The Department for Work and Pensions (DWP) has set out a timeline for the launch of the pensions dashboard.
According to the DWP’s consultation, the move to the digital architecture will happen in a phased process over a four-year period.
Firstly, large schemes will be required to connect to the platform between April 2023 and September 2024; followed by medium schemes between October 2024 and October 2025, then small and micro schemes from 2026, although they will not be covered by the regulations.
The DWP said that state pension information will be available from day one. This also applies to master trusts, personal and stakeholder pensions, money purchase schemes used for auto-enrolment, and public service pension schemes.
It added that regulated financial advisers and guidance specialist from the Money and Pensions Service (Maps) will be given access to the dashboard and client data, as long as the customer grants them access to their information.
There will be a staggered implementation process because there are currently around 32,000 pension schemes in the UK, and it “would not be realistic to have all of them brought onto the dashboard from the outset”, the DWP added.
The final timetable shows a slight push back from the provisional plan in May 2021 by the Pensions Dashboard Programme, which estimated all schemes would have been connected by 2025.
A ‘mammoth task’
Steve Webb, partner at LCP, said he is not surprised by the delay, as the government originally planned to have the dashboard up and running by 2019.
“Bringing together full pension data in one place is a mammoth task and ministers have repeatedly over-promised and under-delivered on this goal,” he added. “Back in 2016 there was a promise of a dashboard in use by 2019, but now it looks as though the first generally accessible dashboard will not be available until mid-2024 – at least five years late.
“The biggest headaches include bringing on the public service schemes, which have major headaches of their own to deal with, and defined benefit pension schemes where complex new calculations may be required. It is vital that the government ensures there is no further slippage in this project and that the benefits of dashboards are available to the public as soon as possible”.
Benefits
Tom Selby, head of retirement policy at AJ Bell, added: “The rubber is about to hit the road as pensions dashboards move from theory towards reality. Dashboards have the potential to revolutionise retirement saving in the UK, making it easier for people to track their pension pots online.
“This is increasingly important as the combination of an increasingly transient workforce and automatic enrolment means more people are likely to build up multiple pension pots throughout their lives. In fact, the number of potentially lost or left behind pensions in the defined contribution master trust market is expected to increase to a whopping 27 million by 2035.
“Some estimates suggest people can change jobs up to 11 times during their working lives – potentially building up a new pension each time.
“Having pensions scattered all over the place is not ideal for a number of reasons. Multiple pensions can be hard to track, and it makes planning your retirement more complicated. Savers who combine their pensions can also benefit from more choice and lower charges, and Dashboards have the potential to make doing this a lot easier.”
Practical challenges
But Selby warned that there will be problems ahead as making people’s pensions digitally accessible will be a huge task for the government.
“Over the longer term, dashboards could become a valuable communication and engagement tool,” he added. “However, the size of the practical challenge of getting people’s pensions online in a safe and clear way should not be underestimated.
“Anyone expecting dashboards to be launched immediately with bells and whistles attached might be disappointed by the relatively slow staging timetable outlined. Some savers may need to wait over four years to see all their pensions online via dashboards, although for those with pensions in larger schemes it should be much faster.
“The government has understandably focused on getting the biggest schemes to comply first as this is where the majority of pensions are held. Once a ‘critical mass’ of schemes has been reached and prototypes have been fully tested, dashboards will then be made available to the public.
“Communication of the information that is and isn’t included via dashboards will be absolutely critical in ensuring they gain legitimacy and allow people to make better-informed retirement decisions.”
Plurality
Becky O’Connor, head of pensions and savings at Interactive Investors, said people should be aware that there will not be a single dashboard, rather several ones from different providers.
“If the information is presented consistently, the number of dashboard providers shouldn’t be a problem for people accessing their pensions record,” she added. “But it’s important to avoid a situation where the same data can end up being presented differently, for example, variances in credit scores from different credit agencies, as this could lead to confusion. If all dashboard providers are using the same sources and following the same guidelines, this can hopefully be avoided.
“It’s interesting to see more of the thinking about whether dashboards could or should lead to greater consolidation. There’s clearly a case for this if people can save money or find a home for their pensions that better suits their retirement plan and the government acknowledges this, although it will not want dashboards to turn into a competition among providers from the get-go.”
