I am in a user group of small DB pension schemes , some of whom are looking to stay open, many struggling to meet the costs of staying as pensions and not dragging down their sponsors with costs. I was very sad to read this comment yesterday from one such scheme.

Our administrators, have given an estimate of their charges for the Dashboard upload connection at approximately £145,000, very nearly £300 per Member or 0.8% of total pensionable pay.  I am shocked by this, but felt I better try and get some comparisons from other schemes before taking any action.  I therefore wondered whether you were in a position to provide any informal comments (which will remain unattributed in my discussions with the other Trustee Directors and the Company).

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Pension Dashboard tax?

There followed similar comments of outrage at the cost to other schemes of Pension Dashboard connection by FDs, CEOs and Trustees.

Here is what one executive replied

Remember that if you have fewer than 100 active plus deferred there is no time limit to implement the dashboard. You might find it is a better idea to cut down on the trivial deferreds by buying them out rather than going with the dashboard. I frankly have no idea how it will work but if it unintentionally provides wrong information then it will be you and me who are on the hook for it.

In short, small schemes see it easier to bail out than comply with the pension dashboard regulations. What a sad state of affairs when Pension Dashboard costs appear a tax on bosses.

But back to the cost of compliance if DB schemes do not buy out…

This payment we started with is quoted as a percentage of pay presumably because the DB scheme is open to existing members (and maybe for new ones). Here is another cost thrown in the way of the trustees to be passed on to employers as DB costs are.

This is not me criticising Pension Dashboard but it worries me that costs are now being quoted which have material impact on the capacity of such schemes to do what they are trying to do (pay pensions).

I wonder if there is any thinking going into monitoring VFM from pension administrators for delivering connection? It strikes me that £300 pm to get them to see their benefits on the dashboard is money spent to replicate what most DB schemes already provide, a view of pensions due to open and deferred members.

I fear that what is happening here is that a “worst case scenario” is being costed into the quote to ensure that administrator’s issues are met in advance or collected as profit if the worst case scenario does not emerge.

We have yet to have any information emerging about the cost to trustees and so to employers of linking to the Pension Dashboard. But I fear that the cost will ultimately be paid by members in reduced contributions or support.

Here I think we need the PMI or PLSA to step up and ask the questions of their members so that clarity as to what people are paying emerges. Clearly smaller schemes will be more expensive than larger ones , on a per member basis, but how will this work across the market? What are the large master trusts doing to absorb their costs and where is the carry on to sponsors happening?

There is clearly a moment arriving when these costs will hurt, as they are doing with members of this user group. But the costs are created by a Government activity, the MaPS pension dashboard.

I think we need some guidance from MaPS on costs so that risks are shared between employers/trustees and administrators. PMI and PLSA – please step up and create a reasonable market which does not lead to these kind of per member costs.