Pensions dashboard roll-out in 2023 ‘under threat’

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Pensions dashboard roll-out in 2023 ‘under threat’

The target date of 2023 for the roll-out of the pensions dashboards is under threat from a lack of clarity, the Society of Pension Professionals has warned.

The lack of clarity and complexity of the dashboard roll-out is such that it might be impossible to provide some savers with a "single number" for their benefits.

James Riley, president, and Paul McGlone, immediate past president, wrote to the Pensions Dashboards Programme detailing a list of seven “priority areas” where SPP members “feel clarity is needed before substantial progress can be made on their contribution to the pensions dashboards”.

Riley and McGlone said “that unless clarity is provided urgently, then that [implementation] timescale will be under threat”.

“I think it will be a brave organisation to say today: I promise to onboard in 2022, without actually knowing what they need to build and how to answer the various questions that we've posed,” McGlone said.

The seven points cover a range of issues, the lack of clarity on what IT infrastructure schemes need to develop, on legal questions such as who is liable for any failure in dashboard infrastructure, and on how to resolve the issue of “partial matches”, where schemes possess records “similar to, but not an exact match to the member”.

Asked what a more realistic timescale might be for full implementation, McGlone said there is a chance the dashboards may never see “100 per cent compliance”.

He cited the example of a scheme targeting a buyout with an insurance company in 2024, which might reasonably conclude that there was little point doing all the work to become dashboard-compliant by 2023 if it will only be relevant for a year.

There may also be some people “whose benefits are just so complicated that you cannot condense them into a single number”, McGlone added, and others whose records are “such a mess” that onboarding them proves difficult, if not impossible.

He said that a staggered introduction would be reasonable, with “a good chunk” done by 2023 and then “a couple of years filling in the gaps”.

The letter also called for an industry-wide solution on the problem of matching in general, pointing out that if each scheme or administrator used unique set of rules it would be “highly inefficient” and could lead to schemes reverting to a “least-risk” approach, where they “only release data if absolutely certain, leading to too many missed matches”.

The letter further stated that much more must be done to call schemes to action, as “most trust-based pension schemes have not discussed dashboards at all with their board or advisers, and have no plans to do so any time soon”.

Finally, the letter warned that, even within existing timescales, which would see voluntary onboarding begin in 2022 and dashboards going live in 2023, “schemes and administrators have no certainty over what will be required, including how any staging will work and whether their deliverables will be required all at once or gradually over time”.

“Administrators already have concerns that even if all of the above items were available immediately, then their other commitments are such that they would not be able to deliver for a 2023 implementation date,” it stated.

Industry shares ‘sense of urgency’

Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association, concurred with the points raised in the SPP’s letter.

“As the PLSA has previously stated, we estimate that large DC pension schemes will need around two years from the date when all the requirements are settled to the point when they will be ready to join the dashboards infrastructure. DB schemes are likely to need longer,” he said.

Association of Consulting Actuaries chair Patrick Bloomfield agreed that the industry “urgently needs clarity on the key components pension schemes need to prepare, to have a fighting chance of covering the ground needed to launch dashboards when planned”. 

“What we don’t want to see is government blaming industry if dashboards struggle to ‘go live’ on time, when the reality is that industry didn’t get the information it needed to be able to,” he said.

Aegon’s head of pensions, Kate Smith, told FTAdviser's sister publication Pensions Expert that the industry needs “full clarity [...] ideally this year” if it is to meet the deadlines set for implementation.

Meanwhile, Jason Whyte, associate partner at EY, said that all the questions raised by the SPP derive from the fact that “most small pension schemes are not set up to share member data electronically with and via third parties”.

He said: “The SPP letter makes the point that the key challenge lies in its long tail of smaller schemes, many of which are run on older technology with little or no digital capability.”

While the larger commercial schemes have begun to engage already, “the smaller players lack the capacity to run ahead of clear rules and regulations”.

Benjamin Mercer is a reporter at FTAdviser's sister publication Pensions Expert