The dashboard concept
With changes in the labour market – Government estimating that on average people will have 11 jobs during their careers – and the introduction of automatic enrolment, it was thought likely that this will lead to an even greater number of people reaching retirement with multiple pension arrangements or "pots".
As far back as 2014, the Financial Conduct Authority in its Retirement Income Market Study: Interim Report (MS14/3.2) suggested the creation of a virtual pensions dashboard stating: "A Pensions Dashboard would allow consumers with several pension pots to have a clear understanding of their accumulated pension wealth. This is likely to benefit increasing numbers of members in future with the introduction of automatic enrolment. Consumers with a better understanding of their accumulated pension wealth should make better informed decisions when taking their benefits."
With the Money & Pensions Service estimating there to be 52 million adults in the UK who could use a dashboard service to find and view their pension information, and with these individuals requiring to be connected with up to an estimated 43,000 providers and schemes (Pensions Dashboards Programme Progress Update Report: April 2020, p 7), the scale of what is being attempted should not be underestimated.
After many years of deliberation and consultation with relevant stakeholders, it seems that dashboard obligations may become a reality for some from spring next year. The Pension Schemes Act 2021 included substantive provisions relating to pension dashboards to be brought fully into force by commencement order made by the Secretary of State for Work and Pensions – and under powers in force from 11 February 2021 the DWP published on 31 January 2022 indicative draft Pensions Dashboard Regulations 2022. These draft regulations provide for a mandatory staging timetable for pension schemes and their providers to connect to the dashboards infrastructure.
In terms of the draft regulations, the first staging window will commence on 1 April 2023 (with the deadline date being the last day of the window on 30 June 2023), and will apply to all personal and stakeholder pension providers with 1,000 or more policies, and master trusts with 20,000 or more deferred and active members (in the annual scheme return to TPR in year April 2020-March 2021). Further staging windows are outlined, broadly based on reducing policy or member numbers, through to a window commencing 1 October 2025 for relevant schemes with 100-124 deferred and active members (in the annual scheme return in year April 2020-March 2021).
Interestingly, the staging window indicated for all public sector and collective defined contribution schemes is scheduled for 1 April to 30 April 2024.
Preparation is key
Clearly, in advance of staging much will need to be done by providers and schemes to ensure that they can meet their staging obligations. The Pensions & Lifetime Savings Association ("PLSA") has highlighted actions that schemes should be taking now so that they are suitably prepared. In summary, those include:
- Identify your scheme's staging date or dates.
- Familiarise yourself with the new requirements.
- Plan ahead as to how you will meet the new requirements, including on budget and resource.
- Meet and discuss with your administrators and providers to understand their plans to connect your scheme to the dashboard infrastructure.
- Update administration and other relevant contracts to include dashboard connection services.
- Check to what extent member data is held in appropriate digital format/what is required to make it so.
- Establish what steps are being taken by administrators/providers to check accuracy
of member record data and what elements they plan to compare against any incoming "Find" requests.
- Ask administrators/providers to report on completeness of pensions income data to
meet dashboard data requirements.
- Consider additional support for members using the dashboard and how that can be provided efficiently; and
- ·Consider member communication strategy and adjustment of scheme communications to reflect the availability of the dashboard.
There is much to be done in the coming months by Government, regulators (FCA/TPR), trustees and providers if the staging timelines in terms of the draft regulations are not to slip. Undoubtedly, there will be legal and practical challenges to address and overcome to move the dashboard initiative forward. It is hoped that will be possible given the tight deadlines and not insignificant cost to schemes and providers in seeking to put themselves in a position to meet anticipated requirements before finalised regulations and guidance are available.
Colin Greig, partner, DWF LLP