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The Pensions Industry Needs to Clean the Stables

Matt Burrell ABI’s Senior Policy Adviser, Matt Burrell, assess the challenges ahead for pension providers to ensure pensions dashboards are implemented successfully following the recent call for input on data standards by The Pensions Dashboards Programme.

The closer we get to the implementation of pensions dashboards, the more it seems there is to do. There is a myriad of challenges from differing projection methodologies to the precarious nature of some legacy systems and schemes. Britain has a weird and wonderful pensions system that has evolved continuously since the Napoleonic wars and does not always fit in the neat boxes we’d like it to.

The Pensions Dashboards Programme has recently launched a call for input on the data elements that will have to be shared via the pensions dashboards ecosystem. Allowing consumers to access their own data shouldn’t be that radical, but it is, and it should be transformative. However, it is not going to be of any use unless pensions can be found, matched against the search criteria, and we can be sure of the accuracy of the data that’s returned.

Recently I heard the process of implementing pensions dashboards described as requiring “herculean effort”. Which got me thinking about the story of Hercules being tasked with cleaning the stables of King Augeas. The tale is a relatively simple one of 3000 oxen being kept in a set of stables and Hercules being set the seemingly impossible task of cleaning them in a single day, the catch being that they haven’t been cleaned for thirty years. Rather than admit defeat at this seemingly impossible task Hercules diverted a local river to go through the stables, cleaning it instantly.

The task ahead of some parts of the long-term savings sector in terms of their data resembles the challenge faced by Hercules. There has been an obligation on all schemes and providers to hold accurate data for over a decade (not quite thirty years but you catch my drift). A small task that could have been done on a day to day basis was not done by some parts of the industry, and over the years it has built up to a task of legendary proportions. This is true to varying degrees in unfunded public sector schemes, private sector trust-based schemes and in some areas of contract-based products.

Much like cleaning the stables, there were probably many more interesting and seemingly urgent tasks over the years that has led to the neglect of data. This has not been helped by legal requirements constantly evolving, but that doesn’t change the fact that the obligation to maintain data was there and in many cases it hasn’t been fulfilled. This seemed to be OK in a world where that data was only accessed once in a while on the conditions set by the scheme, but in a world where consumers have the right to access their personal data it is not fit for purpose.

It should be noted that undertaking this Herculean task can in fact result in cost savings for some firms and schemes, particularly those with complex back books. There are ongoing projects within ABI member firms to give them a single view of client accounts across a multitude of legacy systems. This not only will help them comply with their obligations for pensions dashboards, it also helps them reduce costs internally as they can communicate with a customer regarding multiple policies held on different systems at the same time.

Unfortunately, we do not live in the world of Homeric epics and we do not have a single hero who can divert a river and clean the stable of bad data. If it is not already underway, this is a task that has to start now and will require a great effort. There will be no single hero for fixing these issues and creating the systems of the future, there will be thousands. Running checks, staring the scale of the challenge in the face and utilising the latest technology and insight to make the task easier. The crucial thing is to start and not let the build up in the stables get any worse.

Last updated 31/07/2020