Initial dashboards should at launch show all or “very nearly” all the benefits pension scheme members have accrued, but the onboarding process should not be rushed to achieve this end, the UK’s pension fund body has said.
According to the Pensions and Lifetime Savings Association (PLSA), a survey it carried out showed that 75% of schemes – both defined contribution and defined benefit – stated they should be able to make available within 24 months the data available on annual benefits statements or on request.
“This is encouraging, but the onboarding timeline should not be designed to suit the capacity of the simplest schemes – it needs to be flexible enough to cater for those schemes that might need more time to prepare,” it said.
It cited as an example that only about half (48%) of DB schemes currently provided information on the accrued rights of deferred members as part of the annual benefit statement, which was not a legal obligation, saying that a requirement to provide this data point for the dashboard would take some time to address.
“Moreover, dashboards will be of most use to savers if they can see all their pensions,” added the PLSA.
In its response to a call for input on data standards by the Pensions Dashboards Programme (PDP), the lobby group said the onboarding window should be delayed until pension schemes had had sufficient time to prepare the data they hold, ensure its accuracy, and the robustness of their process for matching individuals to their entitlements.
“This will need to be communicated to schemes in a clear, comprehensive timeline as soon as possible,” it said.
“Initial dashboards should show – at launch – all or very nearly all the benefits members have accrued or the project may fall at the starter’s pistol”
Nigel Peaple, policy and research director at the PLSA and a member of the Pension Dashboard Prototype Project Steering Group
In the PLSA’s view, moving ahead with dashboards providing an incomplete picture of an individual’s pension entitlements would present several risks, such as further saver disengagement resulting from seeing a potentially lower retirement income than is likely, or misleading savers approaching important decision points, such as retirement.
The association supports pension providers being required to supply a figure for a saver’s “estimated retirement income” (ERI) for each pension to ensure individuals had comparable information. However, there were several technical challenges associated with providing this information that would influence the timeline necessary to deliver dashboards, it said.
There was also a communications challenge to do with presenting a consolidated – DB and DC – picture of an individual’s pension entitlements, the PLSA said.
Nigel Peaple, policy and research director at the PLSA and a member of the Pension Dashboard Prototype Project Steering Group, said: “The progress schemes have made in addressing the data challenges they face is highly encouraging, particularly given current circumstances. That said, we should not pretend that real challenges do not remain and we need to give the industry time to ensure data is complete and accurate.
“The Pension Dashboard should connect people with all their pensions. We have concerns that launching with too few participating schemes will provide savers with an incomplete picture of their pension entitlements and present very real risks to users. Initial dashboards should show – at launch – all or very nearly all the benefits members have accrued or the project may fall at the starter’s pistol.”
Earlier this week LCP partner Steve Webb called for the government to be clearer about what meeting dashboard requirements would involve for schemes, saying that one approach could lead to a “multi-million pound compliance bill”.