In case you missed the fourth session of Pensions Dashboards Week 2024, here’s everything you need to know from Thursday’s ‘Pensions continuity in an uncertain world’. In this discussion, experts answered questions about how pensions dashboards can help the industry adapt to an uncertain economic future.
Since the introduction of auto-enrolment (AE) in the UK more than a decade ago, membership of defined contribution (DC) occupational schemes has increased more than tenfold. Following this success, the industry is now focussed on building member engagement in a bid to improve retirement outcomes for the current and next generation of savers, and pensions dashboards are a crucial stepping stone on this journey.
With a new government in Downing Street, all eyes are on the upcoming Autumn Budget (30 October) to see what changes are coming to address the lack of member engagement, as well as reforming the sector to encourage investment and economic growth.
In this session, our Propositions Lead EMEA, Jon Hawkins, quizzed Chris Curry (PDP), Jamie Jenkins (Royal London) and Louise Davey (TPR) to discuss the current and future direction of travel for the pensions industry. Our experts also discussed the macroeconomic forces impacting UK pensions today, and how the industry can respond to the changes that will result from dashboards going live.
Below are some key insights from the discussion. You can watch the full video here.
Pensions can’t escape wider macroeconomic pressures
As one of our panellists noted, the new government seems to have similar ideas to the previous one about using the c.£3 trillion held in pensions assets to address the UK’s lack of investment and wider economic woes. This idea has been percolating for several years now and it seems like the general direction of travel won’t change.
However, neither government nor industry should lose sight of whose money it is and what it’s intended for: retirement. It’s not to say the two are incompatible but the industry must always keep in member outcomes front and centre. There’s also a challenge of separating our economic growth agenda from some of our sustainability and net zero ambitions and investment should not lose sight of either one of these.
Pensions Dashboards Programme Update
Delegates were also provided with an update on the Pensions Dashboards Programme (PDP), which is making good progress and following the timetable that was set out in March this year. Work is currently proceeding on testing both the reporting and design standards, as well as the code of connection. Testing started over the summer. Since no significant problems have been uncovered, user testing in a pre-production environment is planned to begin soon.
Looking further ahead and dashboards will hugely incentivise the digitising and collecting of data, which can be used to better personalise products and services as well as roll-out digital advice in the future. Connecting pensions together in one place will also encourage better management of small pots, since tasks like consolidation should be much easier for users when the technology matures in the coming years.
Evolving Consumer Needs
Another panellist emphasised that the industry’s future success relies on continuing to earn the trust of a general population that’s becoming increasingly tech-savvy – and more demanding. Having the right data available on dashboards is crucial to meeting these demands, helping people keep track of their assets and simplifying their lives.
This is becoming even more important now that employment trends involve people changing jobs much more frequently than was previously the case. Automatic enrolment at each new job means that many people end up accumulating a complex set of pensions by the time they retire. Being able to provide users with the ability to keep track of their assets, however complicated their arrangements, will be key to the success of pensions dashboards.
Modernising Pensions
Many problems have arisen from the pensions industry’s slow response to the pace of change, especially when compared to other segments of financial services. Large swathes of the industry still aren’t digitised, and although pensions dashboards are forcing the industry to modernise, there’s a lot to be done. Regulators will have a key role facilitating the process of catching up, and encouraging funds to embrace innovation where it’s in the interests of savers. If this is done correctly there’s potential for dashboards, and the improvements they will enable, to have the same impact as open banking.
Increasing Member Engagement
The panel called for a greater focus on younger people, who are often facing significant financial challenges that discourage them from engaging with pensions. In particular, many of them are struggling to buy a home, and the percentage of the retired population who are renting is predicted to increase substantially as a result.
In response the industry needs to normalise and build familiarity with the idea of saving for retirement. Auto-enrolment, and the greater visibility and control that dashboards offer, can help encourage them into greater engagement with their pensions, presenting them with a pot of saved money they can monitor via the dashboard and watch as it grows over time.
It’s key that pensions feel like a part of people’s overall financial wellbeing, and even more vital for young people preparing for an uncertain future.
In case you missed the fourth session of Pensions Dashboards Week, you can watch the recording on demand here.
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