Open Finance – Pensions

Open Finance – Pensions

Lydia Coyle
by Lydia Coyle

The pensions market is a 6 trillion-pound industry that is ripe for innovation and disruption. For too long consumers have passively built up a pension pot with no real regard for the future life it will allow them to lead. Any attempt to increase consumer engagement with their pensions or to optimise processes more generally have been blocked by bureaucracy and complexity.

60% of pension savers don’t know their current pension balance and 80% leave their pension behind when they switch jobs. Coupled with this, there is currently over £20 billion in lost or unclaimed pensions in the UK. Research conducted by the World Economic Forum showed that retirees worldwide will outlive their savings by a decade. With a distinct lack of trust, transparency and clarity, the pensions industry is clearly failing to meet customer needs.

Open Finance can transform the pensions industry and change customers’ behaviour and interactions with their pensions.

Without clarity, you can’t gain control over your finances.

How could Open Finance solve some of the key issues with Pensions?

Complete consolidated view

The Pensions Dashboard Programme is a good first step towards progress, and highlights how the industry and regulators have finally recognised the pressing need to transform and do more for customers.

The pensions dashboard will allow customers to find and see all of their lifetime pension savings in one place, finally giving a clear and complete picture of their true pension amount.

However, limitations in the scope of the service coupled with delays until at least 2023 suggest that a more general approach to open pensions should be developed in parallel. Customers need access to key pension data that will help them to make informed decisions – balances, charges, investment information.

PensionBee predicted that fully opening up pensions data could create 50 times more value for consumers than a pension finder service such as the pensions dashboard.


Over 70% of consumers said that they would like to see a projected future value of their combined pensions.

PensionBee allows you to estimate your projected retirement income based on how much you’re saving and how many years you have left until retirement. Using their solutions you can model how changes to your contributions and spending can impact your retirement income, allowing you to take action and make changes now to ensure you are on track to meet your future retirement goal.

By fully embracing Open Finance, pension providers and aggregators in the market can combine transaction, savings, investment and pension data to make automated, informed assessments on whether customers are setting themselves up for a financially stable retirement.


Firstly, Open Finance will allow customers to optimise their current pension pots to maximise their potential returns. Once data is readily available, digital tools can offer actionable assessments on how customers could switch to lower cost providers, better allocate their existing funds, or increase their contributions over time.

Secondly, it will enable advice on how best to withdraw, manage and structure a pension once it can be accessed. PensionBee have created a drawdown calculator that illustrates how much tax a customer could be charged on future withdrawals. Building on this, customers would benefit from insights on how to drawdown and manage their pension in the most optimal way based on their specific needs.

“It has been quite an effort for many financial institutions to deliver Open Banking capabilities to the market – and this in an industry with fully digital customer channels. Perhaps a bigger challenge is in sectors such as pensions, where some providers have yet to offer a fully digital customer experience and will really need to invest and step-up to meet the demands of Open Finance.”


Open Finance considerations within Pensions solutions:

Lack of corporate incentive – regulatory or otherwise

The pensions industry is typified by a heavily manual mode of operation, paired with complex, sometimes inequitable products.

It is not in the interest of many providers to open their data in the name of competition or otherwise, and for those that would be inclined to do so, there are huge technical hurdles that need to be overcome.

This is why and where regulation needs to come in. 12 providers own around 80% of the defined contribution pension data in the ecosystem. If these 12 were compelled by the FCA to open up their data to customers and third parties via APIs, solutions could develop at pace.

But as we’ve seen through the ongoing delays to the pensions dashboard, sometimes a regulatory drive alone is not enough. More needs to be done to highlight the huge cost benefits of enabling an Open Data landscape, as well as the competitive advantage it can bring to a firm.

Read our report “Uncovering the true potential of Open Finance” for more insights and solutions being developed across the industry today.

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