Mr Yuille adds that the technological capability across the industry is not consistent but “fragmented”: some industry participants have the latest in technology; others have older systems.
“Rather than [focusing on] technological breakthroughs,” he says, “we believe the key to unlocking the potential of dashboard services will be incentivising those who have not traditionally invested in technology to do so.
“As this will require investment, we believe the government will need to look at supporting dashboards with regulatory incentives that encourage schemes to become dashboard ready.”
Piecing schemes together
According to John Kelly, consultant at Mattioli Woods, while many platform-based pension providers “will be able to move quickly on this”, another potential barrier is how smaller or more esoteric and complicated pension schemes will fit into the dashboard framework.
Mr Kelly explains: “There are lots of old legacy pension schemes and final salary schemes which I do not see being ready for this.”
Ms Tait agrees: “The biggest challenge will be for pension and service providers to ensure they can provide quality data to the pension finder service.
“For private pension schemes and many of the older insured arrangements, the challenge is greater and there may be a temptation to try and avoid participation.
“Also, there are a number of self-invested personal pension and small, self-administered schemes which hold assets such as commercial property and loans.
“These types of assets do not necessarily have the ability to be valued and reported daily, and this will have to be emphasised to the end users with appropriate caveats.”
Filling the data gap
Then there is the matter of the so-called ‘dirty data gap’.
The pensions dashboard will work by collating all pension information into one place for the end consumer, securely and safely.
To do this, it will rely on providers supplying all data of all schemes – but herein lies the problem.
According to data specialist ITM, the majority of UK pension schemes and providers are missing crucial customer data, and the technology will need to be agile enough to cope with the missing information.
In a survey carried out among 440 pension schemes, who have more than 20m members between them, ITM revealed the scope of the problem.
The survey showed:
- Schemes set up before the year 2000 account for more than three-fifths of the total number of pension pots surveyed.
- These schemes have the highest average levels of inaccurate or missing data.
- Less than 30 per cent of workplace personal pensions have dirty data.
- Slightly more than 20 per cent of defined benefit occupational schemes have dirty data.
- 60 per cent of the missing or incomplete data among defined benefit schemes before 2000 was postcodes.
- 30 per cent of postcode data was also flawed in all other defined benefit and defined contribution data.
- Approximately 50 per cent of both workplace and group personal pensions set up before 2003 had inaccurate or missing national insurance data.
So why is this such an issue? Mr Howorth of ITM, which is one of the six technology partners working on the dashboard prototype project, explains: “The challenge within this, for many pension providers, is that legacy books and systems have created high levels of inaccuracy and gaps in pension data.
“Data cleansing will therefore be a necessary step for many providers to get fully prepared for the dashboards.”
