Whatever the Government’s view, pensions dashboard services have the opportunity to be really great for UK citizens. In the second of two articles, Richard Smith reviews some of the high level technical complexities of making it happen.
Part 2 – Technical requirements
Three months ago, in the June edition of Pensions Aspects, I used two case studies to illustrate some of the challenges that a pensions dashboard service will face in terms of content, i.e. “what” needs to be shown. This month, I turn to the technical challenges of actually achieving it, i.e. “how” it might be done.
It’s likely that this article could be superceded by DWP’s dashboard feasibility report – at the time of writing this is expected “in due course”. Much of the content remains valid, however, whatever Government says.
Picture worth a thousand words
The only feasible way to talk about this is through pictures, so this article centres around the simplified ecosystem diagram on the next page.
“Ecosystem” used to refer to a biological system of interacting organisms, but nowadays it’s come to mean any complex network or interconnected system.
And behind the dashboard’s front-end simplicity for users, there will most definitely need to be a complex, interconnected, and highly sophisticated ecosystem.
The concept’s really simple: there are currently about 40 million UK Citizens of working age (“Layer 1” at the top of the diagram) who between them, today, have something like 100 million pension entitlements (or, very roughly, an average of two and a half pensions each) (“Layer 8v” at the bottom of the diagram).
Dashboard merely makes online connections between Layer 1 UK Citizens and their Layer 8v Entitlements. What could be simpler? The following brief descriptions of each layer in the ecosystem, show how it will be far from simple. But it can, and must, be done, as citizens really need greater confidence about their pensions.
Highly simplified diagram of the potential ecosystem for UK pensions dashboard services
Note: The brief descriptions on the next page can only give the merest flavour of the different dashboard components. Bringing all the components to fruition at once, in all their necessary detail, will present a truly exciting industry-wide programme, unlike anything the UK pensions world has ever seen before.
Layer 1 UK Population: Clearly, UK citizens should expect to be able to use UK pensions dashboard services. But who exactly is in and out of scope? For example, should a retired person expect to be able to use the dashboard? What about if one or more of their pensions aren’t yet in payment?
Layer 2 Identity Verification Service (IVS): The two hearts of the dashboard ecosystem are the IVS and the PFS, i.e. confirming respectively “who you are” and “what pensions you’ve got”. Citizens may come to dashboard first (interaction A1), or alternatively, have their identity verified before they come to the dashboard (for example by another service such as online banking – interaction A2). The level of identity authentication required, and the associated costs, need to be discussed and agreed across the industry.
Layer 3 Dashboard Services: The dashboard service itself is the citizen’s window on to the ecosystem. Different segments of the UK population will find different things useful, which is part of the argument for multiple dashboards. A plan for publicising dashboard services to the UK population needs to be devised, as part of a coherent industry-wide approach to launching and operating the ongoing dashboard service.
Layer 4 Governance / Funding Entity: As soon as we talk about showing consolidated pensions data to citizens, we need to think about who (or which entity) will govern and control that activity. This entity will have a wide role on data controls in terms of security, matching, transmission, presentation, and so on. Because of its oversight of the end-to-end ecosystem, this entity will also be well placed to manage the necessary funding of the ecosystem, both on start-up and ongoing. It also seems highly logical for this entity to also be responsible for managing the initial delivery of, and ongoing updates to, the service.
Layer 5 Pension Finder Service (PFS): The critical component the Governance entity needs to procure and oversee is the function which finds the pensions belonging to each citizen who uses the dashboard service. Some of the critical complexities surrounding this service are whether, where, and for how long, records of positive and negative finds should persist, as well as the extent of the data that should be recorded.
Layer 6 State Pension Service: The DWP’s State Pension Service isn’t just another pension provider, partly because it’s an existing national online service, but also because the UK’s National Insurance Number database could well prove helpful in providing additional support for the verification of users’ identities.
Layer 7 Integration Service Providers: ISPs are the layer between the Pension Finder Service and our familiar pensions world. In order to access data from this world (and transmit it back via the PFS to dashboards), ISPs will need to enter into agreements as appropriate with Trustees / Providers / Admin Functions / Admin System Providers. (In fact, it’s likely that several Admin System Providers may bring new ISP services to market to leverage their existing relationships with pension schemes and providers.)
Layer 8 Pension Entitlements: This lowest layer represents the circa 100 million pension entitlements currently in existence in the UK. The entitlements “belong” to Citizens but the data relating to them is “owned” by Trustees and Providers. So it is these entities, together with their administration partners, who need to expose their members’ / customers’ pension data to ISPs (or, potentially, directly to the PFS – interaction G2, although that seems less likely). Being compelled to expose this data, over a staggered introduction period, will greatly simplify schemes’ and providers’ business cases for the necessary work. All pension types are in scope: public and private sector defined benefit (DB), trust and contract based defined contribution (group and individual), and, of course, Pension Protection Fund compensation.
To a UK citizen, the experience of using a pensions dashboard should be simple, elegant, beautiful even. Like the proverbial graceful white swan gliding across the lake: it appears elegant and effortless, but under the water a huge amount of sophisticated work is going on. So it will be with dashboard: when all the components in the ecosystem described here are set up and tested thoroughly, they will work together seamlessly, making all the hard work behind the scenes look ridiculously easy; and, crucially, providing a really clear, simple and great service for our fellow UK citizens.
The whole UK pensions world now needs to get behind the dashboard initiative, working with technology and other partners as appropriate. We must urgently get on with adapting our industry so that it functions properly for citizens in a world where folk don’t just have one 40-year job.
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