The pensions industry is on the cusp of its own 'open banking'-style revolution in the way that consumers interact with their finances and manage their pensions, according to experts.
Open banking allows consumers to give providers secure access to their financial information, and, it is hoped, will facilitate the disruption of financial services by tech innovation.
The government’s pension dashboard has been seen as pioneering 'open pensions' – the solution that will allow savers to view and manage their retirement savings in a simple platform.
We very much think that the post-pensions dashboard architecture will support an innovative, open pensions landscape
Kenneth May, Origo
A panel of pensions experts and fintech aficionados came together at the Association of British Insurers on Thursday to discuss the way forward for open banking, and more importantly, open pensions.
Putting information into the hands of savers
New open banking regulations that sought to transfer the ownership of information from institutions to customers came into force this year. It is hoped that consumers will be able to securely transfer transaction data between providers with greater ease.
Tim Evans, head of innovation and fintech alliances at Hargreaves Lansdown, said that the objective of “open wealth” is starting to promote questions over “who owns that consumer relationship”.
“How can you enrich the client experience so that they can find, create and manage wealth, in the best way possible?” he asked.
Clare Reilly, head of corporate development at pensions tech company PensionBee, said that consumers want to see their financial information integrated across banks.
Customers are asking, “When can we see our pension balance next to our other balances?” according to Reilly. Open pensions would not need to keep savers in constant touch with their retirement savings, she added.
“You don’t need to check your pension balance every day – that’s not helpful,” she said.
Dashboard is open pensions
Savers will at least be able to view all their pension balances on one screen if the the pensions dashboard sees the light of day.
The project’s timeline remains uncertain, however, and the idea will soon be as old as some of its prospective beneficiaries.
Kenneth May, chief architect at fintech company Origo, told the ABI audience that “the dashboard architecture is open pensions”.
“We very much think that the post-pensions dashboard architecture will support an innovative, open pensions landscape,” he added. The Department for Work and Pensions is currently undertaking a feasibility report into the dashboard.
Panellists acknowledged that self-employed people may also stand to benefit from open pensions.
“I am conscious that I have a manifesto commitment that says, ‘I will extend automatic enrolment to the self-employed’. If it were that easy, I think we would have done it by now,” said Fiona Walker, deputy director, automatic enrolment and defined contribution pensions at the DWP.
Looking ahead for pensions
Helping individuals engage with their pensions more easily will help the industry attract new savers, ensuring even more people are preparing for later life, says Guy Opperman, minister for pensions and financial inclusion.
The department may well back a technological solution to help the self-employed save for retirement, “but let’s test it,” she said. “Let’s start with the small scale pilots, then let’s try and get it to a bigger audience.”
“I would rather do this over a number of years and do it really well, than hope that I’d found the best, most obvious solution now.”
