In an online roundtable discussion, CoreData Research senior consultant Matt Craig speaks to pension tracking systems experts in four Nordic countries about the challenges facing the UK’s pensions dashboard. This is the first of a three-part series.

Trond Tørstad CEO at Norsk Pensjon, the Norwegian PTS

Anders Lundström Former CEO of the Swedish PTS

Maarit Selin Director at the Finnish Centre for Pensions

Michael Rasch Head of PensionsInfo, the Danish PTS

A delayed gamechanger?  

The UK’s pensions dashboard project is a potentially game-changing initiative designed to allow individuals to see all their pension information in one secure online place. It will help people understand how much they have built up in pension benefits, where their various pension pots are located and what level of income they can expect in retirement.

While it may sound straightforward in concept, in reality it is a complex undertaking. It means creating a digital ecosystem seamlessly integrating pensions data from different sources – including state pension, workplace pensions and any private pensions.

The complexities of building this digital infrastructure are underscored by the fact the UK pensions dashboard has been in development since 2016. But after a series of delays, it’s now in the final stages of testing and set to launch either later this year or in 2027.

Several European countries have already launched their own pension tracking systems (PTS) and can therefore provide some key learnings as the UK prepares to roll out its own model.

As such, CoreData recently held a virtual roundtable with PTS experts from Denmark, Finland, Norway and Sweden to pick up some practical advice on setting up a pensions dashboard.

Engagement and behavioural changes

The ultimate goal for pensions dashboards is to help ordinary individuals better understand their pension position.

“People often have pensions spread across different providers and the dashboard gives an overview and hopefully a better understanding of their total retirement income,” says Trond Tørstad, CEO at Norsk Pensjon, the Norwegian PTS. “Another benefit is increased engagement with pensions, helping individuals plan their retirement.”

The importance of engagement is echoed by Maarit Selin, Director at the Finnish Centre for Pensions.

“From the Finnish perspective, the main benefits of PTS are increased transparency, awareness and trust, so individuals can actually see how much earnings-related pensions they have accrued, who their pension provider is and who will ultimately pay their benefits.”

Michael Rasch, head of PensionsInfo, the Danish PTS, describes a recent incident in Denmark to illustrate the potential reach of a PTS when the younger generation is engaged. He says 70,000 users aged 15 to 30 logged on to their website over two days after an influencer appeared on social media to warn about high fees on small pots.

“The way the influencer presented it was really good and something for us to take into account,” he says.

Anders Lundström, former CEO of the Swedish PTS, notes how their system has changed people’s behaviour. He says more individuals are now making retirement plans, leading to more informed decisions and a rise in flexible approaches to retirement.

“Academic research involving qualitative interviews found 99% of people made use of the pensions tracking system before deciding on retirement.”

“Keep it simple at the start”

When launching a PTS, the advice from the Nordic experts is to focus on the fundamentals first.

“Keep it simple at the start and add more functionality later,” says Selin.

Norway’s Tørstad says it makes sense to begin with only information on the first and second pension pillars: the basic state pension and then occupational or workplace pensions.

“You need a critical mass of pension providers delivering their data when you launch a PTS portal. I think the third pillar [voluntary individual pensions, such as UK SIPPs] can be added later. First and second pillar pensions are by far the most important.”

Lundström thinks the UK should focus on bringing together all the necessary information – including lost pension pots.

“From what I’ve seen of the UK, improvements need to be made to the data quality before it can be simplified. The UK will need information on what pensions are included and there has to be the option to trace any lost pots or add missing information.”

Pension planning and projections

Selin says that once the PTS is up and running, additional functionality can be added to show projections of future pension income using different assumptions on earnings, retirement age and career breaks.

“Tools of this type are extremely useful but also more demanding in terms of communication and user understanding of the PTS,” she says.

Such features are commonplace in countries where PTS have been operational for several years.

“We have a retirement planner so you can plan your retirement in detail, with a to do list with instructions on when to do it,” says Lundström.

He adds there are examples of PTS which give a single figure for expected retirement income, alongside the retirement age, for each individual.

Rasch says his organisation has developed a feature showing pension projections at different retirement ages.

Data quality and managing user expectations

A key issue is getting different pension organisations on the same page with data.

“There will be misunderstandings over information or information standards,” warns Lundström. “It will take time to get a uniform style of information; you will get different dates for different pieces of information from different providers, and you will need to work that out. You will need a communication plan and the state, pensions tracking service and pension providers will need to work very closely.”

But managing user expectations is an even bigger issue, according to Lundström.

“You need a narrative for the dashboard, telling everyone, especially the media, what they will get in the beginning and how you plan to improve it. You have to be humble, because it’s a steep learning curve when you start a PTS.”

He adds: “The UK dashboard has been in development for a long time and expectations will be huge, so you need to be very clear on what the PTS will deliver in the beginning.”

He also stresses the importance of carefully managing people who find faults in the system.

“If you don’t handle users who detect problems in the right way, there will be a lot of media criticism. You need to be prepared for that and have a strategy to deal with it, as it could be the biggest problem.”

Lessons and learning curves   

Denmark’s experience in launching a PTS is instructive. It was first launched in 1999, but for the first few years only about 30% of Danish pension providers provided data.

“There weren’t many people using it, because not many could get a full overview of their pensions,” Rasch says.

By 2007, most Danish pension providers had joined the PTS, while the final few joined by 2011.

“The point where almost all providers deliver data is when it really gives value to users because they get a full overview. The big risk at the start is that only a fraction of users get this full overview. And you have to make sure the data quality is high and providers are delivering data on all their customers,” Rasch adds.

Lundström says the first iteration of the Swedish PTS was scrapped after seven months. “It was decided to build a totally new version, because the learning curve was so big in the beginning and we couldn’t meet user expectations properly.”

Final thoughts

Given the much-heralded and high-profile nature of the UK pensions dashboard, there will be intense pressure to get it right from the start. Lundström warns the goal of displaying workplace, private and state pension benefits will entail a lot of information gathering. This will then need to be synthesised into a coherent format for users who may have limited understanding of pensions.

“In the long run it will be good, but the UK has made it quite complicated, so you have had a longer journey to start the dashboard,” he says.

These reflections demonstrate that launching a PTS is a challenging endeavour. Data quality and the ability of different stakeholders to work collaboratively to resolve issues will be paramount.

In the next article of this series, we will discuss how commercial apps from banks and other organisations can link to pensions dashboards to help individuals take greater control of their retirement.

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]