What do pensions dashboards mean for your business?

What are pensions dashboards?

Dashboards will bring peoples’ pensions information together into one place online, thereby helping savers keep track of or reconnect with their pension pots.

For employers, there is hope that dashboards can dramatically increase financial wellbeing and knowledge, thereby driving better engagement with employees on pensions issues. In turn, this could improve employers’ understanding of how their pension schemes can best reflect their workforce’s needs and values.

Dashboards might also drive further consolidation in the pensions industry, improving value-for-money and allowing economies of scale, and enhance the sector’s reputation amongst savers.

But first there’s the task of implementing them. The government has just concluded a consultation on the requirements it will place on pensions schemes to connect to and administer dashboards, and has made it clear that it will place high expectations on pension schemes to deliver.

How can pension schemes get ready for dashboard implementation?

The responsibility to deliver dashboards will sit with trustees.

In practice, most schemes will employ the help of external third-party administrators and software providers to assist them with connecting to (or even designing) their chosen dashboard architecture and administering data requests.

Schemes with over 1000 members are expected to now begin preparing for connection between April 2023 and September 2024. Medium-sized schemes (100-999 members) will follow in October 2024 to October 2025, and small schemes (less than 99) will then be brought into scope from 2026.

April 2023 is fast closing in, so trustees should refer to the Pension Dashboard Programme’s website which sets out the range of things schemes should be doing now to prepare, as well as what else will be required in the coming months. Trustees of large schemes should also be engaging their administrators and discussing new service level agreements that ensure they can deliver dashboards to the required standards.

Whether employing the help of third-parties or not, for many schemes there will need to be a significant data cleansing exercise undertaken in advance of dashboards going live so that they can both comply and deliver their savers the best possible user experience. Guidance on detecting and resolving pensions data issues is available from PASA.

Trustees should also look out for guidance within the next few months issued respectively by the money and pensions service (MaPS) and the pensions regulator (TPR) on the practical steps they need to take to connect to the digital architecture.

What has CBI been saying to the government?

The CBI responded to the government’s consultation on the proposed dashboard regulations and broadly welcomed the proposals. We did however drive home some of the challenges dashboard delivery brings and set out proposals for how they could be mitigated.

Of most concern are the proposed user response timescales set out. The government is expecting schemes to return the ‘value data’ (i.e. accrued and projected pension pot values) immediately to dashboard users upon request if already generated, else within 3-days for Defined Contribution (DC) schemes or within 10 days for Defined Benefit (DB) schemes.

We have been keen to stress that, for DB schemes in particular, this is going to be a challenge. Some pension valuations are incredibly complex, some require clarifications from savers, many DB records are currently incomplete or held offline, and administrators themselves are already stretched, with dashboards being just one of many policy changes they’re currently grappling with. A 20-day timeline would be a far more practical and still ambitious one for DB schemes.

We also stressed the valuable role employers can play in supporting dashboards’ rollout and future development, as well as the need for government and TPR to problem solve with the sector. Given that dashboards will be such a sea change for employers and how people engage with their pensions, many of the issues and opportunities they bring will only become evident upon implementation.

TPR will soon be setting out its proposed enforcement approach to the dashboard regulations and we are keen to use our influence to ensure this supports the effective delivery of the best dashboard system possible. We want your help and insight to do this and shape the wider regulatory environment that will underpin dashboard success.

Please contact Laurence Raeburn-Smith.