This week, the Government published a paper on the regulations that will govern the delivery and running of pension dashboards. These should begin appearing in 2024 and will reach steady state some time before the end of this decade.
In this article, I look at some of the main features of the Government’s consultation on the rules for the forthcoming dashboards and ask “will it be worth the wait”. My conclusion is that the dashboards will be worthy, but not worth the wait,
So what will these dashboards deliver?
The dashboard commits to providing immediate on-line information on all pensions, including the state pension , provided users have properly identified themselves.
“Properly identifying yourself” need not be hard , nor need it mean exposing yourself to online harm, either through a deluge of junk mail nor- worse – the attention of scammers.
The original idea for the dashboard (the one that should have been with us three years ago), simply involved Government establishing the conventions that governed self-identification and the internet plumbing. It was thought then that the momentum behind open banking would surge the project over the line. That didn’t happen – this did.
In its simplest form, the dashboard is no more than a pension finding service, though it won’t be able to find all pensions as some pensions (the ones that are actually being paid to us) won’t be on the dashboard, so we should qualify the statement, to say all “outstanding pensions”.
There won’t be one big reveal, the “Dashboard Availability Point” (DAP) will happen at the point when Government thinks that the data available through a search is sufficiently comprehensive to satisfy most people. There is no certainty when this will be, it could be as early as late 2023 when the biggest schemes’ data will be dashboard ready, it might be as late as 2028 when some of the micro pension scheme are linked up. My hope is that Government will see sense and go early. People aren’t looking for 100% solutions. There are greater risks in further delays than in going too early.
We are being promised we will be able to see our state pension entitlement using the pension finder service. This is being billed as “a welcome bonus”, though there has always been an expectation that what can already be seen through the Government Portal, could be seen through with the dashboard personal verification credentials.
So what is taking so long?
If all that the dashboard was , was a pension finding service, we would have a short consultation and we might have a dashboard now. Most of the consultation and most of the wait to come , is over what further information the dashboard will deliver, either online or within 10 days of a request being made.
Referring to the diagram at the top of the blog, the value information in the three green steps at the bottom will be to the following timeframes.
Here we have to go with the naming conventions of the dashboard. Administrative data is simply information meaning someone has pension rights
We believe that for all pension schemes, administrative data should be returned immediately after a view request is received (regulation 23(2), subject to 23(3)). This is important because we believe that at the point when an individual is seeking to access their pensions information on their dashboard, they should be made aware immediately of what pensions they have.
This is spot on. People should feel confident that they can find all their pension data straight away. Then there’s value data, that’s the “nice to have” stuff at the top of the pyramid in the diagram above.
We have proposed that the value data which would be returned to an individual’s dashboard must be a value that has been generated for a benefit statement within the last 12 months or for another purpose, but using the same methodology, within the last 12 months. If such a value has been generated, the expectation on the trustees or managers of all pension schemes is that the data will be returned immediately (meaning straight away) .
This is “sort of” good. Best practice is to have online valuations of accrued rights which feed projection engines which can give an expectation of what rights will be in future. Most workplace pensions allow you access to your pot’s value in real time.
Regulation 25(5)(b) provides that where a relevant value has not been calculated or provided on a benefit statement within the last 12 months, Regulations propose that all pension schemes will have 3 days to return value data except for:
This is where it gets messy (all timings are in working days). Instead of insisting that lagging schemes use the generous timescales (see below) to get valuations and projections on line, the rules give grace for manual solutions.
non-money purchase schemes which have 10 days, and
ii. schemes which offer benefits where the benefit value is calculated with reference to both money purchase and non-money purchase formulas, which will also have 10 days.
and this is where pension complexity gets in the way of a proper user experience. It looks as if DB schemes have won a carve out. While this is not a dashboard-breaker as member expectations for DB and hybrids will be lower, it shows just how much the DB pension system is in need of consolidation.
If the Pensions Minister wanted to, he could drive consolidation apace, by ensuring that recalcitrant administrators “comply or die”. Instead the consultation is mealy mouthed.
In time, we are keen for these proposed timings to be reduced to help improve the quality of the service provided by pensions dashboards. In particular in relation to money purchase schemes, we intend to move towards instantaneous responses for all requests in the future. With this in mind, we want pension schemes to think ambitiously and consider now how they can put mechanisms in place to facilitate the provision of data to dashboards as quickly as possible.
