What does preparing for the pensions dashboard really mean?

At last the pace is accelerating now that both the Department for Work and Pensions and Financial Conduct Authority have published their draft regulations and rules for pensions dashboards for consultation.

The DWP consultation runs to 137 pages setting out what trustees and managers of occupational pension schemes will have to do: first to connect to the Money and Pension Scheme pensions dashboard's digital architecture and then to provide data on a ‘find and view’ basis.

These draft regulations also set out compliance, enforcement provisions for The Pensions Regulator and last, but not least, a very ambitious timeline to get all UK pension schemes on board starting from April 2023. 

The FCA rules set out complementary proposed rules for pension providers of contract-based schemes, building on the DWP requirements.   

Those pension providers who run contract-based pensions as well as master trusts, which are regulated by TPR, will need to be on top of both the DWP regulations and FCA rules. 

In addition, the Financial Reporting Council has published its consultation on assumptions underpinning statutory money purchase illustrations (SMPI). FRC is proposing to mandate greater consistency of estimated retirement illustrations used in SMPIs in annual benefit statements across pension providers and on pension dashboards from October 1 2023.

More pension dashboard details will follow, including Maps technical standards and DWP guidance.

Putting consumers at the heart of dashboards 

Pensions dashboards will enable consumers, at a time of their choosing, to see all their pensions online securely. This will include all workplace pensions, public and private sector occupational and contract-based pensions, and non-workplace pensions. Crucially it will also include the state pension from day one, which for many is the bedrock of their retirement income.  

Pensions dashboards will put the consumer at the heart of the process, with consumer protection a key principle. The consumer will always be in control over who has access to their data and will be able to give delegated access to regulated financial advisers, with specific permissions, and Maps guidance specialists. 

The idea is that pensions dashboards will help people to reconnect with their pensions, including with any lost pots, supporting better planning for retirement and growing financial wellbeing. Over time, pensions dashboards have the potential to be a game-changer in terms of improving member engagement, driving greater pension pot consolidation, and hopefully leading to improved member outcomes at retirement.   

Phase one

The first phase of pensions dashboards will be on a find and view basis. Consumers will be able to see the accrued and projected values of their pensions in accumulation. Transactions will not be permitted initially. Pensions dashboards are expected to evolve over time, innovating and expanding to include pensions in retirement and other savings and assets, and allowing transactions.  

Maps will develop its own non-commercial dashboard, to be followed by potentially multiple commercial dashboards, hosted by different organisations. Commercial dashboards will have to be FCA authorised and regulated as well as complying with DWP regulations and Maps standards.  

Staging dates 

The DWP draft regulations set out the staging dates for occupational pension schemes, the deadline by which schemes must connect to the digital architecture. This will be by membership size (active and deferred members) excluding pensioners, based on scheme return data for the scheme year end between April 1 2020 and March 31 2021. 

Large master trusts with more than 20,000 members, along with the state pension, will start connecting to the dashboard ecosystem from April 2023 in the first cohort of the first wave. The FCA has confirmed that the largest pension providers of personal and stakeholder pensions will be in the first wave with an implementation deadline of June 30 2023. 

This will be followed by the first wave of the largest single employer schemes (1,000 plus members) between April 2024 and September 2024, and the second wave of medium schemes (100 to 999 members) between October 2024 and October 2025. 

Smaller pension providers with fewer than 1,000 pots in accumulation and which will need to rely on a third-party integrated service solution provider can apply for a later implementation deadline of October 31 2024, but only if they notify the FCA of their intention by April 30 2023. 

This phased approach, with largest first, means that 99 per cent coverage of memberships could be achieved by mid-2025.

The third wave of small and micro schemes has not been set out in the regulations but is expected to stage from 2026. 

What do pensions dashboards mean for providers? 

The final DWP regulations and FCA rules are not expected to be published until the summer, but the draft regulations and rules should contain enough information for occupational pension schemes and pension providers to start getting ready for their dashboard day. They can start mapping out what they need to do, including a number of big-ticket items: 

Get your data in order

• Understand the data requirements, carry out a data audit, fill the gaps.

Know your staging date

• The FCA anticipates that providers will be able to request a preferred connection date that falls within the three months preceding their implementation deadline.

Get ready to connect

• Be able to deal with ‘find’ requests, undertake matching, identify the individual and send data back to dashboards within the prescribed response times. 

Comply with the pre-connection steps to be set out in Maps standards. These are expected to include: 

• Registration with the governance registrar. 
• Building (or securing) a find and view application programme interface – the pipes to connect with the digital architecture.
• Developing a ‘user managed access’ which will check the individual’s permissions, and allow delegated access to a regulated adviser or Maps guidance officer.   
• Completing software and security conformance testing.
• Obtaining a software certificate from the governance register, and
• Completing a test cycle.

Decide whether you want to be a dashboard provider

• Obtain FCA authorisation.
• Comply with the DWP and FCA regulations and Maps standards and reporting requirements.

Going live in 2024 – a public campaign needed 

Pensions dashboards are not expected to become ‘live’ to consumers until around mid-2024. By then the largest pension schemes and the state pension will have staged and invested a great deal of time, cost and effort into making dashboards a reality. 

Once up and running, we want consumers to actively use pensions dashboards and view them positively to help with their retirement planning, ideally with the additional support of advice or guidance.

To make people sit up and take notice it is vital that the government and industry work together and launch a big bang campaign promoting pensions dashboards. A co-ordinated approach setting out what pensions dashboards mean for people could make a real difference to the numbers signing up and actively using them to find and view their pensions, and ultimately improve better planning for later life. 

Kate Smith is head of pensions at Aegon