Pensions dashboards are a long-awaited service expected to allow information about a person’s UK pension savings to be consolidated and presented online in one place.
The intention is to include State, public sector, occupational and contract-based pensions (whether personal pensions or annuity contracts).
The rationale behind this initiative is that it will help people to reconnect with any lost pension pots as well as supporting better planning for retirement and financial wellbeing.
Political will
While ideas and proposals in this area have been circulating for some time, the pace of implementation has recently accelerated.
The Pension Schemes Act 2021 contains the legislative framework to introduce pensions dashboards and the powers to compel schemes to provide information on demand to support them.
The clear political will for this reform is shown by the Pensions Minister’s comments in December.
Pensions Dashboards Programme (PDP)
The Money and Pensions Service (MaPS) established the PDP to design and implement the infrastructure that will make dashboards work. On 15th December 2020, the PDP published its key Data Standards Guide, a key step in the project’s development.
The PDP has concluded that initial dashboards should aim for as broad a coverage as possible, to enable people to see most, if not all, of their pensions in one place.
This “find and view” approach will require enough data to link entitlements to individuals and to provide basic information about those entitlements, but it won’t provide more in-depth information until a later date.
Previous research has found that people exhibit “a low tolerance for an incomplete dashboard”, a principle that has guided the PDP’s thinking.
Timing – key phases
The PDP has set out the following planned phases in the programme:
Data standards
A key point to recognise is that the pension dashboard ecosystem doesn’t store any information itself. It acts as a highway, switchboard or conduit between those who have data (ultimately the pension scheme providers) and those who want it (the individual members).
Its role is to authenticate the member (the identity service) and then to find their various pension pots (the pension finder service), collate and present the information in a consolidated format. Naturally, this will require all necessary digital data to be accurate and available on electronic demand.
The challenge then becomes the need for schemes to be ready to deliver that accurate digital data.
Does their existing administration system allow this? If not, a potential solution will be to use specialist integrated service providers (ISPs) to store their data and manage this process for them.
Types of data
The Data Standards Guide sets out in detail the data that will be required. A brief description is given below but clearly trustees will need to scrutinise the details and compare them with what data they currently hold.
View data falls into separate classes:
Action for pension schemes on view data
The PDP is calling on pension schemes to review and prepare their data in the light of these data standards before compulsory onboarding starts in 2023. Trustees and their administrators must:
Capita comment
There is no question that providing accurate data in a timely, automated manner will be a serious challenge for many schemes over the next few years and it’s important to recognise that the political will exists to deliver this reform. Providing digital data on demand will necessitate the modernisation of administration and record-keeping arrangements for many cases and a failure to grapple with the challenge now may see some falling foul of their legal obligations in the future. This message is amplified against a background of the potential for capacity limitations on how much work the pensions industry can do between now and 2023.
As matters develop during the next year, we think that many trustees facing the constraints of their existing administration arrangements and systems will have to explore using an ISP to collate their data, ensure that it is dashboard-ready and manage the demands of an online and on-demand service. There may be benefits in pooling their resources.
Please speak to your usual Capita contact if you would like more information.