In the famous parable Blind men and an elephant, a group of blind men who have never met an elephant before try to understand and describe the gigantic beast from the parts they can touch. Some thought the elephant felt like a fan, some found it resembled a snake, and some said it was like a brick wall. It is not very different from how the pensions sector has been imagining dashboards.
The concept of pensions dashboards is simple. It is a digital space where you can see all your pensions in one place 24/7. However, in reality, the details can differ a lot when you ask different people. Should dashboards show who provides your pensions as well as your pensions’ worth? Should the retirement income projection be a simple estimated figure or modelled in real-time through an interactive tool? Should users be directed to additional guidance if they are confused? We asked the public and the industry their opinions in our two recent research projects.
For the stakeholder research, we spoke to pension providers, tech companies, and consumer advocates to understand the pension engagement gaps and how dashboards might close them. Most interviewees agreed that engagement with pensions is low because of the complexity and accessibility of pension information. They believe pensions dashboards are a crucial opportunity to improve the data quality in the pensions market. It will be the first step to enable customers to own and view their pensions with far more transparency. The availability of new data, with the ability to export it and appropriate data protection rules, can stimulate the development of innovative retirement planning tools and value-add services to support more holistic financial planning. With just over a year before dashboards are due to onboard pension data, the report calls for the Government and regulators to finalise the data standards as soon as possible. For potential dashboards providers to consider their propositions, it will also be important for the Government and regulators to have a holistic strategy to expand the potential functions of dashboards and bring the project and other Open Finance initiatives together.
To see whether and how the industry’s vision can be realised, our research partner Britain Thinks tested 4,000 people’s reactions to different potential pensions dashboards models to understand their behaviours throughout the journey. It is the biggest quantitative research survey on dashboards in the UK. The research provided important insights into the public’s reaction to the concept of dashboards, expectations of the service, and the next steps they would like to take.
We found the concept to be especially popular among working-age adults, where 2 in 3 are likely to use them. Most of these potential users would also like dashboards to be interactive, for example with functions to simulate how varying contribution levels might impact their retirement income. To the public, the security of the service and the completeness of data are the dashboards’ most important elements. Users expect to see security cues that are like online banking, such as 2-factor authentication. They also have little tolerance towards incomplete data and expect to do very little to make sure missing data is added. Users intuitively affiliate the dashboards service with the Government because of the connection with National Insurance. However, our research shows that the first dashboard that the user accesses will be the most trusted regardless of the provider. The case is especially strong for dashboards run by the Government, the users’ own bank or their pension providers. While the service is well received, it does not necessarily mean the public’s engagement with pensions will automatically improve. The research points to the need for nudges that encourage users to take further steps on their pensions, as 30% of users would likely take no actions after visiting a dashboard.
Looking at the two projects together, clearly there is a strong public demand for pension data to be more accessible. However, this does not guarantee better engagement, understanding or retirement. The Department for Work and Pensions (DWP) consultation announced this week will decide the scope of dashboard functions and value-add innovations that will be possible. It is welcome to see that data export is proposed to be allowed, with some restrictions to prevent manipulation of data.
With a marketplace of dashboards emerging, we expect dashboards providers will be differentiated by the reliability of their offering and how well they can cater to individual needs. To maximise engagement, user needs and flexibility to enable value-adding innovation should be at the heart of every decision by both policymakers and potential dashboard providers. With the certainty of a regulatory regime on the horizon, it won’t be long before we start teaching the elephant tricks to bring the service to life.