Bravura’s Proposition Lead EMEA, Jonathan Hawkins, explores how the pensions dashboards ecosystem will cope with potentially millions of users rushing to use them and whether the building block our pensions system together will start to fall apart.
To adapt a quote from one of our speakers at Pensions Dashboards Week 2022: “The Pensions Dashboards Programme (PDP) is the biggest change in pensions for a generation so it’s vital we deliver them effectively”.
With the reset now behind us, the Pensions Regulator (TPR), the PDP and the Financial Conduct Authority (FCA) are all driving us forward to our guided connection dates – no doubt there will be a series of mad scrambles, and late nights to get things over the line – but none of this is unusual in projects and programmes. What we do know though is that we are full steam ahead.
All data providers (schemes, DWP, pensions provider, and administrators) are all at different stages of their readiness journey, with a large proportion still focused on finalising connection plans, confirming matching criteria and cleansing member data. But, to grasp the material opportunities – and indeed challenges – dashboards present, firms must start bracing for impact and look at dashboards through a couple of lenses; namely growth, and operational impact.
Dashboards are designed to flex
Earlier this year, the UK’s National Audit Office released its report into the delayed PDP. It estimates more than 16 million savers will use dashboards when they are open to the public – a point known as the Dashboard Availability Point (DAP). No fixed date is set for this at the time of writing, but we know it will come after the final connection deadline of 31 October 2026. Personally, I’d put an emphasis on the ‘more than’ in that statement.
With millions of people potentially rushing to use a brand-new service, one could rightly expect some teething issues. However, unless the Central Digital Architecture (CDA) has been built incorrectly by multiple stakeholders – and in close collaboration with industry working groups – the dashboards ecosystem will be able to handle large volumes of traffic by design.
What’s more, because the PDP ecosystem is designed to be federated, nothing relies on a single linchpin. So even if millions of consumers log into MaPS’ dashboard straight after the DAP, the system might struggle with speed and some consumers may have to queue to access the MaPS dashboard, or the CDA might be a little slow. But the failure of one system shouldn’t cause a wholesale outage as the ecosystem is designed for flexibility, resilience, and scalability.
In addition, cloud-based ISPs, such as Bravura’s Dashboards Connect, which connect providers member data and dashboards with the PDP’s CDA, are designed to handle millions of calls for data and can scale effortlessly to cope with surges in demand. Crucially, because of our data-protection first design, it doesn’t compromise on data protection and control – which were identified as a top concerns for providers and schemes when choosing an ISP provider, according to our research.
The walled garden
We can assume that many folks finding many pension pots will look to combine, consolidate, or find out more. These actions lead to predictable behaviour changes of pensions holders, which will have impacts for dashboards operators, data providers, and across the whole pensions industry.
Under current guidance from the FCA, savers won’t be able to consolidate or transfer pensions through commercial dashboards. They might be redirected outside the dashboards “walled garden” to complete these journeys, either directly through their provider or via a third-party provider.
The FCA has taken this position to, quite rightly, protect consumers from harm. But, I’d argue, by directing customers outside of the walled garden, it could in fact open more problems because they leave the regulated dashboard ecosystem. At best, this could mean savers are enticed by offers to consolidate that aren’t in their best interests. Or worse, they might accidentally share their details with malevolent actors and open themselves up to fraud, scams, and phishing attempts.
This last point is obviously one of the worst-case scenarios, but as an industry we need to think carefully about how consumers will initially want to interact with dashboards and how this will change over time as more functionality is added. You can see from other countries that have launched dashboards previously that usage changes over time and as more features – like digital advice and educational tools – are built in.
Thorny transfers
Thinking on further – people will (sometimes correctly) want to understand and consolidate their pots – this leads on to further impact on the industry.
The current transfer process for pensions is fragmented and relies on too many disjointed parts, proprietary systems, and manual working. It is an ugly patchwork of half-implemented proprietary solutions with still much of the work prior to inputting this transfer onto a system is incredibly manual and hasn’t changed in decades. This can mean transfers can take weeks, months or in some cases even years.
This money belongs to the saver and making them wait this long to access savings – even if they are wrapped up in a pension – just isn’t good enough. And this is where I really see dashboards having a negative impact on the industry if the status quo is not challenged and changed.
Technology has raced ahead in the past decade and these challenges can be easily overcome with investment and industry collaboration to standardise transfer processes, for example, by using instant validations of request. This could work by capturing and collating all the information that providers want so that transfers could be automated and processed by exception (by which I mean only the real outliers need manual interventions). This type of technology is already working in Australia and there’s no reason we couldn’t create a similar ecosystem in the UK.
If we don’t sort transfers out now, providers and schemes may face a tsunami of enquiries from customers looking to confirm their details or transfer a pension and could quickly be overwhelmed. It’s in all our interests to finally kick the thorny issues of transfers into the long grass forever. If we don’t, our industry will be in for a rude awakening.
Like any change, there will be resistance – and we all know that some providers drag their heels to retain their outdated business model. But as an industry we need to start looking through the consumers’ eyes – rather than protecting assets or paying lip-service to the bare minimum of regulation.
We can and should think bigger and act bolder. We are already seeing the regulators bare their teeth with the VFM consultations, they will be expecting us all to play our part – both individually, and to apply peer pressure on market recalcitrants.
Connect to the PDP ecosystem with Bravura’s ISP
Our award-winning ISP offers a secure, scalable, and no-code solution for connecting to the UK’s pension dashboards. It enables fast implementation, ensures data security without storing identifiable information, and can scale effortlessly to handle large volumes of data requests. This allows providers to focus on their core business while seamlessly meeting regulatory requirements.
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