Pensions Dashboard Programme: The challenge of data matching

06 Mar 2023

There are data matching algorithms everywhere. Some are obvious. If you sign up for a dating app an algorithm and probably an artificial intelligence (AI) engine, will attempt to match you with someone with similar interests, attitudes and background. As anyone whose has had a foray into the world of online dating will attest, the results can be mixed at best!

The safety valve in online dating is that humans can decide whether they really are a match in the real world. An absolute belief that ‘if the AI engine says it's true, then it must be true' is ascribed to by very few people today.

Online chess is another area which has led the way in matching algorithms. If those algorithms go wrong, then the only downside is the losing person is beaten more resoundingly by a much better player.

Some are more subtle. When you shop online, the special offers and ‘upsell' opportunities presented are not coincidental. AI engines learn through not only your online activity but the activity of people like you. They then apply this intelligence to determine the optimum way of increasing the size of your online basket. Worst case scenario? You spend more than you planned to and maybe more than you can afford.

The Pensions Dashboard Programme

In essence, the Pensions Dashboard Programme is a government-sponsored pension matching service designed to link people with their pensions past and present. Here the potential fallout of mismatched pension pots is a good deal more serious: not being matched with your pensions or finding yourself matched with somebody else's pension is going to be treated pretty seriously by the financial regulator and/or the Information Commissioner's Office (ICO).

The Pensions Dashboard Programme poses a significant challenge for pension trustees. Client data has always been critical, and as pensions have evolved so too has the technology that underpins them: from paper files to Excel and the modern fully-fledged pension administration systems. Unfortunately, it has not always been feasible to migrate the administration systems supporting some pension schemes to the latest digital technology.

Pensions dashboards are a significant technical undertaking as their aim is to have a secure, reliable, and scalable ecosystem that connects multiple dashboards to multiple underlying pension schemes. Some schemes will be doing the heavy lifting themselves. However, most will be using an integrated service provider (ISP), a third party that develops and maintains the technology needed to connect schemes' back office systems to the new pensions dashboards.

Whilst an ISP will do a lot of the heavy lifting, pension trustees will still need to get their house in order. Their key tasks now are:

• Ensuring member records are digitised. The strict service levels attached to responding to ‘find and view' requests from the Pensions Dashboard makes digitisation a must.
• Check the data quality of all member records. This is important for two reasons:
  1. To maximise the number of matches the data needs to be complete and accurate.
  2. The data will be exposed to dashboard users, and you don't want to be embarrassed by what is presented. PASA has done some great work on producing some data accuracy guidance.
• Determine your matching rules. These are critical and unique to a pension scheme.

Pension Matching

Matching is the critical process of joining a dashboard user to an underlying pension - a daunting undertaking for pension trustees who must be confident that a dashboard user is the pension holder. The Pensions Regulator (TPR) has recently published a consultation on its compliance guidelines and states: "In particular it is critical that schemes connect the right pensions to the right saver. We will be interested where a scheme is failing to find a pension for a saver when they should (failing to return a match made or a possible match), and when a scheme returns data to the wrong saver."

The Financial Conduct Authority (FCA) is yet to publish its compliance guidelines but they are likely to be similar to the TPR's.

In short, pension trustees must ensure they are matching pensions accurately. If data is returned for the wrong person, or a pension is not found when it should, then enforcement action may be taken by the ICO or by TPR/FCA.

Member data must be as accurate and complete as possible for schemes to be ‘dashboard ready'. At the start of the matching journey, a new pensions dashboard user will register and have some of their data validated. This is known as ‘asserted data'. When a user searches for their pensions, a request will be sent to all registered pensions schemes using the user's asserted data as well as any additional ‘self-asserted data'. It is important to know the difference when creating a pension scheme's matching rules.

Pensions Dashboard Programme Matching rules

When a pension scheme or ISP receives a find request from a dashboard user, they will search their pension records to see if there is a match. This could result in one of a possible three outcomes:

• Full match - You are confident the dashboard user is a pension holder.
• Partial match - The dashboard user may be a pension holder, but you are not 100% confident.
• No match - You are confident the dashboard user is not a pension holder.

For a full match and no match, there is no additional work needed by the trustees. The technology required to connect to pensions dashboards will automatically handle these scenarios. For partial matches however, the dashboard user will be provided with the contact details of the pension scheme and advised to get in touch. When contacted, it is the responsibility of the pension trustee and pension scheme managers to determine if the user is the pension holder and to ensure that the match outcome is updated.

It is therefore key that the matching criteria are reflective of the scheme data quality to fulfil the regulatory obligations whilst ensuring they do not overwhelm operational teams with inbound queries. The Pensions Regulator has stated that, as part of this process, pension trustees must conduct a Data Protection Impact Assessment (DPIA).

Once the DPIA has been completed, pension trustees can create matching rules that are suitable to their pension scheme(s). Check with your ISP that they have the flexibility to support your needs. Significantly, these matching rules are not a ‘once and done'.

The expectation is that they will evolve over time as dashboard usage increases and lessons are learnt. Having an ISP that will help provide this insight will be critical to enable trustees to meet their obligations in the future.

Pensions Dashboard Programme Matching - Final Thoughts

Matching pension(s) to dashboard users can be viewed through the lens of a dating app:

• Your records need to be digitised to be matched.
• You need to ensure your profile is up to date to ensure there are no awkward conversations.
• You need to decide the rules you are using to automatically match and connect people together.
• If in doubt you need to have processes in place to allow a human to intervene to make the final decision on the match.

Dunstan Thomas launched its new Pensions Dashboards ISP solution called Imago Connect in October 2022. The first Qualifying Pensions Dashboard Service (QPDS) should be authorised by FCA and connected to the Pensions Dashboard Programme central digital architecture to begin end-to-end testing with real pensions data, by the end of this year. Imago Connect has been designed and built to enable all types of pension providers to meet their pension dashboard obligations in a straight forward and cost effective manner, whilst remaining fully compliant.

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