Pensions dashboards are almost here

Discussion about pensions dashboards dates back to 2016 when HM Treasury and the Financial Conduct Authority recommended that Government should challenge industry to make a pensions dashboard. Following feasibility studies, a legislative and regulatory framework for pensions dashboards, including powers to compel pension schemes to provide pension information to consumers, was enacted in the Pension Schemes Act 2021.

The new legislative framework gives authority to the Pensions Dashboards Programme (PDP) which was established in 2019 as part of the Government sponsored Money and Pensions Service, to set standards relating to the practical operation of dashboard services and the digital infrastructure needed to support them.

The benefits for pensions savers are:

• Easier to locate lost pension pots;
• Easier to engage with pensions saving for better retirement planning in particular as the dashboard must show an estimated retirement income for each pension and signpost savers to impartial guidance or regulated advice;
• More transparency on investment management costs.

The industry call the digital infrastructure behind the dashboard an ‘ecosystem’. The requirement to connect to the ecosystem applies to occupational pension schemes – those with 100 plus members and therefore have a staging date and those with no staging date but who want to connect early. Pursuant to the legislation, the Financial Conduct Authority has published similar requirements for personal pension schemes.

Pension schemes, starting with master trusts, will be connecting to dashboards from August 2023 – in accordance with their staging date. However, the public will not have access until mid-2024 (precise date to be specified by the Secretary of State for Work and Pensions) by which time, it is expected that most schemes will be connected into the dashboard ecosystem.

Most schemes are expected to connect to the dashboard ecosystem via third party ‘integrated service providers’ rather than directly by building their own interface. However, schemes will still be responsible for the compliance and therefore need to be familiar with the standards. Schemes should allow around 30 days for the former process and six to nine months if building their own interface. As with the introduction of the automatic enrolment regime, there is likely to be a capacity crunch amongst providers.

What if schemes do not comply?

The Pensions Regulator has new powers to issue notices and penalties against administrators, third party ‘integrated service providers’ and employers. The fines are up to £5,000 against individuals and up to £50,000 against entities in respect of a single breach.

Is there an accreditation system that will help in selecting an integrated service provider? The Money and Pensions Service has confirmed there are currently no plans for an accreditation scheme for third party integrated service providers. However, the provision of a pensions dashboard by a party other than the Money and Pensions Service is a regulated activity under the Financial Services and Markets Act 2000. Therefore, providers must be authorised and will be subject to Financial Conduct Authority regulation. Their details will be published on the Financial Services Register.

For any readers who are trustees of occupational pension schemes, The Pensions Regulator has published a checklist on what needs to happen.