The stigma around pensions being a topic you steer-clear of has vastly decreased since I started my career in pensions. Now there is far more public engagement and enthusiasm about pensions. However, there remains a long way to go. Unfortunately many people still lack basic understanding regarding pensions, too often members regard pensions as “that complicated thing they’ll get round to dealing with another day“. Hopefully pensions dashboards will help by ensuring the key information is readily accessible to individuals.
What is a Pensions Dashboard?
Pensions dashboards are intended to provide non-pensioner members with essential information to ensure good oversight over their pension savings.
The DWP’s recent consultation, which launched on 31 January 2022 and closed for responses on 13 March 2022 states that:
“Pensions dashboards will put individuals in control of planning for their retirement by bringing together their pensions information from multiple sources, including information on their State Pension, which can then be accessed at a time of their choosing.”
The objective is that individuals will be able to log in to the dashboard and ask the dashboard provider to “find” their pension(s). The dashboard provider will ask the Consent and Authorisation Service (“CAS“) to verify the individual’s identity and send a request to the “Finder Service” who will, in turn, send out instructions to relevant schemes to search for the individual’s benefits. The schemes themselves will be responsible for deciding whether there is a “match”; they will provide information regarding matches and potential matches to CAS who will then tell the individual how to access that information via their dashboard using a unique identifier code.
When will we have Pension Dashboards?
The government have proposed phased staging dates as follows (spoiler alert – these deadlines seem optimistic!):
|Phase||Schemes with the following number of members||Staging Date|
|1 – Large schemes||more than 1,000 members||Between April 2023 and September 2024|
|2 – Medium sized schemes||(100-999 members)||Between October 2024 and October 2025|
|3 – small and micro schemes||fewer than 99 members||No specific date set, although the consultation stated it is likely to be from 2026|
Most pension schemes will need to connect to the digital architecture of the dashboard by their staging date. In advance of that they will have to register with the dashboard provider and supply information regarding the manner in which they will comply with their duties (the Money and Pensions Service’s (“MaPS“) guidance will provide further clarification over what is required of trustees and scheme providers). In exceptional circumstances there may be up to a 12 month period of leniency for complying with the staging date (we can advise further if you represent a scheme which you think this may apply to).
All this talk of phased implementation and staging dates is somewhat reminiscent of auto-enrolment – another enormous exercise which was, on the whole, well implemented. Can we have the same expectations for Pensions Dashboards? It must be said that Pensions Dashboards are a very different beast. And this particular beast is enormous.
What are some of the concerns?
Many affected parties are reeling at the prospect of having to comply within such a short timeframe.
Under the draft regulations pensions dashboards will require schemes to provide specified information – information which schemes may not have readily available; the requirement to collate and provide information they may not currently have will be particularly onerous.
The Local Government Pension Scheme is one party which has already voiced particular concerns regarding its suggested implementation deadline of April 2024. The Local Government Pensions Committee published a bulletin in February 2022 indicating that the proposed deadline would be difficult to achieve and indicated its formal response to the consultation would express concern about its ability to meet the deadline “given the pressures they face”. The other pressures they face include the implications of the McCloud judgment in respect of which regulations are expected to come into force from 1 October 2023, requiring the removal of age discriminatory practices affording greater level of benefit protection to older members. This will, in practice, require the recalculation and correction of countless public sector members’ pension benefits (for the past and the future) – in itself a daunting task, without the threat of Pensions Dashboards galloping up behind it and requiring certainty of benefits in a period in which benefits are being adjusted.
One area of particular concern is the Pension Dashboard facility which will enable individuals to find details of their pension savings in any UK pension arrangement. Schemes will need to have suitable systems in place to ensure they can comply with information requests in an accurate and timely manner. Trustees will have a general duty to co-operate with and to provide information to MaPS to aid MaPS’ work relating to establishing, maintaining and managing the digital architecture of pensions dashboards.
Another concern is that pensions dashboards could provide rich pickings for pension scammers unless pension dashboards security arrangements including digital interfaces with scheme trustees and members are of the highest quality.
Trustee boards in the firing line
Trustee boards will face a significant responsibility to ensure they are providing full and correct information in respect of the right person and complying with data protection requirements eg where a member has withdrawn consent to sharing of personal data.
The industry has serious concerns about the potential implications for incorrect and/or incomplete information provision, particularly as the Pensions Regulator will be able to issue compliance notices and penalties in relation to breaches of dashboard compliance (up to £5,000 for an individual and £50,000 in any other case). There is also the risk that Members may misinterpret information provided to them by dashboards (and make financial and lifestyle decisions based on that misinterpreted information). The government has acknowledged that dashboards may contain incomplete information at launch and has suggested ways in which scheme trustees could potentially mitigate any resulting damage, but we remain concerned about liabilities which scheme providers and trustees may be exposed to as they try their best to comply with these requirements. Hopefully pension information supplied by dashboards will not bind scheme trustees where the dashboard service is at fault, and that information provided by pension dashboards will be suitably caveated eg subject to the overriding effect of the scheme’s deed and rules.
Trustee boards will need to decide whether to delegate the performance of their pensions dashboards’ duties to a third party eg the scheme’s external administrator. The trustees’ agreement/terms of business with their administrator will need reviewing and amending to include delegated dashboard responsibilities and specifying how any liabilities arising are to be met.
The pensions dashboards objectives are admirable. The timeframe in which the objectives are to be achieved seem over-ambitious and if unamended will see many pension providers/trustees struggling to properly comply with their new duties.