The Department for Work and Pensions (DWP) is to consult on proposals for new, free ‘pensions dashboards’ which would allow people to access their information from most pension schemes in one place online for the first time, following a letter from Frank Field MP
It is envisaged the first pensions dashboard will be established in 2019, with multiple dashboards to be introduced in the following years. The news follows a campaign by the work and pensions select committee and other industry bodies pushing for progress in this area.
Guy Opperman, minister for pensions and financial inclusion, said: ‘Plain pensions information at the touch of a screen will ensure better-informed, more engaged savers and help many more people to plan effectively for retirement.’
Unlike earlier proposals, which envisaged one, single source of pensions information, in the latest announcement the government says it believes that consumers will benefit from a range of dashboards to choose from, and will work with the pensions industry to include state pension information ‘at some stage’.
According to the DWP, development and design of dashboards will be industry-led and facilitated by government which has committed to legislate where necessary (for example, to compel pension schemes to provide data to consumers via dashboards).
The DWP has published a feasibility report into pensions dashboards, which forms the starting point for consultation on a range of matters including delivery models and governance.
This states industry is best placed to design, develop and own dashboards. However, the government will help to convene a delivery group, comprising experts, industry and government, to facilitate implementation of the technology that will enable dashboards to operate.
The DWP is proposing that this group is convened and stewarded by the Single Financial Guidance Body (SFGB).
It states: ‘We believe that multiple dashboards will improve choice for consumers, allowing them to use the dashboard that most meets their needs.
‘However, these should exist alongside a non-commercial dashboard hosted by the SFGB, offering an impartial service to those who prefer it, or who may not be targeted by the market.’
The DWP’s expectation is that industry should start to supply data to a dashboard, on a voluntary basis, from 2019, and says the existing legislative framework does allow for this.
It will seek to legislate to compel schemes to provide their data for dashboards ‘when parliamentary time allows’. This will result, the DWP says, in the industry-led dashboard facilitated by the SFGB being introduced from 2019.
While the final timeline for onboarding will need to be agreed by industry through the delivery group, the DWP expects that the majority of schemes will be on-boarded within three to four years from the first dashboards being available to the public.
DWP identifies the single pension finder service (PFS) is a key element of the technical infrastructure behind dashboards, and says the government will seek to compel schemes to supply their data to the PFS. There will be only one PFS which will be run on a non-profit basis and with strong governance, with an approach to be determined by the industry delivery group. It says the costs of the governance structure should be met by the pensions industry, which will also be required to fund the development and delivery costs of the dashboard infrastructure, such as the PFS and identity verification; the development of a non-commercial, consumer-focused dashboard hosted by the SFGB; and any new regulatory functions related to dashboards.
It also says that there may be an opportunity to use existing industry levies to fund the dashboard service in a fair and equitable way.
Nigel Peaple, director of policy and research, Pensions and Lifetime Savings Association, said: ‘The publication of the feasibility report is a significant step forward for the dashboard project.
‘There are a number of important questions which will need to be worked through, such as on governance, compulsion, regulation, the timetable and funding.’
Yvonne Braun, director of long-term savings policy at the Association of British Insurers, said: ‘The government is right to be preparing for legislation - all pension providers and schemes need to be involved, as well as the state pension. We’ve been working hard for more than two years with our members and partners to lay the groundwork but there’s a huge amount still to do.’
Letter to pensions minister
This consultation follows a roundtable discussion with industry representatives at the end of last month which led Frank Field, chair of the work and pensions select committee, to write to the pensions minister urging him to commit now to legislation compelling firms to provide customer data for the pensions dashboard.
In his letter to Guy Opperman, Field said the discussion had shown that the industry is ‘keen to get started’ but urgently need the government to announce its intentions so that they can prepare.
Field’s letter raised the issue of independent governance, which he said is crucial for ensuring that the dashboard works for its users and can command their confidence, which might involve a board with a mix of consumer and industry representation.
He also pointed out there needs to be a secure authentication mechanism to verify the identity of customers, along the lines of the government’s Verify service, and said there is a clear role for government to play in providing this.
The industry discussion suggested a realistic timetable for delivery of the dashboard could be relatively short for large defined contribution (DC) schemes - perhaps a year to eighteen months, once the intention to proceed and method was clear and there was certainty about future legal requirements. Legacy DC schemes in particular may take more than a year to get on board.
For defined benefit (DB) schemes, depending on the information that the dashboard was required to show, it would take longer. DB presented more challenges when it came to providing a current value. Some schemes will have that information now, but for others there may be a longer implementation period, depending on the requirements of dashboard, of perhaps three to five years.
The consultation closes on 28 January 2019.
Report by Pat Sweet