Us Edinburgh folk know a bit about delayed big projects. The trams debacle still causes palpitations. Pensions dashboards has some parallels for sure.
First a bit of history
Pensions dashboards where first announced as government policy at the 2016 budget by George Osbourne. Remember him? There had been semi-official discussions at an industry level for a year or two before that. When announcing it, the then Chancellor said the project would be live in 2019.
So what happened?
Let’s break this down into two key strands: the policy / regulatory work and the IT work. Both are needed to create a national system like the pensions dashboard.
Policy and regulation
In order to create a dashboard like this, you need regulations. Mainly to force the thousands of pensions schemes and hundreds of organisations that administer them to release the data to the system. Then of course to ensure that everybody in the process behaves and acts in the interests of the customers.
On top of that you want to hone in on what pensions dashboards actually should and should not be in detail. For example, there was considerable opinion that there should only be one dashboard, run by Pensions Wise.
The delays here were down to a couple of things. First Brexit. I don’t care what side of the fence you sit on, but there’s no doubt that from 2016 to 2020 a lot of parliamentary and government time was spent on this, so there simply wasn’t the time to present the bill allowing for regulation. It finally arrived with the 2021 Pensions Schemes Act.
The other main reason, in my opinion, is that the Department for Work and Pensions (DWP) took the whole idea in house and did not collaborate enough with the pensions industry. Quite a lot of good groundwork had been done by the industry under the auspices of the Association of British Insurers and the Treasury. A lot of this was parked and work was started from scratch.
The IT
I’m not sure how many times I’ve said it but will continue to do so. The pensions dashboard is an IT project. And a big complicated one.
To create something like this you need an architecture design, data standards, security standards, testing systems etc. All sorts of stuff that chaps like me get excited about, so no one else has to.
You also need to employ specialist IT firms to create and maintain the central IT systems that everything runs on.
The first issue here was that it took a very long time to appoint the firms that are now building the systems. This was down to the government procurement process, which is even more bureaucratic than you might think. It took the best part of two years to appoint Origo and Cap Gemini for example.
The second issue is that people have underestimated quite what an endeavour building this system is. My old boss had a phrase that I think applies well here: “Everybody thinks other people’s jobs are easier than they really are.”
Given the time taken to work through the regulation and policy work, on reflection, it was a mistake to allow so little time for the actual build.
So where are we now?
We’re genuinely getting there in making Pensions Dashboards real. The IT build, although delayed, is nearing completion. The regulations are in place. The FCA is preparing the regulations in terms of hosting a dashboard.
Plus, in the background, pensions providers, administrators and third-party connection services have been getting the pensions information ready. Take it from me, this is a lot of work, and contrary to much commentary, the industry is taking this seriously.
So what’s the problem?
You will have heard that there’s been another delay. But probably very little on why.
The main problem is that the UK pension landscape is ridiculously complicated. There are thousands of schemes administered by upwards of 200 organisations. Connecting these to the central system is, it turns out, going to be much more complicated than first expected. Therefore the DWP had announced that the final date for all schemes to be connected will now be October 2026.
What we don’t know yet is when the UK public will be able to use the dashboard. There was always planned to be a Beta phase where a few people could join; I would advocate this be expanded once a decent number of pensions have been connected. After all we still expect the largest organisations to go first, probably in 2024. I am talking firms such as NEST, AVIVA, Phoenix and Royal London in the DC world and Hymans Robinson or Capita in the DB world.
So with some luck we should have the first Pensions Dashboards in 2025.
What’s important to remember about the pensions dashboard is that once they it’s, much like Edinburgh’s trams, people will find them rather useful.
