Out-Law News 2 min. read
02 Nov 2022, 10:23 am
Final regulations to enable people in the UK to access information on their pensions through online pension dashboards have been laid before parliament.
The pensions dashboard regulations set out how pension schemes will connect to the online dashboard ecosystem and what providers must do to become a qualified pensions dashboard service.
It comes in the year that marks 10 years since the introduction of automatic enrolment. According to UK Department for Work and Pensions (DWP), with more people managing their finances online, the need for digital pensions dashboards architecture is stronger than ever.
The Pensions Dashboards, as DWP Minister for Pensions and Growth Alex Burghart said, aim to transform how people access their pensions facts and figures – allowing people to see what they have in their various pensions, including state pension, at any time and anywhere in a single, secure place online.
Pinsent Masons pensions expert Tom Barton welcomed the positive development, but warned consumers about the increased risk of scams and predicted possible increased industry consolidation as a result of the new regulations.
“The pensions dashboard will help put people back in touch with old pension schemes, in some cases reuniting them with thousands of pounds for their retirement,” he said.
“Visibility and ease of access should help to improve consumer outcomes, but is not without risk. Retirement savings remain vulnerable to scams and unwise decisions which consumers live to regret. Dashboards may well confuse the average consumer with rows and columns of unfathomable numbers and even create new opportunities for scammers. Help in the form of advice and guidance is vital to ensure consumers can make sense of it all, and make good decisions,” said Barton.
The regulations consist of three main parts: requirements for qualifying pensions dashboard services; requirements for cooperation and connection to the dashboard ecosystem by occupational pension schemes; and compliance and enforcement provisions.
Legal experts expect the digital transformation and data requirements of the dashboards project will place higher digital and technology requirements on pension schemes, and so prompt further consolidation in the pensions market.
“At consumer level, it is expected that pensions dashboards will help consolidate pensions into one place, or fewer places,” said Barton. “At industry level, this may well lead to consolidation of the pensions market, leading to a smaller number of very large schemes and pension providers.”
The dashboard availability point (DAP) – the date on which the dashboard will be made available to the public – will now be announced six months in advance, giving time for industry to make final preparations for the public launch of the service, the DWP announced. However, building and initial testing of the digital dashboards architecture is already well underway. The DWP has urged pension schemes to ensure they are “data ready” for the launch of pensions dashboards.
The regulations provide a timeline for pension schemes to connect to the dashboard technology in a staged rollout, starting with large schemes of more than 1,000 relevant members between August 2023 and September 2024, before smaller schemes follow suit. Master trusts with 20,000 or more relevant members will also be included in the first stage of the rollout.
Medium schemes will be required to connect to dashboards between October 2024 and October 2025. The deadline for collective defined contribution (CDC) schemes is April 2024 and public service pension schemes deadline is set for September 2024. Small and micro schemes are then expected to connect from 2026. Once schemes have connected to a dashboard, they will be required to stay connected – even if they have chosen to connect before their compulsory staged connection date.
The regulations will only apply in England, Wales and Scotland. Separate pensions dashboards legislation will be drawn up for Northern Ireland.
01 Feb 2022
01 Jul 2022