Warning over multi-million pound pension dashboard bill

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Warning over multi-million pound pension dashboard bill

Schemes and providers preparing data for the long-awaited pension dashboard face a potential multi-million pound compliance bill, Sir Steve Webb has warned. 

A consultation launched by the Pensions Dashboard Programme on data standards for the dashboard is set to close next week, having initially been delayed by the coronavirus pandemic.

Mandatory data to be provided by providers and schemes will include information around estimated retirement income and accrued entitlements.

But Sir Steve, a former pensions minister and partner at LCP, warned this was a "huge data task" which could cost schemes and providers millions. 

He said: "The problem is that there is currently huge variation among both DB schemes and DC schemes in the data which they supply to members in statements, and many deferred DB members do not get regular statements at all."

For example, Sir Steve said, a DB scheme might give a pension figure based on service to date or assuming continued active service up to retirement. 

But on the DC side trust-based DC schemes provided projections based on rules set by the DWP whilst contract-based DC pensions were projected on rules set by the FCA.

He added: "The fundamental problem is that information currently supplied on statements is provided on a range of different assumptions and presented in different ways." 

The pension dashboard project was first announced in the 2016 Budget with the government pledging to ensure the industry designed, funded and launched a dashboard by 2019.

But following delays to the legislation the industry has faced an extended wait for the dashboards to become consumer-facing.

A pensions dashboard will allow savers to see all their lifetime pension savings in one place, with the data being retrieved directly from providers and updated in real time. 

It is not the first time the industry has been warned they face a potential multi-million pound bill to accommodate the dashboards. 

Last year Margaret Snowdon, president of the Pensions Administration Standards Association, said the industry was expected to spend £25m over a four-year period in an attempt to ready its data for the project. 

In its first progress report on pension dashboards, published in April, the PDP said it would not be possible to develop data standards that cover every complexity that exists in the pensions industry right from the start. 

To minimise the initial cost on pension providers and schemes, the government has already limited the data they will need to supply in the first phase with more complex information being shown at a later date.

It claimed that in the first phase, schemes would "at maximum" be asked for "the information already available on annual statements, or on request". 

Sir Steve warned schemes may have assumed this meant they would be "doing little more than a ‘cut and paste’ of existing data from statements onto the dashboard".