Pension Dashboard  

Pensions dashboards could report small pot income as 'zero'

Pensions dashboards could report small pot income as 'zero'
 

The pensions industry has warned that under proposals for the pensions dashboard, savers with small pots could be told they will receive zero income from these savings.

The Pensions and Lifetime Savings Association warned the government that more consideration needed to be given to pot sizes under £2,000 where statutory money purchase illustrations tend to round down income figures to zero.

It warned this would be a "counterproductive" experience for savers and recommended that they be given to a warning that explains the income is less than £100 rather than returning a zero.

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The Pensions Administration Standards Association said the basis for estimated retirement income “isn’t prescriptive enough” and warned of a plausible inconsistency in the way benefits are presented to users, which could “potentially even misrepresent benefits as no wider context is given”.

The Department for Work and Pensions intends for the dashboards’ legislative framework to come into force from April 2023.

The Pensions Dashboards Programme’s consultation, launched on July 19, sought input from the pensions industry on areas including operational, security and design standards.

Respondents to the pensions dashboards standards consultation also warned that user testing and experience will be required before a full assessment can be provided.

The PLSA and the Society of Pension Professionals were among respondents to the consultation, which closed on August 30.

The PLSA welcomed the clarity offered by the PDP’s standards but lamented that the consultation did not run for at least eight weeks over the summer, which the body said would have helped organisations to provide fuller feedback.

The SPP, meanwhile, said that “the solutions being proposed largely seem reasonable”, but added that until they are tested “using real data and structures, it is not possible to say for certain whether they are the best solution or not”.

The market is only just emerging

Efforts have been made to incorporate the views of the industry throughout the dashboards’ development process. 

In July, the DWP was told by respondents to its own consultation that the timeline for making the initiative accessible to the public is too short. There will be a 90-day period between the point at which the dashboards will be available to the public — known as the “dashboards available point” — and their announcement.

While welcoming the standards, the PLSA told the PDP: “We would have preferred them to have been developed after extensive user testing, with real connected pension schemes, to achieve balance between a good, comprehensible user experience and what is technically feasible and not onerous to data providers.

“Our main concern, and that of our members, is that many of the questions are best answered by an [integrated service provider] market that is only just emerging and [qualifying pensions dashboard services] that do not currently exist. 

“Pension schemes have only just started to engage with ISPs and not all have had discussions at the level of detail to know if these standards are set at the right level.”