This does not sound very ambitious to me. We are six years into this project and encouraging pension schemes to think about a digital experience should not be “ambitious”.
We are clear that where we are setting the expectation of an ‘immediate’ response, this means schemes will need to shift towards the automation and better storage of individuals pensions information. This is the only way that immediate responses will be achievable. For some, it is likely that investments in automation or better storage of pensions data will be necessary, and we strongly believe that where that is the case, schemes should consider making investments now.
Frankly, this should be taken as an admission of failure. If we are serious about mandatory dashboards, then enforcement of the provision of online data needs to be a compliance imperative , not a consideration.
What is the penalty if we can’t “properly identify ourselves”?
The DWP propose that if people provide insufficient matching data, they can have up to 30 days to contact the pension scheme and supply all the relevant, additional information necessary to satisfy the scheme as to whether they have a match for that individual or not. If they can’t prove who they are, the scheme has the right to delete the inquiry.
But happily, this doesn’t stop someone trying again at a later date.
When will data be available?
There will be a staging timetable and – as with auto-enrolment – the biggest schemes will go first.
Staging should focus initially on large and medium schemes with the approach to staging small and micro schemes to be determined later
– Master Trusts, personal and stakeholder pension schemes should be among the first to connect, followed by money purchase schemes used for Automatic Enrolment
– Public Service Pension Schemes (PSPS) should be compelled to connect no earlier than October 2023 and before staging of medium schemes due to generally being larger schemes
– staging large schemes should take no longer than two years from 2023
– schemes should be able to connect earlier than their compulsory staging deadline, where there is capacity
Which isn’t too clear!
A generous timeline
The timescales for staging are generous. Bearing in mind all schemes have known this will be coming since 2016, they seem overly generous to me. These time schemes are targets.
– large schemes (April 2023 – September 2024)
– medium schemes (October 2024 – October 2025)
– small and micro schemes (not in these Regulations but expected to stage from 2026)
Back in 2019, I made a bet with the then CEO of MaPs that the dashboard would not be fully up and running by my State Retirement Age. My SRA is now November 2028, it will be a close run thing! Let’s hope that the DAP beats my SRA – there is a chance but not if too many schemes elect to take up a period of 12 months grace extended to these deadlines in the consultation.
What will dashboards (not) be allowed to do
Dashboards will not be able to offer any functionality which enables transactions, such as consolidating pension pots or transferring pensions, to take place. Transactions increase the potential risk for consumers, in part because for initial dashboards at least, the information provided will be high-level, and certainly insufficient for decision-making around transactions.
This has come as a disappointment to many potential dashboard operators who had anticipated that by finding people’s pensions, they would have first dibs at combining them (into their pension schemes).
Instead , dashboards will have to work to a different economic model. It’s clear that the first dashboard – the one operated by MaPS (the Government’s Money Helping service) will not need to wash its face, it will be subsidised by Government. How competing dashboards make their money isn’t clear, perhaps they will be paid as lead generators, perhaps they will find alternative income streams.
But consumers will know that as with auto-enrolment (where Nest was the scheme of last resort), there will always be a MaPS dashboard and it will always do nothing but aim to show everything.
There is a lot of stuff at the end of the consultation about how people might be able to download information about what they have into a PDF (instead of taking screenshots!), but practically speaking, the dashboard is not for doing!
Will it be worth the wait?
The Government will argue that the delays that have plagued the dashboard have been inevitable , considering the complexity of the UK pension system . Wading through page after page of complex pensions (money purchase, non money purchase, state pension – even CDC) , I realised that the vast majority of the wait is about managing complexity that didn’t need to have been dealt with over the past six years.
We could by now have had a proof of concept up and running which could have found people’s pensions and allowed people needing to bring pots together (both on a screen and financially). We missed that chance because
- The original vision of a tech led project was compromised by the pensions industry’s insistence on having the dashboards their way.
- The Treasury handing over the project to the DWP who gave it to MaPS
- MaPS losing its CEO and wasting two years while the DWP offered little support
- The tortuous progress of the Pension Schemes Act 2021.
- The insistence on a belts and braces approach to development which is the opposite of the agile development originally proposed by the Treasury in 2015.
I still believe that what will be delivered will be worth having, but it won’t have been worth the wait. The counter-factual needs to be considered. If the State had not taken this on, could we have open pensions by now? Open banking says we could.
The work of the PDP is good work and by and large the consultation and regulations are the right ones, but only as making the best of a bad job.