28 September 2016
The more eagle eyed might have noticed the Chancellor’s announcement in this year’s budget statement that “The government will ensure the industry designs, funds and launches a pensions dashboard by 2019”. This one liner was the full extent of the detail provided.
So you might ask:
A pensions dashboard is a way for individuals to see what pensions they have, and how much these pensions are worth. While this is new to the UK, there are similar systems already available in Sweden, Netherlands and Australia.
At a simple level the dashboard would actually be a register, providing a list of pension schemes that the individual has an interest in. However, the proposed dashboard takes this a step further by providing valuations of the individual’s interest and projected benefits in each of these pension schemes. Ideally, the dashboard would include details of:
Occupational Defined Benefit (DB) Schemes
Occupational Defined Contribution (DC) Schemes (including MPPs, GPPs and AVCs)
Personal Pension Schemes
It will be an online service, providing individuals with details of their pension schemes in a “real-time” response environment – similar in look and feel to online insurance quotation websites. This will be the first time that individuals will have information about all their pensions in one place.
The dashboard will operate in a secure, password protected environment. It will only provide information where exact matches are found but with tools for additional checks where partial matches are found. This is likely to mean individuals providing additional information about themselves to the relevant pension provider to confirm that they are the right person.
Investigations are progressing on how to establish a gateway service using a unique digital ID similar to that currently being used by individuals accessing Government agency services such as online tax returns. This would enable a single sign on process to the dashboard, giving an individual seamless access to the underlying pensions information held on the individual providers websites without the need to separately log on to each of the individual websites.
There are many “lost pensions” – either pension scheme members who have lost track of their pensions, or pension schemes who have lost track of their pension scheme members. This happens for a variety of reasons:
Member changes address
Member changes name
Employer gets taken over by another employer
Employer changes name
Employer changes address
Pension scheme changes name
Pension scheme changes address
Pension scheme gets transferred to another scheme
There have been ways for employers and trustees to trace any lost members. While many schemes provide regular information to their scheme members, they do lose track of members over time. These historically have involved member searches carried out by specialist tracing companies when the member was close to retirement age. Recent regulatory changes have meant that more regular tracing checks now take place, but there are still many lost pensions where we cannot find the individuals.
Individuals have had access to the Government’s Pensions Registry service for many years which will provide the latest address of the pension schemes the member has listed so that the member can find out where they need to go to re-establish contact with the scheme. So far it has not been as widely used as the Government would have liked, partly because those individuals with lost pensions that the service is aimed to help have not had access to information about the service. Until earlier this year the service has been paper / telephone based. It has recently been upgraded to provide an online service which should improve its visibility and usage. This can be found at: www.gov.uk/find-pension-contact-details
The Pensions Advisory Service (TPAS) have also produced an online “trace a lost pension” tool to assist individuals in things to consider, and where they might look, when tracing a lost pension. This can be found at: http://www.pensionsadvisoryservice.org.uk/my-pension/online-tools
All pension schemes will be required to provide information about its pension scheme members on request from the dashboard. Prudential, as your pension scheme provider, would provide the relevant information in respect of your scheme.
Individuals will be better informed about what pensions they have built up, reuniting them with any previously lost pensions. It will inform them about how much these pensions are worth, both for the individual pensions and as a total value. It is hoped that this information will encourage them to be more engaged with how much, or little, they may have to live on in retirement, and will encourage them to put more into their pensions.
This is being considered by the Government and various working groups. The initial discussions have considered options involving a single dashboard, multiple white-labelled dashboards or multiple independent dashboards. Pension providers are considering whether they wish to provide a dashboard as they can see a potential benefit in being a dashboard provider. More details are required before decisions from Government or potential providers can be made on this question.
There are a number of issues to be resolved before a fully functioning dashboard, covering all the different pensions an individual may have, will be available. This includes:
- Inclusion of State Pension details
- The secure online access – “verify”
- Who will be providing a dashboard?
- How will data be updated?
- How will legacy systems be able to provide data – especially Defined Benefit schemes?
The Chancellor has said that this needs to happen by 2019, but there have been no further details provided by the Treasury yet. There are a number of working groups looking at developing how the dashboard would work, with major players in the pensions market, including Prudential, involved. We will look to provide an update in a future edition of Oracle as the position becomes clearer.