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Out-Law News | 05 Apr 2019 | 4:37 pm | 2 min. read
The government is anticipating staged compulsion over a three to four year period, with the largest defined contribution (DC) schemes required to provide data first. It intends to legislate "as soon as possible", although schemes will be encouraged to participate on a voluntary basis ahead of their staging date.
A response by the government to last year's consultation confirms that the first non-commercial dashboard will be hosted by the new Single Financial Guidance Body (SFGB), and developed by an industry delivery group. Commercial providers will also be permitted to develop their own dashboards alongside the non-commercial dashboard. The government has also committed to making state pension data available to the dashboards "at the earliest opportunity".
Pensions expert Tom Barton of Pinsent Masons, the law firm behind Out-Law.com, described the announcement as "a significant step in the evolution of the UK pensions industry and a big leap for members of pension schemes".
"Those members, as highlighted by the language used by the DWP, become consumers - and as such will be given the opportunity to view, consolidate and interact generally with their savings through technology," he said.
"This all makes sense in the context of auto-enrolment, the gradual phasing out of active defined benefit (DB) membership and the pensions freedoms. It also recognises that, as consumers, pension members can expect the pensions system to keep pace with the digital age generally," he said.
Barton said that the "phased compulsion" approach backed by the government in its consultation response was "probably the best way of making sure the dashboard takes off in the right way". Confirmation that the state pension would also feature would mean that consumers, and their advisers, would "soon have a complete picture to work with", he said.
"The three-to-four-year roll-out on a phased basis certainly worked well for auto-enrolment, despite some scepticism that it would ever take off," he said. "There's no reason to think, therefore, that the dashboard project will be anything other than a success."
"The lesson learned from auto-enrolment is that over-prescription in pensions legislation can interfere with existing administration processes and technology solutions. Much of the prescription with auto-enrolment arose because of concerns about avoidance and non-compliance. The same sort of concerns do not necessarily map across to the dashboard project, which hopefully means that the law will not present obstacles to an orderly roll-out," he said.
The government first announced the pension dashboard project in 2016, with the idea of helping people to make more informed decisions about their retirement savings by allowing them to see their various retirement income streams in one place. It is anticipated that dashboards will also help people to track down 'lost' pension pots from previous employment.
Amber Rudd, the work and pensions secretary, said that dashboards "have the potential to transform the way we all think about and plan for retirement".
The SFGB has been asked to set up an industry dashboard delivery group to deliver a timetable for the project, set standards and design a robust governance and data security framework. Industry respondents to the government's consultation said that initial models will be developed and tested later this year.
The government intends that all consumer-facing dashboards, whether commercial or non-commercial, will be supported by the same digital architecture and governed by the same governance system. The dashboards will also be required to display the same basic information from the same number of schemes.
Schemes should "start getting ready now" by preparing the necessary data ahead of the anticipated legislation, the government said.
Fintech meet up