Will 2023 be the year of the Pensions Dashboard?
With the largest pension schemes set to connect to the dashboards ecosystem from August, and dashboards finally gaining attention in the mainstream media, we predict that 2023 will be the year of the pensions dashboard.
What does this mean for trustees? In this blog, we set out the key dashboards decisions that should be on every trustee board’s agenda for the year.
By way of a brief reminder (it is January after all), a pensions dashboard is a digital interface that is designed to enable individuals to see all of their pensions information in one place.
1. Governance and oversight
Deciding upon the practicalities – such as who will manage the project, what third-party input is required and putting in place a timetable and budget – are the building blocks of any significant pensions project, and dashboards is no different.
You may wish to delegate dashboards work to a committee or working group or you may prefer to keep it at board level, depending on your staging date, frequency of board meetings and the spread of dashboards knowledge of individuals on the trustee board.
It is also crucial to ensure that there is a suitable record-keeping process in respect of the dashboards-related decisions and actions taken by the trustee board. Having this paper trail is particularly important in light of the Pensions Regulator’s stated approach to compliance and enforcement – which has a strong focus on trustees being able to demonstrate how they have sought to achieve compliance with the legislation and regulatory guidance.
2. Connecting to the dashboards ecosystem
If you have not already determined this, the next key step is deciding how you are going to connect to the dashboards ecosystem.
For those with third-party administrators, this is likely to be an exercise in understanding the administrator’s connection proposal and monitoring progress towards it. For those with in-house administration, a specific decision will need to be taken as to whether to engage a third party to provide the point of connection (known as an integrated services provider, or ISP) or to develop an in-house software solution.
Whichever of the options applies is likely to involve due diligence (in terms of sourcing an ISP or software provider), contract negotiations and – once the connection is set-up – a testing process. This should all be built into the timeline for compliance in advance of the scheme’s staging date.
3. Find requests and matching criteria
Once you have decided how you are going to connect, attention should turn to how matches will be made. This is the process by which individual savers inputting their information into the dashboards ecosystem (a ‘find request’) will be matched to their pensions information in relevant schemes.
The focus here should be on (i) ensuring your data is of sufficient quality to enable accurate matches, and (ii) setting the criteria for matches.
If your data is not yet dashboard ready, steps should be taken to get it to that stage by the scheme’s staging deadline. Trustees may wish to liaise with their administrator or a data specialist on the improvement options available.
On your matching criteria, it is important to strike a balance between setting criteria which are too restrictive and risk missing matches (for example, because the trustees have not made any allowances for minor changes such as typos or surname changes) and setting criteria which are too broad and risk making too many matches with individuals that do not turn out to be members, resulting in an unnecessary concentration of scheme resources towards dealing with non-members.
4. View requests and value data
The most complex of the initial decisions to be made each relate to the provision of ‘value data’ in response to a ‘view request’. This is the provision to a scheme member of prescribed information in relation to their scheme benefits.
The legislation on dashboards includes optionality with regards to both the content and presentation of this data. For example, trustees may need to take decisions on aspects such as:
- The use of live data or data drawn from recent benefit statements,
- The calculation methods to be used for complex DB benefit structures, and
- The presentation of multiple tranches of data (including hybrid benefits and benefits with different retirement ages attaching to them) as a combined value or separate values.
This is an area which is still developing, particularly when it comes to industry guidance, and trustees should ensure they factor enough time in to seek advice on and make the decisions necessary before their scheme’s staging deadline.
The most important decision all trustees should be taking is to embrace the year of the pensions dashboard and get started on their preparations. While it might seem like the lead-in time has been long, those staging dates are fast approaching.
As always, please do reach out to your usual Sackers contact if you would like more information on any of the above.