Opinion  

Is there finally light at the end of the pensions dashboard tunnel?

Steve Webb

Steve Webb

The pensions dashboard feels like a project that is always at least two years from coming to fruition. 

But at long last there seems to be momentum behind the idea of having a single online location where you can see all (or most) of your state and private pension entitlements.

Last year the Pension Schemes Act 2021 gave the government power to require pension schemes and pension providers to supply data to a dashboard. 

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And at the end of January we saw draft regulations that provide a set of deadlines for schemes to supply data, and which give more information about the kind of data that will have to be supplied.  Although details could still change, The Department for Work and Pensions is keen to crack on with the dashboard as soon as possible.

The main focus for now will be on finalising the legislation and the first stages of private testing of the dashboard. From 2023 onwards, pension schemes will have to start making data available, starting with the biggest schemes. 

Because pension scheme memberships are heavily concentrated in the largest schemes, a dashboard with a high level of coverage could be open to the public by the summer of 2024, even though the smallest schemes will continue to be added in 2025 and beyond.

Users should see their projected state pension, the size of their current and projected defined contribution pension pots, and their current and projected entitlements from their defined benefit pensions. 

One important omission will be pensions in payment, including most funds in drawdown, so it may still be necessary to supplement dashboard data to get a complete picture.

From the perspective of the adviser, the dashboard could be a game changer. Clients will be able to provide delegated access to an adviser who can then log in to the dashboard on their behalf. 

If clients prefer not to do this they can still export their own data from the dashboard and provide this to their adviser on a one-off basis. Either way, this should reduce the amount of time spent simply assembling basic information about a client’s pension entitlements.

However, the dashboard will in many cases prompt more questions. At a basic level, people may not understand what they see. 

There are bound to be errors and omissions, not least as the data held by many occupational pension schemes is patchy in quality to say the least. A first task will be to make sure that the data on the dashboard makes sense and is comprehensive.

But one of the biggest behavioural impacts of the dashboard is likely to be a wave of pension consolidation. Individuals who find they have half a dozen separate pensions will feel a great urge to combine them in one place. 

And there will be plenty of consolidators with TV adverts and easy-to-use apps who will be more than willing to help them. Consolidation of DC pots is likely to be the first thing that we see, but I also anticipate an uptick in interest in DB transfers, again driven by the instinctive desire to consolidate.