A] Prelude*
* For more general and detailed information about UK pensions and pension plans in general, feel free to visit our dedicated webpages:
https://expatpensionholland.nl/uk-expat-pensions
https://expatpensionholland.nl/global-pillars-systems
As per the latest survey, 25% has lost track of at least one pension in the UK, with almost three million pension pots left unclaimed. The estimated combined value of these unclaimed pensions is a staggering £26.6 billion. Thus, a pressing need was long felt by the authorities and pension holders in the UK for a program that helps consolidate and simplify access to pension information across multiple pension providers, helping individuals better manage and plan their retirement savings.
Consequently, the Pension Dashboards Program (or the “PDP”), an innovative UK government initiative was launched in 2016 which sought to transform how individuals in the UK access and manage their retirement savings. The PDP was eventually formally established in 2019 under the governance of the Money and Pensions Service (MaPS).
All pension providers within the UK were mandated to provide pension data to the PDP as part of the Pensions Schemes Act 2021. The PDP was tasked with coordinating the efforts across industry participants, setting up the various technical and data standards needed and delivering the digital dashboard infrastructure ensuring data security and privacy. The pension dashboard is working towards first connection date in April 2025.
B] 3 main components
The PDP has 3 main elements;
1] The Pension Dashboards. These are authorized apps, websites, tools that help individuals access and view all their pension information in one place. The organizations planning to build these dashboards as commercial offerings need to get permission from the Financial Conduct Authority (FCA) to run a Qualified Pension Dashboard Service (or a “QPDS”).
2] The Central Digital Architecture. It includes of services that perform tasks like authentication of user credentials, managing user consents/authorizations, governance of participants, orchestrating the “find pension” activity. This will be implemented by the PDP.
3] The Data Providers. These are the pension providers/administrators who have been mandated by law to provide the pension data when requisitioned by the digital ecosystem.
C] What is a QPDS?
QPDS is a service that allows pension holders to view all their pension information online in a secure way. All the digital interactions between QPDS and Pension Providers are made possible through the Pension Dashboard digital ecosystem. QPDS connects the user with the pension ecosystem. It receives and displays the pension information sent over by the pension data providers.
As per the PDP, “…dashboards should be engaging, accessible and inclusive whilst presenting pensions information in a clear and comprehensible manner”. There is scope to tailor the dashboard offering and communications to reflect the QPDS provider’s unique customer demographics.
D] QPDS providers
In the current state, no firms are mandated to be QPDS providers in the UK. It is our view that becoming a QPDS will be a necessity to protect existing AuM/AuAs as well as represent a commercial opportunity to drive future growth and benefits for these market participants:
1] Pension Administrators and Providers. They have a direct interest in offering user friendly pension dashboards to enhance their service offerings. QPDS can enable them to provide better transparency and engagement tools for their existing clients and help attract new ones.
2] Financial/Wealth Advisory firms. As QPDS providers they will be able to offer more holistic and detailed retirement planning services by integrating the pension data into their advisory platforms.
3] Fintechs. QPDS may serve as an opportunity to leverage their expertise in design, data analytics and technology to create compelling products.
4] Insurance companies. They offer pension products and annuities. By providing a dashboard, they can enhance client engagement and cross-sell other insurance products.
E] Why be a QPDS provider?
1] Competitive Advantage
Being a QPDS could help a firm differentiate from its competitors. A QPDS provider can integrate with other financial planning tools and open banking platforms, allowing customers to see their pension data as part of their wider financial picture.
2] Enhanced Customer Engagement and Experience
People now tend to shift jobs often. It is estimated that a person will switch their employer as many as 11 times in their lives. Each of these jobs could have an associated work pension.
The individual may also have state and/or private pension pots.
Which leads to multiple types of pensions and pension pots getting frequently created and often forgotten. Dashboards aim to simplify this for the pension holder by consolidating pension information across all these multiple sources.
3] New Customer Acquisition
Firms offering QPDS service may attract new customers by allowing them to view their pension data as a free service. This can help acquire new customers.
F] How to be a QPDS provider?
There is a well-structured process that needs to be followed to be able to apply for a QPDS qualification. There are requirements a prospective QPDS provider must meet:
1] Obtain Financial Conduct Authority (FCA) Authorization;
2] Adhere to all MaPS Standards;
3] Ongoing Operations, Reporting and Audit.
G] Conclusion
The whole program is of course set up to service the British resident. In reality not only finding until then lost pension claims but also providing the chance of really much better integrated advisory/provider services regarding all existing pension claims.
The pursuit of a QPDS qualification within the larger PDP program represents a strategic opportunity for financial firms. PDS providers will be able to offer a lot of value-added services to the customers as the PDP program evolves in the future. These benefits outshine the drawbacks apparent while pursuing it!