The DWP has published its response to its consultation on the pension dashboards - asking the industry for support in the delivery. Holly Roach looks at what schemes need to do now to prepare.
Pension dashboards are a relatively straightforward concept but, with around 40,000 pension schemes of different types in existence, creating a dashboard that works for users and gives individuals a full view of their pensions in one place is a "considerable challenge", as explained in the government's response to the pension dashboards consultation, published on 4 April.
The Department for Work and Pensions' (DWP) consultation ran from 3 December 2018 to 28 January this year and sought views on a range of questions relating to the creation of the pension dashboards, and closed to comments last week.
The government said a non-commercial dashboard will be delivered and overseen by the new Money and Pensions Service (MAPS), which will bring together an industry delivery group to set out a clear timetable and roadmap to drive progress towards fully operational dashboards, setting standards and ensuring security to protect users and their information.
Commenting on the proposals, work and pensions secretary Amber Rudd said: "Dashboards have the potential to transform the way we all think about and plan for retirement, providing clear and simple information regarding pension savings in one place online."
MAPS chief executive John Govett added: "Our vision is everyone making the most of their money and pensions. A big part of this is equipping and empowering people to engage with their pensions, often the biggest financial investment they will make.
"The new pension dashboards will play a crucial role in this, helping people make decisions about their money and pensions with confidence, so they can enjoy greater financial wellbeing throughout their lifetimes."
Association of British Insurers director of long-term savings and protection policy Yvonne Braun agreed: "The digital retirement revolution is here at last. All the pieces are being put in place to deliver the easy access to retirement information everybody needs and that the pensions industry is so keen to deliver."
The DWP explained that multiple dashboards will "improve choice for consumers, allowing them to use the dashboard that most meets their needs". However, it stated these should exist alongside a non-commercial dashboard hosted by the MAPS, offering an impartial service to those who may prefer it.
It added the government is "committed to compelling schemes to provide information to consumers via a dashboard" and said it is seeking an "appropriate legislative vehicle, subject to securing parliamentary time, to do this".
The DWP said evidence from other countries that have dashboards has emphasised the importance of getting the maximum number of schemes participating in dashboards so that consumers have a comprehensive view of all of their pensions.
But, the government's response explains that due to the sheer volume of schemes that need to be connected to the "dashboard ecosystem", compelling all schemes to begin participation at the same time was not a practical option.
The government said schemes should participate in stages, with the option to join voluntarily at any stage. It also suggested prioritising large schemes with large numbers of members first, due to them having the ability to supply reliable data in a shorter timeframe. Large defined contribution (DC) schemes are expected to be among the first on the dashboard in any compulsory staging.
Now that the government has published its response, schemes need to start preparing for the dashboards.
The DWP urged schemes to "start getting ready now", particularly in terms of preparing and cleansing data, and noted that it does not expect the information initially required to be too complex.
It also asked for interested organisations to "create and test" their own consumer facing dashboards by the end of the year, working with the delivery group while setting proper data standards and cleansing all data before supplying it to the dashboards.
The DWP also set out what it believed would be the industry's key priorities for the coming year - noting that schemes would need to prepare data to be ready within a three- to four-year timeframe. It said schemes will also need to work with the industry delivery group, which is currently being set up, on setting data standards and offer opportunities to supply data on a voluntary basis to inform delivery.
Pensions Management Institute (PMI) president Lesley Carline explains: "At this stage, we need to know what data will be required, although one can make certain assumptions on that. Data cleansing may also be required for the dashboards but data needs to be clean for so many different reasons, that we believe this type of exercise should be carried out irrespective of the dashboards."
Carline adds schemes would also need to engage with their administration service providers. She says: "When we see new sweeping legislation affecting all schemes, providers typically establish special projects for delivering change. They will no doubt be drafting technical updates and sending their client relationship managers out to speak to trustees about how they are going to approach the new development and look to see what is needed for each scheme."
The DWP's response also noted the government expects the delivery group to "turn their attention to the data standards as a priority, building on the work that has already been done on this by others both within the pensions industry and across the financial services sector".
But it also said MAPS would need additional support from the industry - something Carline says will be particularly important when it comes to scheme-specific issues.
Carline explains: "Much of the work required will be standardised in terms of how the providers will look to provide the relevant data, but there will inevitably be instances where schemes have unique issues to factor in, and in the coming months discussions will be needed on how to handle them."
While there is much to do, the industry seems ready to move quickly on the dashboard project.
Pensions and Lifetime Savings Association director of policy and research Nigel Peaple explains: "Preparing the sector for connection to pension dashboards will be a major undertaking and one that we stand ready to support. The government is right to acknowledge that connecting the majority of schemes may take three or four years.
"But the government is also right to urge the pensions industry to act quickly, in 2019, to enhance the quality of their data, and to support MAPS in developing appropriate data standards."
Smart Pension director of policy and communication Darren Philp agrees: "We now need to get our collective heads down and crack on if we're to develop something that really delivers for pension savers."
He adds: "We think most modern DC schemes should be able to hook up to a dashboard quite quickly once the data standards and architecture is agreed. For others, it will take more time and legislation, but we think a great first step would be for a pension finder service to cover all schemes."
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