certainty for firms

 

  1. So consumers desperately need FRPDs: they are available on their favourite, most trusted financial apps, they support immediate action, and promise fantastic, personalised support into the future.

 

  1. But it is not at all certain that any FRPDs will actually emerge for consumers to use.

 

  1. FRPDs are rightly very tightly regulated, to protect consumers.  But government has made this so onerous, and so uncertain, that it’s currently just not possible for firms to make a business case.

 

  1. In particular, there are dependencies across multiple different parts of government / regulators:
    DWP policy, MaPS PDP, FCA, GDS, MaPS MoneyHelper, DWP SoS, and possibly others as well.

 

  1. As a decade-long, close student, of the UK dashboards initiative, it is not clear to me that these different departments will be able to deliver the detailed timeline certainty industry firms need.

 

  1. MaPS PDP has recruited KPMG to help, but there is no one entity in overall charge of ensuring all the dependencies are coherently planned for, and delivered, to enable industry firms to do FRPDs.

 

  1. Without certainty and a detailed timeline from government, firms can’t make an FRPD business case.

 

 

Testing data supply and the central data retrieval service

 

  1. On the plus side of the programme, the industry’s pension providers and schemes are ready to connect their data, starting in just 10 weeks’ time, connecting over 50 million pension records.

 

  1. Through the MHPD team, we await scale testing, both of the interaction of the central GOV.UK One Login service within the ecosystem, and of data suppliers' personal data matching policies.

 

  1. But I foresee challenges with this testing: other countries got their end-to-end dashboards ecosystems working before mandating the connection of all data at the “bottom of the hourglass”.

 

  1. What we have done in the UK is mandate the whole industry to connect its data into an untested end-to-end ecosystem.  This approach will undoubtedly cause rework for the pensions industry.

 

  1. Throughout, collaboration between government and industry will remain key.  This was a really critical message from all the continental European dashboards teams who I met with in 2023.
     
  2. Collaboration is a particular challenge for us in the UK.  Other countries set up joint industry / government entities to govern their dashboards programmes.  In the UK, it is wholly government-led.
     

Conclusion

 

  1. FCA Regulated Pensions Dashboards (FRPDs) are critical so that consumers can easily increase their contributions following the “inadequate total ERI shock” many will experience.  However, it’s not at all clear that any FRPDs will emerge because firms need detailed timeline certainty from multiple different parts of government and, in the past, the programme has not been highly joined up or collaborative.  If all parties can find a way to get FRPDs done, though, the prize for UK consumers, and growth, is huge.
     

“The cost of doing pension dashboards is cheap for
  the great deal of trust in pensions they create:
  dashboards are just the right thing to do.”
Steven Janssen, Director of Sigedis, the co-operator of mypension.be, the Belgian pensions dashboard

 

“Doing dashboards is a long, complicated and painful
  process. But when you look back, over many years,
  you can see you they’ve helped many, many people.”

Anders Lundström, (Former) CEO of minPension.se, the Swedish pensions dashboard

February 2025

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