What next for the pensions dashboard?
In 2016, the UK Government made a commitment to delivering the pensions dashboard project in 2019. While the project is still on-going, progress has been made with the UK government and industry remaining committed to it.
Prior to launching a major consultation on the dashboard project in December 2018, the Department of Work and Pensions:
- Conducted a series of stakeholder roundtables with industry representatives, fintech firms and pension savers.
- Undertook additional structured interviews with individual users.
- Reviewed the international experience of countries which already have dashboards and actively engaged with some countries to discuss their experiences in more detail.
These activities informed the proposals contained in the DWP’s consultation paper published in December 2018.
The proposal set out in the consultation paper were largely well received and, in April 2019, the DWP published its response to the consultation.
Building the evidence
User research indicated that pension savers are in favour of a single government-sponsored dashboard, with a single point of access. Savers also indicated that they favour a dashboard which contains information on all their pension savings in one place from the initial launch.
Savers are not actively seeking a dashboard but are overwhelmingly positive about the concept.
The DWP considered research compiled by an industry-led group on the experiences of other countries which have pensions dashboards. It also engaged directly with representatives from eight of those countries: Australia; Belgium; Denmark; Finland; Israel; the Netherlands; Norway; and Sweden.
The DWP found a variety of approaches towards delivering pensions dashboards:
- Most countries delivered a single, government-sponsored, non-commercial dashboard.
- Where countries had multiple dashboards, only positive outcomes for consumers were reported.
- Where delivery was industry-led, it was often free at the point of use and facilitated by the government through legislation.
- Where legislation was used to compel provider participation, a complete dashboard was delivered more quickly.
- Phased implementation of the dashboard did not damage consumer confidence or trust in the dashboard and fostered pension provider buy-in.
- Take up by savers increased significantly once a country’s dashboard achieved coverage of all retirement income pots.
The UK pensions landscape is very different in scale and complexity to the experiences of other countries which have dashboards and the DWP’s consultation findings reflect this.
The DWP has decided on a multiple dashboard approach to encourage innovation, build trust and encourage saver engagement. A non-commercial, industry-funded and government hosted dashboard is also to be developed. The dashboards will be free at the point of use.
Meeting the users’ needs
Pension schemes and pension providers will be required to deliver pension data which can be accessed by pensions dashboards and the UK government plans to legislate for this as soon as parliamentary time allows.
There are expectations that a Pensions Bill will be included in the next Queen’s speech but commentators acknowledge that parliamentary time will likely be at a premium as Brexit continues to dominate the political agenda.
The DWP agrees that the State Pension data must be included so savers can obtain a full picture of their retirement savings. It is committed to doing so at the earliest opportunity while recognising that it will take time to achieve.
Data from trust-based pension schemes and public sector schemes will have longer lead-times to prepare their data and change their IT systems than contract-based arrangements.
This phased approach means that the expectations of pension savers need to be carefully managed in the meantime.
Some schemes wish to supply data to dashboards without waiting for the official deadline. For example, the early participation defined contribution (DC) mastertrusts, which look after the pension pots of millions of new savers through auto-enrolment, could accelerate the speed at which data is made available.
The DWP expects some schemes and providers of contract-based arrangements to start supplying data as early as 2019 on a voluntary basis.
The new Money and Pension Service is to develop and run the new non-commercial dashboard on behalf of the UK government. Its success will be vital to establishing trust in the concept of a pensions dashboard.
The benefits of the dashboard project are clear but it will only be effective in encouraging further pension saving if the public come to trust what the dashboards deliver. Data security is also paramount.
Data made available to dashboards by the DWP, pension schemes and providers of contract based arrangements must be presented in a simple, consistent manner so that savers can understand it and can, therefore, rely on it for retirement planning.
- The government will put forward primary legislation requiring pension schemes and providers to make savers’ data available to a dashboard of their choice.
- The DWP will make State Pension data available to pensions dashboards as soon as it is feasible to do so.
- Industry organisations, with their pensions dashboards in development, are being encouraged by the DWP to participate in a new industry delivery group.
- Pension schemes will have member data ready to deliver to pensions dashboards within three to four years.
- The new Money and Pensions Service is to develop and run a non-commercial pensions dashboard.