Pension schemes are being warned to start preparing data for the pensions dashboard now, even though its launch is some years away, as data requirements are expected to grow in complexity.
XPS Administration, a third-party pension scheme administrator, is advising trustees to review pension scheme data sooner rather than later to prepare for the introduction of the pension dashboard, which is expected to go live no later than 2023.
Despite pension schemes having three to four years to get their data ready to feed into the dashboard system, there is a concern that data requirements could get increasingly detailed and complex over time, further enhancing the requirement for improved pension scheme data.
David Watkins, managing director of XPS Administration, said: "Through identifying and locating members and ensuring complete and accurate data is held, trustees will be able to get to the source of all pension benefit calculations.
"This will allow for automation of calculations therefore reducing the risk of errors and providing accurate member data for the pensions dashboards.
"For sponsors, improving data not only improves the accuracy of the benefits being paid to members but creates a clean and efficient platform to introduce new options and engage with members around the choices available to them."
In its consultation response on April 4, the department for Work and Pensions gave the green light for the pensions dashboard to go ahead, with secretary of state Amber Rudd saying that the government will facilitate the delivery of the dashboard as a "key priority".
The pensions dashboard will allow savers to log in and view all pension pots in one place enabling them to easily see their expected income in retirement.
There will be a non-commercial dashboard, which will be delivered and overseen by the new Money and Pensions Service, alongside further provider-led dashboards.
It is up to the saver to decide which dashboard they want to use however, the government expects all dashboards to be free and user-friendly.
It is hoped that the government's dashboard will be developed and ready to test later this year.
The government also stated it would bring forward legislation to "compel all pension providers to make consumers’ data available" while it confirmed that state pension information will also be included.
Romi Savova, chief executive of Pension Bee, an online pension manager, said: "Data in the pensions sector is in a sorry state.
"Data sampling indicates that 25 per cent of data is incorrect with known errors (things like birth years missing the fourth digit). Correcting this data so that it can ultimately be used by members to find their pensions will take a long time.
"In many instances pension schemes will need to reach out to members to validate the information that they hold. In other instances data structures, including the technological backbone, will require a complete overhaul.
"The data does not necessarily need to be detailed; at this stage providing a balance seems to be sufficient. However, seamlessly identifying the owner of that balance is tricky."