Pensions Dashboards enter a new phase
Chris Curry appointed as Principal of the Pensions
Dashboard Industry Delivery Group
As the Pensions Dashboards project moves forward and, in particular, standards are set for data, will employers and their pension providers be ready to provide all the requisite data within the required timescales?
Furthermore, will employees be able to understand the information contained within the Pensions Dashboards when they gain access to them?
An overriding objective of Pensions Dashboards is to encourage and enable people to engage with their pensions, by making them more tangible and visible. The Department for Work and Pensions (DWP) has stated that a priority “must be ensuring that information is presented in a clear and simple format to support consumers with retirement planning”.1
However, pensions can be a complex area to understand.
The Money and Pensions Service (MAPS) has published that 16.9 million (42% of) working-age adults feel that thinking about their financial situation makes them anxious.2
Therefore, are employees going to be able to understand this information when it is provided, or will they just feel overwhelmed and confused? Moreover, will employees understand what action they can and should take, based on the information, to improve their financial position at retirement?
Here we explore recent developments in the Pensions Dashboards project, and how it will progress. We also examine what employers can do to make sure that they, and their employees, are ready for them.
What is a Pensions Dashboard?
A Pensions Dashboard is a digital interface that enables people to see all their lifetime pension savings in one place.1
It will contain secure information that users can trust, presented clearly and simply, about all of their pensions in one place online for the first time, available at their fingertips on a home computer, tablet or mobile phone. The Government has confirmed that this will also ultimately include an individual’s State Pension.2
What has happened so far?
A Pensions Dashboard Prototype Project, undertaken on behalf of HM Treasury in 2017 by the Association of British Insurers (ABI), showed that it was possible to build the infrastructure to connect multiple pension schemes to dashboards, thereby allowing people to see their pension savings all in one place.2
The Government issued a consultation in December 2018 ‘Pensions Dashboards: working together for the consumer’ to which it responded in April 2019.2 In its response the DWP confirmed that:
“The pensions industry is best placed to develop and deliver dashboards. However, as has been requested by many in industry and the public, there is a role for government in facilitating industry’s delivery of dashboards”.2
Multiple dashboards – one governance system
It is believed that multiple dashboards, appearing on different platforms, will increase the number of people likely to use them compared to if there was only one. This is because there will be more opportunities for people to come across them, for example when interacting with their existing pension provider or bank. However, all dashboards will be supported by the same digital architecture, displaying the same basic information from the same number of schemes, and will be governed by one governance system.2
There will also be a non-commercial dashboard, developed and delivered by Money and Pensions Service, as part of their usual function to provide impartial information and guidance .
How will Pensions Dashboards be delivered?
The Money and Pensions Service (MAPS)
MAPS, the new single financial guidance body, will take a leading role in the delivery of Pensions Dashboards.2
This new body has been established following the merger of Pension Wise, the Pensions Advisory Service and the Money Advice Service.3 It will set important strategic direction, and lead on the establishment of a non-commercial dashboard. A key priority is to establish a Pensions Dashboard Industry Delivery Group (IDG), comprising of stakeholders from across the industry, consumer groups, regulators and Government. The appointment of Chris Curry is the start of this process.
The Pensions Dashboard Industry Delivery Group (IDG)
The priorities of the IDG are to create a clear and comprehensive roadmap for delivering the digital architecture for dashboards, including timelines and costs. It will work with industry on setting data standards as soon as possible, and provide a robust governance and security framework for the supply of information. User testing will be instrumental in achieving these goals. Furthermore it will work with industry on their readiness to provide data to the dashboards.4
The Government confirmed that it is committed to compelling schemes to provide information, and will ultimately legislate for this once it is satisfied that the digital architecture, governance and consumer facing dashboards are secure and work in the best interests of consumers.2
However, compelling all schemes to participate in dashboards at the same time is not practical due to the sheer volume of schemes. Therefore schemes will be compelled by a staged timeline that prioritises getting as much membership coverage as possible as soon as possible. It is anticipated that this will commence with large defined contribution schemes.2
It is expected that large DC schemes, including Master Trusts, will be ready to provide data on a voluntary basis from 2019/20, once data standards are agreed. The timescales of voluntary participation and the schemes involved should be managed by the IDG.2
Phased delivery of information
The DWP confirmed that the information on dashboards should be phased starting with simple information, increasing to more complex information as we understand how consumers interact with dashboards. The initial functionality will be ‘find and view’, enabling users to locate their pensions and view them in one place. The longer term aim is for more complex and useful functionalities to be achieved.2
Testing how dashboards will look and work for the user before moving to ‘live’ dashboards is critical and is expected to begin in 2019. This testing will identify what information can be provided simply, and will also determine what standard of data is required.2
Let’s focus on the data
The DWP has asked schemes to prepare their data to be ready within a 3 to 4-year timeframe, and has emphasized the importance of accurate information. Incorrect data will lead to users making the wrong decisions and undermine their trust in Pensions Dashboards2. Whilst data standards have yet to be confirmed by the IDG, the DWP stated:
“We encourage pension schemes to start getting ready to participate now, particularly in terms of cleansing data.”2
The DWP confirm that the first phase of the development is expected to require no more information than is already available to people on statements issued annually (such as annual benefits statements) or on request.2
Whilst it will be the responsibility of the workplace pension provider to supply data to Pensions Dashboards, this will only be as good as the data supplied to them by employers.
How clean is your data?
In October 2018, we asked the question ‘How accurate is your Auto Enrolment data?’ after research was published highlighting that Auto Enrolment (AE) data sent on behalf of employers to pension providers have a 50% error rate. The full article can be found here.
Whilst this research focused on AE data, the issue of accurate and comprehensive data is potentially much broader. Poor and inaccurate data supplied to pension providers will ultimately be supplied to Pensions Dashboards. We therefore recommend that employers start to examine the quality and accuracy of their data now.
We would be happy to conduct an audit of your data and assist with your preparations. For more information, get in touch.
Financial education - helping your employees to get the most out of Pensions Dashboards
In order for Pensions Dashboards to be a success, people need to understand the information they will be given, and how to use it to plan effectively for their retirement. DC pension schemes place the responsibility on the individual for ensuring that they have sufficient money with which to retire, and so it has never been more important for employees to understand and engage with their pension planning.
Financial education, in the form of impartial information and guidance, can give employees the knowledge and confidence to take control of their financial planning.
It is critical that any such financial education is free from bias (or sales agenda on the part of the provider of the education service), so that recipients can be confident of receiving valuable guidance and support, rather than having financial products or services promoted to them.
Employers can play a vital role in facilitating the provision of financial education to their employees, thus helping to secure their financial wellbeing. Furthermore, when given by experienced professionals, it can benefit the employer by contributing to an improvement in employee engagement, retention and productivity.
If you would like to know more about how financial education can help your employees and your business, including the many options available, your Jelf consultant would be happy to assist you. You may also find the following articles interesting.
The full DWP response to the Pensions Dashboard consultation can be found in the following link: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/792303/government-response-pensions-dashboards.pdf
2 Money and Pensions Service
4 Money Pensions Service
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