Pensions dashboards – avoid a last-minute dash to the finish line

• United Kingdom

• Pensions

02-07-2021

The time has come to start moving pensions dashboards issues up meeting agendas.

This speedbrief looks at how pensions dashboards will work, where we are on the journey towards implementation and what trustees, managers and providers (for ease, referred to as “trustees”) should focus on now. 

Pensions dashboards in a nutshell

The core idea is that pensions dashboards will allow people to see their pensions information (including the state pension) online, all in one place. This should support better retirement planning and help to reconnect savers with lost pensions.  

The government’s Money and Pensions Service (MaPS) will develop a dashboard and commercial organisations will offer other dashboards. MaPS established the Pensions Dashboards Programme (PDP) to plan, design and implement the infrastructure that will make pensions dashboards work.

The basic framework for the dashboard system is in the Pension Schemes Act 2021 but future regulations, Financial Conduct Authority (FCA) rules and regulatory guidance will set out the detail.

All types of plans - defined benefit (DB) and defined contribution (DC), private and public sector, including small and “micro” plans (those with fewer than 100 members) - are currently in scope. The only significant proposed exceptions are non-UK plans and pensions that have already been accessed. The first plans will need to be ready to onboard in less than two years (in April 2023), and the government’s aim is for 99% of pensions to be covered by dashboards by April 2025.

How will pensions dashboards work in practice?

There will be three main steps: identify, find and view.

Identify: The identity service requires dashboard users to authenticate themselves (prove they are who they say they are) before they can access their information via the system. Dashboard data standards will set out data items such as date of birth, national insurance number, surname and address, which will enable records to be searched for a match. Details are set out in the PDP’s December 2020 data standards guide. The PDP says it will not define the minimum requirements for a match, as different plans hold different data but we understand industry bodies are working on suggested industry-wide standards.

Find: When a dashboard user submits a request to find their pensions information, this sends out a message to all plans connected to the dashboards to search for that person’s pensions. There is no filter and there won’t be a central database of pensions - the PDP describes dashboards as more like a “switchboard”. This means that every plan is likely to receive many thousands of “find” requests every day.

View: When a “match” is found, the plan will have to provide data on the user to the requesting dashboard, enabling the user to view information about their pensions. The government has said this will be “no more information than is already available to people on statements issued annually (such as annual benefits statements) or on request”. The PDP’s data standards guide says that this will include basic information about the plan (plan name, administrator contact details etc) and data about the value of the individual’s pension.

It is envisaged that the “value” data will include the value of the pension built up so far and an estimate of the retirement income (ERI) the person might receive, projected to a retirement date. Other information, such as on costs and charges, may also be included in due course. However, there are outstanding questions, particularly on how ERI should be calculated and communicated across DB and DC plans. This is subject to further testing. As such, it is conceivable that no information on the value of the pension (or only information on accrued benefits) will be shown, at least to begin with.

When will your plan have to connect to the dashboards?

The concept of pensions dashboards sounds very simple but a web of interconnected parties, contractual arrangements and technical systems need to come together to make it happen. It is no surprise that the project is taking longer than many people initially envisaged. Good progress is now being made, however.

The PDP’s call for input on staging seeks views on its proposed timetable for plans to connect to the dashboards. As with the auto-enrolment roll-out, it envisages “staging” plans based on type and size, broadly as follows:

1. very large master trusts (with 20,000+ members) and FCA regulated providers of personal pensions – April 2023
2. remaining master trusts, DC plans and hybrid plans used for auto-enrolment (with 1000+ members) – from later in 2023 to 2025 in size order
3. the largest DB plans (possibly including public service schemes but that is not yet confirmed) – Autumn 2023
4. all remaining occupational pension plans with 1000+ members – by April 2025 in size order
5. medium sized-plans with 100-999 members – after all larger plans have staged
6. plans with fewer than 100 members – when there is a market in third party integrated service providers (ISPs) that can help to provide information to the dashboard ecosystem –  after April 2025 (timing not confirmed)

The PDP also suggests that there should be a mechanism to allow plans to connect to the dashboards voluntarily before their staging date.

It is important to note that dashboards will not be launched to the public at the same time as plans are staged. This will allow for testing in a controlled environment. No intended “go live” date is indicated in the PDP’s paper but it seems unlikely to be before April 2025.

The PDP’s call for input closes on 9 July. The results will be used to inform the DWP regulations and FCA rules that will set in stone the staging timeline for trustees.

What happens next?

During 2021, the PDP will work with its chosen suppliers to start building and testing the digital architecture for dashboards.

The DWP plans to consult on draft regulations by the end of 2021 that would set out in law the staging timetable for occupational pension plans. It expects to lay those regulations before Parliament in summer 2022.  The FCA will consult separately on similar rules for pension providers.

The PDP will also develop a proposed approach to liability, data protection and consumer protection. It plans to have a “liability model” that sets out who is responsible if things go wrong, and a complaints procedure. So far, little information has been available on this important aspect of the project but initial proposals are expected in a discussion paper this summer.

What should trustees be doing now?

Trustees will have much to do before their dashboard staging date and should, if they haven’t done so already, engage with their administrators about this as soon as possible. The PDP has created a data providers hub to help trustees prepare.

Trustees need to consider:

• what processes and/or systems need to be put in place in order to deal with “find” requests from large numbers (perhaps many thousands) of users every day, match users who are plan members with their pensions and return specific information electronically in the required format
• whether further data cleansing and verification is needed to meet the requirements and if data needs to be reformatted. It goes without saying that any remaining records held on paper, microfiche or other non-digital formats will need to be digitised. New IT systems or upgrades may also be required to enable results to be returned on demand
• whether to work with dashboards directly through a plan’s current administrator or use an ISP, a third party service that allows pension information to be connected into the dashboard ecosystem on behalf of the trustees. The ISP market is currently in its infancy but it is expected to develop over time

Trustees should also consider responding to the PDP’s call for input on staging (by 9 July). They may wish to focus on the question of whether they could realistically deliver all the “value” data in the PDP’s data standards guide (as opposed to just basic plan information) within the proposed staging timetable. Significant benefit-related projects such as GMP equalisation for DB plans and McCloud remedies for public service schemes could of course affect this.

Trustees should keep an eye out this summer for the discussion paper on liability issues. This should help them (and their legal advisers) to understand where the legal responsibilities and potential liabilities relating to pensions dashboards sit. Data protection issues are likely to be a key consideration here.

Many questions still remain to be answered but the direction of travel is clear. Trustees should act now to avoid a last-minute dash to the finish line.