Pensions Dashboards: What are they and what will be required?
What is a pensions dashboard?
A pensions dashboard is a digital platform that allows individuals to access information about all of their pensions savings in one place. The government is introducing pensions dashboards which aim to provide clear and simple information about an individual's pension savings across multiple pension pots, including their State Pension. It will also help individuals to reconnect with any lost pension pots.
The majority of workers have multiple pension entitlements or pots in two or more different pension schemes. Currently, savers are required to use the Pension Tracing Service to track down old pots. The proposals were introduced as part of an effort to help savers keep track of their pension savings and understand them better.
What will be required?
Last year, the Pension Schemes Act 2021 introduced the legislative framework for pensions dashboards. This included provisions that will require trustees and managers of occupational pension schemes and FCA-regulated providers of personal and stakeholder pension schemes to provide information and member data to the pensions dashboards.
However, much of the detail will be set out in regulations. Since the Pension Schemes Act 2021, there has been a lot of work on the shape of the secondary legislation, but the regulations have not yet been published for consultation. It is expected that the regulations will require pensions providers to provide information about:
- the constitution of the scheme;
- the administration and finances of the scheme;
- the rights or obligations that may arise under the scheme;
- the pensions and other benefits that may arise under the scheme;
- other matters relevant to pension schemes in general; and
- the position of an individual in relation to the scheme.
It is expected that pensions dashboards will come into force in the spring or summer of 2023, with a consultation on the draft regulations expected imminently. However, much is still dependant on the development of the digital infrastructure of the dashboards which is still underway.
It is understood that there is likely to be a phased rollout by which pension schemes will be expected to connect to the pensions dashboards ecosystem. The Pensions Dashboards Programme (PDP) published a call for input last year which proposed that there would be three waves of the rollout:
- Wave 1: schemes with 1,000 or more members;
- Wave 2: schemes with 100 to 999 members; and finally
- Wave 3: small or micro schemes with 99 or fewer members.
The key wave will be the first, which the PDP estimated will cover 99% of members overall. The PDP recommended that this wave should start in April 2023 and run for up to two years. In this wave, the PDP recommended three cohorts:
- Cohort one: master trusts and FCA-regulated providers of personal pensions, starting spring 2023.
- Cohort two: DC schemes used for auto-enrolment, during 2023.
- Cohort three: all remaining occupational schemes with 1,000+ members (in order of size) with the largest DB schemes to onboard in 2023.
How to prepare
Pension schemes should work on ensuring their data is up to date, online and accessible ahead of the rollout. PASA has recently published guidance on its data matching convention for dashboards, which will help pension providers to prepare for the new requirements. There will be further information on what schemes will need to do in due course.