Is the UK Pensions Industry Ready for the Post-Dashboard Surge?

Why time is running out for GMPe and dashboard readiness

Einstein proved that time is relative and actually slows down due to gravity and acceleration. All I know is that time is a relative concept – it passes faster the older I get. And time moves extremely slowly when it comes to some areas of pensions.

The Lloyds judgement on GMP equalisation will be seven years old this year. I would be guessing that about half of schemes have yet to complete their GMP equalisation calculations and pay members their correct benefits.

Why? Not because there has been seven years of uncertainty as to exactly what needs to be paid. But, because we have an industry which has under-invested in data, systems, processes and technical resource. An industry where the profit margin is in actuarial, investment or legal services. Pensions administration, with some notable exceptions, has been the poor relation for decades, not the service that has been properly valued by trustees.

Under-investment in pension administration

My concern is that with the introduction of Pensions Dashboards, this under-investment is coming home to roost. The pensions industry needs to get ready for its “Martin Lewis moment”. Forget the issues of data quality, whether trustees have adopted the right matching criteria. Whether the IT actually works. Not minor issues – but let’s assume they’ve all been addressed.

Pensions Dashboards will go live six months after the Minister says it will. The “Dashboard Availability Point” (DAP), as currently planned, will be the point at which the general public will be able to view their Dashboard data. A DWP impact assessment estimates that between 12.7million and 19.4million individuals will log in to a Dashboard after the DAP date.

Let’s go back to the purpose of Dashboards. It is to give those that have yet to retire visibility of their pensions savings. To help people make informed decisions about their retirement savings. To help people find lost pots. Ultimately it will drive consolidation and member activity. 

I’m not sure that the statistics exist, but I would guess from my experience that less than 10% of scheme membership DO something with their pension every year at the moment. That is what the industry is resourced to service.

So – let’s say that the DAP date happens. And the public are made aware. Let’s say it gets publicity. Let’s say – for example – Martin Lewis suggests that people might want to go and log in.

Automation vs. human intervention: Can administrators handle the workload?

What happens next? Administrators have been planning. The technology should work. Members will see their benefits. Fuzzy matching queries will be minimised because trustees have instructed their administrators to do their homework. 

However – inevitably what then happens is there is an avalanche of member activity, the likes of which the industry has never experienced before. 

At Dalriada, we are trustee to 115 schemes which have over 100 relevant members and therefore are required to connect to the Dashboards by their staging date. Those schemes are serviced by 24 different pensions administrators. Our work to date indicates that those schemes WILL be ready to connect.

What is worrying me is not a single one of them has been able to tell us what the post DAP date world looks like. Because at this stage no one knows what take-up and subsequent activity will be.  Yes – we can look at the experience around the world of such change. We can look at member testing that is going to occur over the coming month – with 20,000 individuals testing the system. 

However, if the results of that testing are that members do something, and that something needs a degree of human intervention – for example, doing due diligence around receiving schemes on transfers – how long is it going to take the industry to react and resource for the activity?

Key questions trustees and administrators must ask before DAP launch

The industry will point to the vast majority of membership activity being automated. But, ultimately there will need to be a level of human intervention. So – time to ask some tough questions – how ready will the industry really be?