The report stated: “The dashboard cannot be about calculating accurate benefits, it needs to be about providing something helpful, and a pension at leaving notionally (and approximately) revalued to a current date is helpful as an illustration, even if strictly speaking it does not exist.
“This change in mindset from ‘quotation’ to ‘illustration’ is essential for the dashboard to work for both members and schemes.”
The SPP also noted that in cases where the estimated retirement income was known to have substantial shortcomings, schemes or administrators must have the discretion to return “estimated retirement income not available” rather than supply a figure that is misleading.
Recognising the approximations that may be required, administrators should be permitted to aim for reasonable and helpful illustrations rather than accurate calculations, the industry body said, since in many cases the figures will only be used for dashboard purposes.
“If their own circumstances mean it makes sense to produce accurate calculations that they can re-use in day to day administration then they are able to and encouraged to do so. But they should not be required to do so,” the report added.
Maria Espadinha is editor of FTAdviser sister publication Pensions Expert