The pensions dashboards project, spearheaded by the Department for Work and Pensions (DWP), is gaining pace, designed to give people more control over their pensions. The cost of building the central infrastructure will be borne by the government, but there will also be a cost to employers. It is worth checking out when the new requirements will bite and what needs to be done to be ready.
The pensions dashboard system will give employees a total monthly income figure for all their pensions, online or on a mobile device. A single figure will aggregate the income from employer, private and state pensions. The user can drill down for a breakdown and more details. It only applies to future pensions; users will know about their pensions that have already come into payment.
The employee enters identification details and a request will be sent to every pension scheme, each of which has to say whether that person is an active or deferred member. The scheme can respond with a 'yes', 'no' or 'maybe'. The employee gets a summary of all their undrawn pensions with an indication of their current and projected pension at retirement.
The tech and data protection challenges in reliably matching with individuals and providing the necessary data are not to be underestimated. Some pension values will have to be radically simplified.
The consultation on the draft regulations ran from February to March 2022. It set out compliance requirements for dashboard providers and trustees, alongside the Pensions Regulator’s enforcement powers, and is expected to come into force in April 2023, followed by staging of the connection process for the largest schemes in July. The point when the public will first get access to the dashboard system will be later.
The new regime is likely to significantly increase costs for scheme administrators, which in turn will increase costs for schemes, and consequently employers.
If this project works in stimulating engagement with pensions, HR or pensions departments will see a jump in enquiries from employees about pensions.
Finally, trustees and administrators may need assistance from employers in collating all the relevant member data in advance of their staging date to ensure there are no data gaps, which could result in members getting the wrong information or being missed.
Charlotte Clewes?Boyne is an associate at Arc Pensions Law
