Establishing a system of “pension dashboards” to enable individuals who have yet to take retirement benefits to find clear, standardised information about all their pension arrangements (including rights to state pension) in one place is a key element of the government’s pension strategy.
The ambition is laudable but achieving it will be a mammoth task, requiring significant time and resource from occupational pension scheme trustees, pension managers and administrators. All UK occupational pension schemes with 100 or more non-pensioner members must participate and must comply with stringent information and technical requirements. Pension scheme trustees should consider now what action they will need to take to ensure that they are ready to meet the new obligations.
When do the requirements apply?
Every occupational pension scheme within scope must connect to the “dashboard architecture” by its “staging deadline” (for example, 30 June 2023 for the largest master trusts; 30 November 2023 for defined benefit (DB) schemes with at least 20,000 non-pensioner members; with all schemes with at least 1,000 deferred and active members having to connect by 30 September 2024; smaller schemes with 100 or more members must connect over the period to 31 October 2025).
Who will provide a "pension dashboard"?
The Money and Pension Service (MaPS) is required to establish a pension dashboard. Private sector providers may also offer a “qualifying pension dashboard service”, with rights to connect to the “dashboard architecture” and receive information about individuals’ pension arrangements, if they have the appropriate financial services authorisation and meet certain conditions.
What must schemes do?
Occupational pension schemes must connect to MaPS by their staging deadline. Once connected, schemes will have to respond in the following two scenarios:
On receipt of a “find request” in respect of an individual: the scheme must search its data to see if the individual’s information matches any of the scheme’s member records. If there is a partial match the individual must be given 30 days to provide further information to enable a positive match to be made or discounted. If a positive match is found, the scheme must create a unique “pension identifier” and return this to the dashboard.
On receipt of a “view request” from a dashboard on behalf of an individual positively identified as having a pension in the scheme: the scheme must send prescribed information on the scheme and the individual’s benefit entitlement in a standardised format back to the requesting dashboard, from where it may be seen by the individual.
Where are we now?
The government has recently consulted on draft regulations, which will provide the legislative framework for the new system, supplemented by operational and technical standards issued (mostly) by MaPS.
The consultation has caused considerable concern within the pension industry at the practical implications of what is expected. However, the government seems determined to press ahead with this flagship initiative, so significant easements in the final requirements would seem unlikely.
What should trustees do now?
Trustees should check their likely staging date and should engage with their administrators to understand what action the administrator is taking to ensure it is dashboard ready. The volume of work to be done to prepare for connection to the dashboard architecture will vary between schemes, but more resource is likely to be needed where, for example:
Historic member data is not held in a digital, searchable format;
Historic member data is incomplete;
The schemes has multiple sections with different benefit structures;
The calculation of some benefits varies depending on, for example: member choice, length of service, or the resolution of uncertainty in interpretation of the scheme rules;
Some or all administration is done by an in-house team (or by a small external team which may have less resource to get up to speed with the new requirements);
GMP reconciliation and / or equalisation is ongoing (or not yet started).
Trustees, in coordination with their administrators, should identify work to be done and should put in place a realistic project plan to achieve this. Trustees should consider whether any amendments to their administration contracts are needed to cover dashboards.