The UK’s pension dashboard could, in time, become an attractive smorgasbord of pension tools and information, if the lessons from the Nordic countries successfully operating their own pensions dashboards are heeded.

As our previous article on lessons for the UK from the pension tracking systems (PTS) in four Nordic countries explained, showing individuals the value of cumulative pension assets has numerous benefits for their retirement planning.

However, in our recent online roundtable discussion, PTS experts in four Nordic countries suggested that the primary dashboard functionality was only beginning to scratch the surface of what could be delivered.

Exploring the wider potential of dashboards

Michael Rasch, head of PensionsInfo, the Danish PTS, explains that a key feature of the Danish PTS is the ability of an individual to use their own data for personalised scenario planning for their retirement. “Someone in their forties can ask ‘I would like to retire when I am 62, what does that look like based on my current pension payments? Do I need to make higher payments?’. The banks and pension schemes can talk to their customers about this and give them an overview of expected retirement income if they retire at 62, or later, which they could not before the pension dashboard.”

Another example of enhanced dashboard functionality is segmenting user groups to ensure different groups have the right tools and information for their needs. Anders Lundström, former CEO of the Swedish PTS, says: “We worked a lot on user segmentation and tried to have different features for different user groups. For younger users, can they get all the information they need, such as a checklist asking: ‘Do I have a workplace pension? Do I have a state pension?’ Or they can play a retirement game, to show them what happens to them in retirement.”

Lundström adds that gathering all the information needed for different user groups takes time and it also means finding out what those groups not using the PTS want to know and getting their attention.

In fact, giving individuals salient information on their retirement outlook could just be the starting point for a PTS. “There’s a general misunderstanding that a PTS is just a website but if you look at Norway and also Denmark, a PTS can be more like a highway for information between different providers and the state,” says Lundström. “That’s good for business for both the private sector and the state; you can save a lot of money with good solutions.”

He says that an additional feature that the UK could add to its pension dashboard, if it is used as an information highway for pensions data, would be for digital pension statements, rather than paper statements, to be sent out by providers via the pension dashboard.

“What we tried to do here in Sweden a few years ago was to get the pension tracking system to handle different pension statements, to make it more like a hybrid digital solution, so users can store all their pension statements within the dashboard. That might be something for the UK to look into in the future,” says Lundström.

Once a PTS is established, a possible next step is to allow external parties that offer pension products, such as banks, to have access to the PTS website and to use the data on their own apps.

Denmark’s Rasch explains that online banking apps are a significant source of traffic to the Danish PTS. “If you are on your banking app, you can get transferred to the PTS website and then send information to your bank. Banks and other pension providers can have pension planning tools and other services in connection with the dashboard, such as self-service or advisory tools, or tools to combine pensions information with information on other savings and other assets, such as real estate. That’s something that we can see is increasing quite rapidly.”

Norway’s official pensions dashboard is also linked to commercial providers, such as banks, as Trond Tørstad, CEO at Norsk Pensjon, the Norwegian PTS, explains. “We have 10 banks using data from the PTS system and it works very well. If you log into your bank’s app, you can get a full overview of your pensions, but the bank can’t get the information unless you agree to it. That’s part of the agreement between Norsk Pensjon and the banks.” He adds that this approach has increased innovation, leading to better dashboards and more information for users.

Not all of the Nordic countries have linked their PTS with commercial apps in this way though. In both Sweden and Finland, providers such as banks do not use the pensions dashboard to transfer pensions data to their own apps. On this, Lundström comments: “Unfortunately we do not have any agreements on using the pensions tracking system as an infrastructure tool. We have been trying to do this since 2009, but it is quite a big political issue, and it has not been resolved yet.”

Close cooperation on data sharing is crucial

One of the biggest hurdles to enabling such wider functionality is ensuring data quality when information from multiple different sources is combined, which raises a host of technical and even political issues. Lundström advises: “Any problems with data quality, information standards and communication standards need to be solved quickly and not made into political issues, with a blame game between the pension dashboard program and pension providers. There must be practical approaches here and working groups can help.”

Lundström adds that a PTS needs to track data quality itself: “We found that heading into a new year, we usually had a lot of issues with data quality, because the providers did a lot of recalculations then and there were often faults with that. So we compared information and put up warnings and would contact different pension providers about data quality issues.”

Close co-operation on data quality is also very important according to Maarit Selin, Director at the Finnish Centre for Pensions. “We work very closely with the pension providers both for data quality and service reliability. It’s not about the technology, it’s more about the co-operation between the parties involved, although the technology must be there in place,” she says.

Selin adds that Finland has the advantage of a central register for employment and pension records. This acts as a powerful tool for verifying the accuracy and completeness of data. “The central register on earnings and pension accruals, as well as common standards for data reporting and data quality, are two key factors for the success of pensions dashboards in Finland,” she explains.

Tørstad also stresses the importance of key parties being able to work together in a positive spirit in order to manage data quality issues. “It’s very important to establish a collaborative forum for the key stakeholders in a PTS and to establish a high level of trust between the participants in the forum.”

At the Danish PTS, there is one standardised data model for all providers to follow, with extensive data validation, according to Rasch. “Data quality is something you have to look into all the time. If we find that the data is not valid, it’s not shown on an individual. Instead, they get a message that we could not deliver data from such-and-such a provider.” To prevent this happening, Rasch says there is a code of conduct for all providers on what is required in terms of data quality, based on high-level discussions with them.

In conclusion, it is clear that there is tremendous potential for the UK’s pensions dashboard to become a valuable and informative tool, helping millions of Britons to make the most of their retirement.

As dashboards in the Nordics show, it can help inform, educate and engage the interest of a wide range of users, from younger workers to those close to retirement. It can also become a way for financial institutions and official bodies to communicate with and empower individuals, giving them more control and insight into their pensions and finances in general.

But for this potential to be realized, a pensions tracking system has to be built on strong foundations and maintained with constant attention to detail for it to become part of people’s financial lives. Here, the UK has the opportunity to learn much from the Nordics on how to make its pensions dashboard work in the best way possible.

Matt Craig is a senior consultant at CoreData Group, a global specialist financial services research and strategy consultancy. To find out more about our industry insights and research programmes, you can reach him at [email protected]