The UK’s Pension Dashboards Programme has set out standards for the data that will be supplied to the dashboard by pension providers and schemes.
Some of the requirements include information on pension accrued to date, expected retirement income, and details on previous employment.
But, the dashboard will only be accessible for those that are under the state pension age and have not yet withdrawn from their retirement pots.
This means that people over the pension age will not see their data on the balance in drawdown accounts shown, even if they have not retired yet, said advisory firm LCP.
Pension revolution
Quilter’s head of retirement policy Jon Greer said that, despite an initial disappointment back in October 2020 when the government said the pensions dashboard will be introduced in 2023, the publication of data standards “is a step forward to finally making this a reality”.
Greer said: “The various pieces of data required point to a dashboard that could revolutionise how people keep track of retirement savings while still maintaining a high level of security.
“In the first iteration of the dashboard, people should be able to identify all the various pots they have with different providers, view what’s in those pots and get estimates about what kind of income those pots might give them in retirement.
“People on average work for six different companies in their lifetime, meaning they could have six different pension pots. Having a centralised dashboard will help people keep track of all these pots and where appropriate consolidate them.
“This is even more critical for future generations who are likely to be auto-enrolled into pensions from the first day of work and are predicted to have even more jobs through their lifetimes.
“Consolidating pension pots can make a huge difference to how much you stand to have in retirement as you can reduce the overall charges you pay on your pension savings. Today’s announcement is an encouraging mark of progress which gives providers plenty of time to start to prepare their data.”
‘Surprising’ freedom
But Steve Webb, partner at LCP, is worried pension schemes will have too much freedom.
This is because data from defined contribution (DC) and defined benefit (DB) schemes will be presented in different ways.
DC estimates could be based on the statutory money purchase illustration (SMPI) or in line with projections from the Financial Conduct Authority (FCA).
But data on DB schemes could be based on pension built up to date or assuming continued service up to retirement, as schemes will be free to choose how they present their data, warned LCP.
Additionally, verification levels will also be up to the pension schemes, with some satisfied with national insurance number and date of birth, while others may push for higher levels of ID verification.
Webb added: “The new information about the data that will be required to be displayed on dashboards is welcome. But it is surprising to see that schemes will be free to make their own decisions on how close a data match is required before they will send data to a dashboard.
“Schemes will understandably be very nervous about accidentally revealing pension data to a third party in error. If they have a free hand, they will have a strong incentive to be very ‘risk-averse’, only supplying data if they are absolutely certain of a match.
“This could lead to large numbers of ‘false negatives’ where individuals do have rights in a given scheme, but this does not show up on the dashboard because of imperfections in the data. If this happens at scale, this could undermine one of the purposes of the dashboard, namely, to help re-unite people with lost pension pots.”
