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Pensions Dashboard will enable Open Pensions, says Origo

9 October 2018

The proposed Pensions Dashboard architecture will enable the financial services industry to deliver Open Pensions for the UK consumer, says Origo.

The Fintech has published a paper, Pensions Dashboard to Open Pension’, in which it lays out how the proposals for a Pensions Dashboard architecture will introduce “the firm foundations required for the development of an Open Pensions approach”.

The Pensions Dashboard architecture, Origo says, will enable the secure transfer of data via Open APIs and encourage a market for consumer Fintech, just as Open Banking does.

Initially the data will be focussed on finding and displaying, in an easily understood manner, a consumer’s basic pensions data. In subsequent phases the architecture would be extended to wider sets of data, in effect, enabling an Open Pensions market.

Anthony Rafferty, managing director, Origo, says: “The potential to deliver an Open Pensions environment via the Pensions Dashboard architecture, as outlined in our paper, is an exciting prospect for the industry.  This would have significant benefits for UK consumers.

The Dashboard paves the way for innovative user experiences he says, including “delegated authority to regulated financial advisers and the single financial guidance body, to inform retirement planning, to obtain pension comparisons, or to populate a budgeting style App.” In addition, he says, Fintech organisations could, subject to governance rules, bring together this pensions and banking information to display all of a consumer’s financial arrangements in one place.

Recently it has been suggested the Pensions Dashboard initiative could leverage the Open Banking approach, the assumption being this would be feasible and quickly lead to a free market environment supporting innovative user experiences for the industry’s consumers.

Rafferty says: “While it is natural for the industry to draw parallels with the Open Banking initiative, and in many ways there are similarities and potential synergies, there are also specific requirements in the pensions industry which necessitate different technical approaches.

“Open Banking was regulatory driven as a means to increase competition in banking. The Pensions Dashboard, on the other hand, is designed to help people find their pension pots wherever they may be, in a secure manner and obtain information about them.

“The UK pensions market has 300+ pension providers of all shapes and sizes – each with different legacies, online capabilities and supporting architecture. There are just nine large banks who make up the CMA9[1]and who fund the Open Banking Implementation Entity in the UK banking market – so scale in the pensions sector needs to be tackled differently.

“Another key factor is that the individual knows who they bank with and their online banking credentials. Compare this to the pensions world where a consumer may have up to 11 pension pots and may not know of or have lost track of some. Furthermore, not all pension administrators will have issued credentials for online access as some simply do not have the capability to do so.

“To handle this in a manner that enables a smooth, secure customer journey requires a single identity verification point and use of a central Pension Finder Service to search the entire market to ascertain where an individual’s pensions may be and to feed the information back to the individual, via the dashboard screen. This is all quite different to the Open Banking approach.

“Also significant is the complexity of pensions information – the differences between arrangements such as DB and DC arrangements, for example.”

While there is a need for a specific approach for the pensions industry, Rafferty says, the current proposals for the Pensions Dashboard “should be the catalyst for consumer engagement building on the success of Open Banking to deliver an Open Pensions landscape incorporating highly sophisticated centralised controls for consumer protection, privacy and consent management.

“A central Pension Finder Service trusted by industry, government and the consumer will be fundamental to success.

“The Pensions Dashboard lays down the firm foundations the industry needs to enable Fintech innovation. The Pensions Dashboard is Open Pensions.”

The paper ‘Pensions Dashboard to Open Pensions’ answering questions concerning Open Banking, Open Pensions and Pensions Dashboard can be downloaded from www.origo.com/open-pensions-faq

[1]The nine largest banks and building societies in Great Britain and Northern Ireland, based on the volume of personal and business current accounts.

AIB Group (UK) plc trading as First Trust Bank in Northern Ireland, Bank of Ireland (UK) plc, Barclays Bank plc, HSBC Group, Lloyds Banking Group plc, Nationwide Building Society, Northern Bank Limited, trading as Danske Bank, The Royal Bank of Scotland Group plc, Santander UK plc (in Great Britain and Northern Ireland).