Pensions Dashboards must meet threshold tests for coverage, accurate data matches and user understanding to ensure savers are not met with incomplete or confusing information when accessing pensions dashboards for the first time.
The PLSA has long been supporter of pensions dashboards, including as an active member of the Pensions Dashboards Programme’s steering group, and believes, alongside Retirement Living Standards, they could play a fuller role in supporting effective decision-making by savers.
The staging timeline sets out when schemes should connect to the pensions dashboards architecture, but the key to the success of the project will be ensuring they are useful and understandable by savers at public launch.
In its submission to the DWP Consultation on Draft Pensions Dashboards Regulations, the PLSA has set out three threshold tests that would need to be met before the public launch of Dashboards.
Meeting these thresholds is going to be a huge task for the industry, but the pensions world wants to make dashboards work for savers, safely and securely. Schemes and their providers will be working extremely hard over the next two to three years resolving the outstanding issues.
The threshold tests relate to:
- Coverage – sufficient schemes connected so that the majority of savers have the potential to match with their pensions.
- Accurate data matches – sufficient matching of savers with the pensions covered by the dashboard so that most savers can see most of their pensions; and
- User understanding – there should be a level of confidence gained from user testing that savers understand the information presented, are not confused by it, and are not taking inappropriate next steps.
The PLSA’s response recommends these thresholds should be agreed jointly by Government, regulators and the pensions industry and then prescribed in the regulations.
Once the thresholds are met, dashboards can be successfully launched, meeting the core saver needs of connecting with their pensions and giving an indication of progress towards the retirement income they need and want. These are the continuing successes of the five major dashboards, which have now been operating in continental Europe for well over a decade.
The PLSA estimates the testing period to meet these thresholds could take 12-18 months, after the first cohort of schemes have connected to pensions dashboards in the spring of 2023, but it may take longer.
Other areas of concern outlined in the consultation include, but are not limited to:
- Data matching – Currently the regulations provide insufficient support to schemes on how to balance their existing GPDR and new dashboards data matching duties;
- Liability waiver wording – All dashboards must clearly indicate that the figures displayed are indicative and as such schemes are absolved of all liability for actions taken (or not taken) by savers in respect of them;
- Timelines for staging – Many schemes will be able to achieve their relevant staging windows as set out but, due to the reliance on third party administrators and ISPs, it is not possible to say this with 100% certainty;
- Discretion on the part of the regulators – Schemes will be making their best endeavours to comply but there will be myriad of teething issues. For 12 months following the Dashboards Availability Point (DAP), regulators should deploy a highly pragmatic and supportive approach to the exercise of their compliance and enforcement powers on schemes;
- Indicative estimates – Users need to understand that the pension income figures they see on dashboards can only ever be indicative, and appropriate disclaimer wording should be developed; and
- Challenges specific to different types of pension scheme – There remain some outstanding issues specific to Master Trusts, DC, DB and Public Service Pensions Schemes.
In December the PLSA published a pensions industry guide – Dashboards A-Z – to inform the decisions required to make initial pensions dashboards a success.
Nigel Peaple, Director of Policy and Advocacy, PLSA said: “The PLSA commends the Pensions Dashboards Programme, the Government, regulators and industry on the hard work they have completed on this highly complex project to date. The draft regulations represent a big step forward for making Pensions Dashboards a reality.
“However, with a number of important outstanding issues still to be resolved, the existing timeline for launching public Dashboards still looks highly ambitious.
“Dashboards will only be a success with the public if they meet three tests on coverage, accurate data matches, and user understanding. In particular, extensive user testing will be needed to reach agreed quality thresholds so that savers are not immediately disappointed by a lack of information, or worse, suffer detriment as a result of making the wrong decisions due to dashboards not being designed correctly.
“We hope we will be able to work closely with Government, regulators and the PDP on the many next steps in the development of dashboards so we can be sure they will work for savers from launch.”
Click here to read the PLSA’s consultation response.