Pensions often seem like something to think about another day. Retirement seems so far away for so many of us, and and pension engagement is at an all time low in the UK.
But, a solid pension plan is the cornerstone of a long and healthy retirement.
And almost all of us have one. In fact, most of us likely have more than a few! Since auto-enrolment was introduced in 2012, UK law has required companies to automatically enrol all employees into a workplace pension. So, if you’ve been working since then, and haven’t specifically opted out, you’ll have one too.
But where are they? Knowing where your pensions are and how they’re performing allows us to make financial decisions now that ensure a comfortable future. With multiple pensions created by multiple employers across multiple providers, finding out what you’ve saved and where you’ve saved it can seem to be an almost Herculean task.
If only there was something that could do all of the hard work for us and find our pensions automatically…
Introducing: Pension Dashboards
Well, good news! That’s where pensions dashboards come in. Currently, legislation is working its way through Parliament which would mandate that all pension providers make available details of an individual’s pensions digitally. That means that companies, such as Moneyhub, or your pension provider, will soon be able to make a request to all of the pension providers in the UK simultaneously and give you details of your pensions in one central place - A Pensions Dashboard.
But what is a pensions dashboard, and how does this all work? At its simplest, a pensions dashboard is an application which enables you to enter your identity, and then have it search for your pensions on your behalf, before returning all of the results for you to view in one location.
The Nuts and Bolts
Finding all of the pensions for anybody who wants to know where they are isn’t a simple endeavour because there’s no centralised system which keeps track of who’s invested what, where.
Along with the legislation mandating that all pension providers provide an interface for pension discovery, the Government is going to play a key part in that system: verifying the identity of a person looking for their pensions.
Pension data is important, personal data that must be kept secure, and who better to verify that you are who you say you are than the people you pay your taxes to?
The Central Digital Architecture
To that end, the Government’s Pensions Dashboards Programme will be working with industry partners to create a Central Digital Architecture (CDA) which will act as a go-between for a person trying to find their pensions, and all of the providers that have pension records.
Upon verifying a person’s identity, the CDA then reaches out to every pension provider in the UK to make a request on that person’s behalf for information on any pensions that they hold for them. Once the request has been received, the pension provider will then go away and look through their records. If they find a record, the provider then responds to the CDA’s request with details on how a person can view their pension information.
One key thing here,is that the information about a person’s pension doesn’t pass through the Central Digital Architecture. Once the pension provider responds to the CDA’s request, it passes back a link where a person can retrieve that information directly without going via the CDA.
All of these requests work in parallel, and can take different lengths of time to respond - ranging from seconds, to weeks(!).
Weeks may sound like a long time to wait for a dashboard to display information, but it’s unfortunately part of the parcel of modernising systems that can be up to decades old. We expect that those will get much faster in the near future.
This all sounds very complicated…
…and yes, it is! These are just a few of the moving parts that will make retrieving all of your pension data as easy as flipping on the kettle, but there’s a lot of work to be done, and a whole bunch of details to get right.
Fortunately, here at Moneyhub we have extensive expertise and technology in this area, and we want to share that with you!
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