The Department for Work and Pensions will be launching a consultation on the pensions dashboards’ draft regulations, which will include rules on the different stages pension schemes will need to start sharing their data to be included in the project.
In its third progress report published on Thursday, the Pensions Dashboards Programme released further details on its timeline, which will see pensions dashboards become live in 2023.
This includes a clear breakdown of what will take place over the next six months, including the expected timings of key milestones within later programme phases so data providers can prepare to connect to dashboards.
After the Pensions Schemes Act 2021 introduced the legislation needed to compel pension providers to make individuals’ data available to them via dashboards, the government will now have to set out secondary legislation.
We need to balance the desire for dashboards to be operational at the earliest opportunity with the many competing demands on the pensions industry and its capacity to provide complete, accurate and digital data
David Fairs, TPR
This will contain “fuller details of how the dashboards’ infrastructure will operate, and how organisations will need to make individuals’ data available to them via dashboards”, the report stated.
According to the detailed timeline, this consultation will be published in December, with draft regulations laid before parliament for debate in 2022.
In the meantime, the DWP is working with the Pensions Regulator, HM Treasury, the Financial Conduct Authority and the PDP on the development of policy to include within the regulations, which will focus on data requirements, staged onboarding, the compliance regime, and consumer protection, the report noted.
The FCA will be tasked with the development of an appropriate authorisations regime for organisations seeking to become dashboard providers, which is subject to an amendment of the Regulated Activities Order by the Treasury
The financial watchdog will also make rules governing the conduct of authorised dashboard providers to secure an appropriate degree of consumer protection, the report stated.
Before the FCA can finalise all these new rules, it will carry out a cost-benefit analysis of, and consult on, draft rules. After finalising the rules, the watchdog must allow organisations an appropriate period of time to apply for authorisation and/or comply with them.
TPR will be tasked with regulating the compliance of thousands of occupational pension schemes, which in turn will rely on administrators, administration software providers, and internet service providers to support them.
The PDP report noted that the regulator will be bringing to bear its experience of the auto-enrolment programme and “will take a proactive approach to help the industry meet its duties”.
TPR is working on designing an engagement programme with the industry as a matter of priority so it can launch in plenty of time for schemes to get ready.
David Fairs, executive director of regulatory policy, analysis and advice, noted in the report that “the landscape is complex, and while TPR can look back at its roll-out of automatic enrolment, in many ways that was a more straightforward operation”.
He added: “With the PDP, there is much more complexity around types of scheme, administrator and industry preparedness.
“We need to balance the desire for dashboards to be operational at the earliest opportunity, with the many competing demands on the pensions industry and its capacity to provide complete, accurate and digital data.
“These are the kinds of issues we can explore and discuss as a group.”
PDP to focus on digital architecture and identity service
Over the next six months, the PDP will continue with its digital architecture and identity service procurement.
The group anticipates awarding contracts and having a supplier in place by October for the central digital architecture, with the identity service to follow in early 2022.
It will also continue to develop and share its thinking on consumer protection and how things will get resolved if something goes wrong, including a liability model.
The PDP will carry out an information architecture project to establish the taxonomy and site navigation of pensions dashboards from a user perspective.
This will feed into the standards that providers will use to work on design standards for pensions dashboards to develop a user experience, it stated.
Chris Curry, principal of the PDP at the Money and Pensions Service, said: “The programme remains on track against the indicative timeline that we published in our last progress update report in October.
“With our procurement of the principal digital architecture under way, and the provider timeline published, we are in the position to add further detail to the programme timeline to enable the industry to prepare for connecting with the dashboards ecosystem.”
Curry also noted that the group has “also undertaken invaluable market engagement on the identity service, which will allow people to connect their data to support the final development of requirements prior to going to tender in the coming months”.
He added: “Over the next six months we expect to award contracts for the majority of the digital architecture, and we will commence a call for input on staging at the end of May, which will take us into the next phase of the programme.”
PDP recognises estimated retirement income issues
The report also revealed that the PDP recognises that there is an issue around the presentation of estimated retirement income on pensions dashboards.
As reported by Pensions Expert in October, since one of the design principles for dashboards set out by the DWP was that they will initially be used only for presentation purposes, the dashboards will not then be able to calculate projected pensions. The responsibility is therefore placed on providers and schemes to supply an ERI for each member.
These calculations will be especially difficult in defined benefit schemes, where for active members prospective annual retirement income will be calculated from their latest annual statement using current earnings.
Deferred individuals will see their annual pension at the date of leaving uplifted to include any inflation-proofing that has already been amassed.
The PDP’s call for input, which ran in the summer, received 61 responses from a range of consumer-facing and pensions industry organisations, which identified including ERI data on the dashboards as one of the more challenging aspects of its implementation.
The report revealed that “work is ongoing to determine the best way for dashboards to present information consistently”.
Dashboards milestone reached as PDP looks for architecture supplier
The Pensions Dashboards Programme has issued an invitation to tender for a supplier to provide digital architecture.
The PDP’s approach for initial dashboards is “to display the ERI as in current provider communications, in the best possible way, recognising the challenges that this will present to the user”, it added.
The group also announced that the Joint Forum on Actuarial Regulation has set up a pensions industry task force to look at this issue in more detail.
“PDP will be represented on this task force, alongside representatives from the regulators, the DWP and the pensions industry,” it concluded.
