How should industry prepare for the implementation of the pensions dashboard
In January 2025, it was announced that the A465 in Wales was due to complete this summer, a mere 23 years since the work began. Just to bring that into context, the biggest financial news of that year (2002) was the introduction of the Euro as coins and banknotes – following three years as an electronic currency.
The Pensions Dashboard can’t quite compete with that record, with current timelines suggesting 10 years since the initial announcement, however, we’re now on our 6th Pensions Minister since then.
With the expectation that the Pension Dashboard will begin the first testing phase in H1 2025, what are expected impacts of this (finally) going live in the near future, and how should the pensions industry be readying itself for the impacts?
Increased Consumer Engagement
One of the primary aims of the Dashboard is to create increased engagement between people and their pensions. Historically, most people only start considering their pensions and their options as they move into the latter part of their working lives.
The hope is that the Pensions Dashboard will engage throughout people’s working lives to understand their pension and plan earlier for retirement.
This is dependent on a few factors that will be important for the industry to consider:
- Marketed Effectively – Whilst the industry has been looking forward to the Pensions Dashboard for a number of years, consumers need to be aware of it when it launches. Benefits for consumers will be limited if it’s only used by a small number, who will also likely be people who are already well engaged with their pensions.
- Ease of Access and Usability – It must be accessible, including consideration of vulnerabilities.. Accessibility requirements, such as readability, and speech recognition are important and it must be intuitive and easy to understand – particularly for those not already engaged with pensions.
- Consumer Protection – The dashboard will need to facilitate a considerable amount of data sharing. Consumers will need to have confidence that data is managed securely. Equally, controls to prevent fraud should be considered to increase engagement.
The industry will also need to consider what the impacts are going to be, and how to mitigate some of the associated risks. We will likely see a high volume of consolidation in pension pots so the Dashboard must consider a fee comparison avoiding potential consolidations into a larger pot which deliver worse outcomes. This could further widen the ‘advice gap’.
Equally, industry needs to ensure that the right levels of integration exist to avoid a two-tier system dominated by larger pension providers. Consumers may be drawn to those providers who are better able to integrate into the dashboard.
Pension Planning
Increased engagement and accessibility should allow people to have a more informed view across their pension savings, which should aid in planning and decision making. There has been a dis-connect between people’s expectations and the reality of pension savings. By creating a holistic view, people should understand what actions they need to take throughout their pension lifecycle.
The optimistic view would be that this provides welcome support to reducing the advice gap, potentially working alongside other initiatives such as the Advice Boundary Review by the Financial Conduct Authority (FCA). However, this issue is not solely down to access to information, and without further support and guidance, the advice gap will remain for those large sections of the population.
The Pensions Dashboard may provide a wake-up call to some consumers, who are looking for further support and the industry needs to be ready for this.
If done in the right way, the Dashboard will be mutually beneficial – individuals will increase their pension pots, providing valuable inflows for pension providers and support the wider long-term aims of the government..
We may also see some reduction in the issues of ‘lost’ pensions as the Dashboard can be used to find these pensions and either re-engage with them or move them to another product which better suits their needs.
Improved Transparency and Competition
Another of the key aims of the Pension Dashboard is to create greater transparency to allow consumers to easily compare pension products. That means product fees and product performance will likely be under the spotlight.
Again, this should support the aims of Consumer Duty, and Value for Money, both looking to provide products and services that deliver better outcomes and value for consumers. This should also aid in providing more direct competition between product providers, which should be of benefit to consumers. However, pension providers need to ensure that they are switched on to this.
Pension providers, especially those who are delivering more bespoke services for higher fees need to be ready to explain the benefits of their products and services, with the aim not only of attracting new customers, but also to ensure customer retention. If the forecasts for increased pension transfers prove correct, this could be a matter of survival for some smaller providers.
If the unintended consequences of the Dashboard prove to be a ‘race to the bottom’ which decreases consumer choice, then this will be to the detriment of both the industry and consumers alike.
Dom House
Head of Frameworks
