Three Pensions Dashboards Consultations and a PLSA Webinar
13 May 2022
Craig Rimmer, Policy Lead: Master Trusts, is hoping the new Dashboards will be a box office smash.
Ok, this plot isn’t written by Richard Curtis, but it is our hope that Pensions Dashboards may turn out to be a blockbuster at the box office. Pensions Dashboards could play a huge role in re-united people with lost pensions, that they had forgotten about from earlier in their career. The dashboards could also play a useful service by curating pensions that people are aware of into a form that is easier for savers to understand. We have never though that the pensions dashboards would be a silver bullet for solving engagement, but they could be a catalyst for a lot more retirement planning by savers.
The key to a great film lies not just in the performance by the cast, but also the production values and testing with audiences. A key ask from the PLSA of the Pensions Dashboards programme is extensive user testing prior to public launch, to meet thresholds on coverage, data matching accuracy and user understanding. Savers need to be able to log on and not find too many gaps in their pensions information. It is also important that savers are matched with the right pensions and not given too many returns saying “you may have a pension with us”. Financial Literacy is the UK is low compared to over OECD countries and according to MaPS only 40% of people feel confident planning for retirement. Pensions Dashboards could have a part in uplifting financial literacy, especially in regards to retirement planning, but the data shown will need to be easily understandable.
We have already had three Pensions Dashboards consultations from DWP, on the regulations and the timeline for connecting, from FCA, on how they will regulate contract-based schemes and from the FRC, on the new ASTM1 rules for projecting DC Benefits in retirement.
In response to the DWP consultation, the PLSA queried the timelines and suggested that there was a need to delay the public launch of dashboards, otherwise known as the Dashboards Availability Point. Reputationally for dashboards and for pensions as a whole, it is best if 90% of people can see 90% of their pensions and that the information, they are viewing makes sense to them. We also put a spotlight on elements not mentioned in the consultation, including the data matching protocols, the liability model, and the cost of the ecosystem as a whole.
With the FCA consultation, we remade our points from the DWP consultation, including a pertinent request that regulators operate a grace period of 12 months after the Dashboards Availability Point. We also asked for greater alignment on how connection to Dashboards is regulated by the FCA and TPR, in respect of conditions for deferring connection and fines for breaches. The FCA also reiterated the need to balance GDPR duties with those of connecting to the Pensions Dashboards, so we expressed PLSA disappointment that the ICO has not been forthcoming with its own guidance for schemes.
The FRC consultation is redefining the ASTM1 rules on DC projections to have greater consistency between schemes and providers. Growth assumptions can vary for the same fund between schemes and providers, and many of our DC members have called for greater consistency and comparability. The new growth assumptions are based on 5% volatility intervals, that lead 1% being the lowest growth assumption and 7% being the highest. We have seen some of the research from the University of Bath, which is due to be released in October as a technical paper and have expressed our view that it should be released earlier in a pre-Peer Reviewed form to help inform consultation responses. Where we differ with the FRC, is on the decumulation assumptions. The decumulation assumptions are based upon a single life level annuity, which we believe is not comparable with DB schemes and also nudges people to leave out survivor benefits when purchasing their annuities. We also believe there is an argument to say that decumulation assumption could usefully be made on a sustainable drawdown rate instead.
We are still waiting further consultations, including on the Standards and from the FCA on authorisation of Qualifying Pensions Dashboards Services. These consultations are expected in the Summer, and the outcomes of the first three consultations may be published at around the same time. We expect them to give us firmer indications of how pensions information will be displayed on the dashboards and hopefully the disclaimer wording, so that savers know the values are only indicative.
On March 31st, the PLSA held its webinar on Pensions Dashboards: 12 Months to Connect. The event was well attended with James Walsh chairing and Richard Smith speaking for the PLSA. We also had Lorraine Harper (Mercer and PASA), Anna Rogers (Arc Pensions Law) and David Tonge (MoneyHub) speaking. The event featured the demonstration of a potential pensions dashboard from MoneyHub, one of the alpha dashboards services. The demonstration was very reassuring to viewers who could see pension information presented a clear, understandable and useful way. The webinar is still available in our library to view for PLSA members and the questions that it generated and have helped our new FAQ section on the PLSA’s Pensions Dashboards hub.
Also on the hub, you will find the new checklist launched by the PLSA during the webinar, which details the list of actions schemes need to complete in the 12 months leading up to connection. The 12 months to connection checklist is also being signposted to by MaPS and TPR. The checklist gives a list of ten things that you should do now as a pension scheme and pointers on how to go about doing them. The checklist also contains a handy timetable of the pensions dashboard connection staging timeline, detailing the staging windows based on scheme types and sizes from April 2023 to October 2025.
Although we have draft regulations and standards for Pensions Dashboards, we still expect to see change coming out of both the test and learn phase and through schemes connecting to the dashboards during their staging windows. Extensive user testing needs to take place throughout both phases to ensure that pensions dashboards end up being the blockbuster success that they have been hyped up to be. If users log on for the first time and cannot find their pension or the information is not clear enough to understand, then they may not log on again.
We need Pensions Dashboards to be one of those movies you watch over and over again, to be a true success. Repeat visits to the pensions dashboards will allow savers to make informed decisions and plan for their retirement. Combined with other pensions innovation such as the Retirement Living Standards and the Pensions Awareness Season, Pensions Dashboards may even be the start of people comparing notes about their pensions in conversations in the pub or at a family dinner. For most of us, people just knowing where all their pensions are and a rough idea of how much they are on track for will feel like a big leap for pensions engagement.
Visit our Pensions Dashboards Hub