Occupational pension schemes may be expected to provide member data to pensions dashboard services or face regulatory punishments within the next four years, according to a feasibility study by the Department of Work and Pensions.
Long awaited by the pensions industry, the government’s dashboard feasibility study envisages the creation of a non-commercial dashboard hosted by the new single financial guidance body but funded by the pensions industry.
There is no question in my mind that there is a role for government to pressure traditional providers with very poor data
Guy Opperman MP
Commercial providers will be permitted to create their own dashboard services from data submitted to a single pension finder service, once appropriate regulation has been drawn up.
Dashboards have been seen as the solution to the UK's lost small pots problem, which according to the Association of British Insurers could already be worth £20bn. The government confirmed that state pension data will be included in dashboard data.
Governance of the dashboards will be overseen by an industry-led delivery group, although the DWP will lay out broader architectural principles.
Commercial providers will be brought in first
Large schemes such as master trusts could be expected to provide information to the pension finder service from 2019-20, according the the consultation document.
It is proposed that for the wider scheme universe, where there are pockets of poor data quality and where trustees have proved less willing to voluntarily submit data, a deadline of between three and four years could be given before compliance is obligatory.
Small self-administered schemes and executive pension plans could be exempt from compulsion, but would be allowed to join voluntarily. Micro schemes where savers have not been party to the decision to create a scheme are likely to fall outside this exemption.
No excuse for non-compliance
Speaking to Pensions Expert, pensions and financial inclusion minister GuyOpperman reiterated his strong stance on compelling schemes to submit data to the finder service.
“There is no question in my mind that there is a role for government to pressure traditional providers with very poor data,” he said.
“Now is the time [to improve record-keeping] if they haven’t done it already, and bear in mind that they should have done it already,” he continued, arguing that schemes are already required to provide comprehensive data to individuals on request, so migration to the finder service should not be too onerous.
The consultation states that the Pensions Regulator, which would enforce compliance for trust-based schemes, is already focused on improving the quality of scheme data.
The target of between three to four years had been drawn up by looking at other countries, such as Denmark, where dashboards have been created.
AE-style regulation mooted
The dashboards initiative also has cross-party support, with Jack Dromey, the shadow pensions minister, stating his support at the consultation launch event. Opperman told schemes: “This is coming, let’s crack on and get on with it.”
Opperman added that he may specify dates for compliance after the consultation has concluded.
Schemes not complying with data submission requirements could expect to see regulatory sanctions in a similar vein to those levied under auto-enrolment regulation, where employers can be fined for failing to enrol their workers.
“This department knows auto-enrolment very well and they know the compulsion and the penalties of auto-enrolment, so you would start with something that looks similar and work from there. That doesn’t mean to say that that is what it will look like,” said Opperman
The DWP has invited responses to deadlines, exemptions, and a range of other issues by January 28.
