Compulsory compliance is inevitable, says the Pensions Administration Standards Association's Margaret Snowdon, so schemes should embrace the opportunity to improve data quality, rather than face hefty fines and reputational damage.
Feasibility studies are currently underway, and we expect to hear more details about how the resource will take shape at the end of March next year.
One thing that is clear and very pleasing is that the consumer will be at the heart of the solution.
Key points
Compulsion is inevitable for the dashboard project, with a phased introduction most likely
There will be a lot to do for some schemes, but it is mainly work they should be doing anyway
The cost of failing to comply could be very high, from fines to reputational damage and extra workload
We have spent decades telling ourselves that pension monies and data belong to the trustees and providers of the schemes – now we must re-educate ourselves to understand that they belong to the member.
Members should also be aware that their benefits are there from day one, not just at the point they draw it.
Don't let the industry drag its heels
One issue that constantly arises in connection with the dashboard project is compulsion. If we want to show everyone the entirety of their pension provision, we need compulsion to pick up those schemes and providers who will drag their heels, understandably reluctant to spend money on something they do not ‘need’ to.
However, getting the timing right on compulsion will be important.
Most of these data are already needed for the proper running of a pension scheme – dashboard compliance means doing all those things schemes have been putting off for years
We might have proven that a dashboard can be delivered in a fairly short space of time on a small scale, but there are many moving parts to a national solution. Therefore a phased approach is most likely.
While we are probably further along than commentators maintain, there will be a significant volume of work for the thousands of schemes covering millions of members.
Knowing that compulsion is coming will incentivise many to get on with preparations for dashboard compliance, and this will cause a capacity crunch if it is left to the last minute.
Dashboard compliance will benefit schemes
Compulsion worked for auto-enrolment duties and the phased approach was crucial to getting all employers over the line. The same should apply to a dashboard – a phased roll-out of compulsion, plenty of notice and timely guidance on what schemes need to do.
I think we will be pleasantly surprised by the number of schemes and providers who will want to do the best they can for members without compulsion, and who will realise that there are benefits for them too.
Being dashboard-ready is mainly about the quality of member and benefit data. Schemes must be able to confirm they hold benefits for a particular member, and the size of those benefits at a known date.
A lot of work has been done to agree the data fields needed for the dashboard, although the extent and complexity of these data demands will change as the dashboard develops.
Pasa is set to publish a free guide for administrators and trustees, interpreting those technical data standards for the layman, and it will also be plain to see how far a scheme falls short.
Most of these data are already needed for the proper running of a pension scheme – dashboard compliance means doing all those things schemes have been putting off for years.
Now is the time to get to grips with it. There will be some schemes for which the data requirements will be a real challenge and not financially viable. These should be minimal, but they need to identified in the feasibility study so that sensible decisions can be made on them.
Facing the consequences
But what happens if schemes are not ready? If they cannot meet a compulsory participation date, they may well face fines, but they will also face an uphill struggle to get up to speed.
Members will be entitled to view their pension data on a dashboard and if these are not there, they will complain, or worse, fear that their pension savings are being withheld.
An increase in queries will see schemes having to spend precious time handling them, while also dealing with the consequences of their non-compliance.
The cost of the support needed to get data and systems ready in a crisis will be significantly more expensive – and the cost of reputational damage should not be ignored.
Finally, schemes that are not dashboard-ready could also fail on data protection standards and therefore fall foul of General Data Protection Regulation, for which the penalties can be eye-wateringly high.
Suddenly, being dashboard-ready looks pretty attractive.
Margaret Snowdon is chair of the Pensions Administration Standards Association
