Will poor data standards hinder dashboard success?

Speaking to Pensions Expert immediately after the event, the minister for pensions and financial inclusion said enforcement of data submission could borrow from the auto-enrolment regime, which has seen the Pensions Regulator name, shame and fine employers.

In the short term we’re getting a single dashboard with a single pension finder service and that is very very different from the open banking standards

Romi Savova, PensionBee

“That doesn’t mean to say that that is what it will look like,” said Opperman, before adding: “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.”

Clock is ticking

“There is no question in my mind that there is a role for government to pressure traditional providers with very poor data,” he continued. “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.”

For the majority of pension schemes in the UK, the clock is ticking on data standards. The government has mooted a three to four-year deadline for most occupational schemes in its consultation (commercial providers will have less time), and stories of poor records and shoddy administration still abound in the industry.

In May this year, the regulator revealed that the number of schemes with inadequate processes for checking the quality of their data and administration had increased, and it committed to taking action against failing trusts.

The coming dashboard deadline may give a further incentive to change for schemes and administrators who have been fixing problems on the go.

“This whole idea of ‘I’ll clean the data when the member retires’ is just not going to work for much longer, and the dashboard calls time on that,” said Girish Menezes, head of administration at Premier Pensions and a member of the Pensions Administration Standards Association’s industry policy committee.

Do not be daunted by data overhaul

Submitting data to the pension finder service will be incredibly laborious and costly if administrators still use outdated legacy systems, he said, although this should spur them to improve the quality of their service.

“There are administrators out there with vast quantities of data in files and on microfiches,” he said.

Schemes themselves may also need to overhaul their data processes, but this task need not be a daunting one, according to Menezes.

While details are still being worked out, information required by the dashboard is likely to fall into two broad categories. Common data, such as a national insurance number, can be used to identify members and link them to their lost pots.

Menezes said schemes have been given “more than enough time” by regulators to improve their records in this area, although he conceded that the bar may be raised in some areas, for example where trustees opt not to spend money updating constantly changing addresses until a member nears retirement.

The second type of information required will be scheme-specific, covering factors like the value of a pot, and potentially information such as charges, now required in defined contribution benefit statements.

“What all schemes should be prepared to do is offer as a minimum the information they would be expected to put in a benefit statement,” said Menezes.

Schemes should plan ahead

Of course, the mere fact that this provision has not been made will require planning, and cost, for schemes.

Defined benefit schemes in particular will have to consider how to date their estimates of accrued benefits, according to David Brooks, technical director at Broadstone, although he added that IORP II regulations mean an annual DB statement is already required.

“What trustees and administrators will want is a way of setting the 'T' date for their own calculation and then [to know] the legislation specifying the deadline for calculation and passing over of the results,” he said. “If schemes have this capability, then doing the calculations once a year to coincide with their own scheme-specific date will be a lesser burden and increase compliance.”

Brooks said he hoped for a reasonable implementation period before the regulator begins to flex its muscles, and urged schemes to begin planning early.

“The major issue will be the problem of data integrity/accuracy and the ability of schemes to do this in an effective and pragmatic way,” he said.

“It is not inconceivable that some schemes will struggle to comply with this new annual obligation to calculate a pension value, although this may be the final encouragement they need to increase the use of technology.”

Savers want complete picture

If smaller schemes or those with less resource may struggle to comply with the dashboard, this is a fair price to pay for a dashboard that fulfils its purpose, according to experts.

Without savers having a complete picture of their retirement savings, including state and private provision, they will be unable to make informed choices about their retirement.

Tom Selby, senior analyst at platform provider AJ Bell, proposed the situation where a saver has half of their money in a scheme not currently compelled to supply information.

The first dashboard, run by the single financial guidance body, will at first include data from master trusts and insurers. Savers will have to wait to see other pensions they may not know they have, although after the compulsion deadline the only schemes excluded will be those that they have had a hand in setting up, such as small self-administered schemes and executive pension plans.

“It only takes one to not be in and all the information that people are being shown won’t be clear,” said Selby.

A 'bit of a compromise'

The solution to this problem appears to be communication. Yvonne Braun, director of policy long-term savings and protection at the Association of British Insurers, said the body’s research showed “people are quite prepared to put up with information not being complete as long as that is very clear and as long as there is a timeline on when that information is going to be there”.

While the dashboard project has built on the concept of open banking, beleaguered administrators and schemes may be happy to know that some of its more advanced features, such as giving members the option to consolidate their pots, look to be further off in the future.

But the initial design for a single pension finder service and basic functionality has irked some in the industry, who would like to see greater competition.

“It feels like it’s a bit of a compromise in order to get things going,” said Romi Savova, founder and CEO of finder and consolidation service PensionBee.

“In the short term we’re getting a single dashboard with a single pension finder service and that is very very different from the open banking standards.”