Dashboard data work could land pension schemes with multi-million pound bill

Pension schemes and providers could face “huge additional work” in preparing data for the pensions dashboards, potentially costing millions of pounds, new analysis by Lane Clark and Peacock (LCP) has found.

LCP partner and former Pensions Minister, Steve Webb, stated that despite government assurances to the contrary, pension schemes and providers could face a “multi-million pound dashboard compliance bill” in order to meet potential data standards.

He explained that the government had previously claimed that schemes would “at maximum” be asked for the information already available on annual statements, or on request, in its response to the consultation on the pensions dashboards.

Webb noted that considering this, many schemes may have assumed that this would allow a “cut and paste” of existing data.

However, he highlighted that the Pensions Dashboards Programme's (PDP) ongoing consultation on data standards for the dashboard states that the public will expect a dashboard to show the “expected retirement income” from each pension held.

Webb explained that there is “huge variation” among both defined benefit (DB) and defined contribution schemes in terms of the data supplied to members in statements, with many deferred DB members not receiving regular statements at all.

As such, he argued that the government must decide whether scheme data is simply ‘cut-and-paste’ onto the dashboard, but is then inconsistent, or whether schemes are required to supply data to the dashboard on new and standardised definitions.

The latter, according to Webb, would be a “huge data task for schemes”, particularly in the DB space, with even the best administered schemes still having to deal with ‘non-standard’ cases, such as people with pension sharing on divorce, which may require manual calculations to present their entitlement on a new definition.

Furthermore, he emphasised that for schemes where data is less organised to begin with, there could be “huge costs” associated with presenting values on a new basis for all active and deferred members.

Webb added: “The pensions dashboards is a very important initiative, but the government needs to come clean about what is involved.

“If it really intends the dashboard simply to be a cut-and-paste from existing statements, then the information on display will be utterly inconsistent between different pensions.

“Assuming that this is not what is planned, schemes will instead have to do a huge amount of data manipulation to get data in a standardised format for the dashboard.

“The cost of this will be huge, especially where data is not currently well organised.

“The government needs to be much clearer about which approach is planned so that schemes can prepare properly."

In response, a Department for Work and Pensions (DWP) spokesperson commented: “The government has asked the PDP to develop proposals on the data standards needed to best support consumers using pensions dashboards.

“Their call for input enables industry and consumer representative to set out their views which will be considered as the proposals on data standards for dashboards are developed.”

The government previously stated that the pensions dashboards could cost businesses up to £1.48bn in its Pension Schemes Bill Impact Assessment report, which considered costs under three scenarios, including a range of data requirements.

However, the report argued at the time that there may be some benefit or cost saving to the industry if the dashboard leads to less contact from members, and that potential changes in member behaviour could see increased revenue for providers.

LCP's analysis also comes amid the government's ongoing call for input on the scope and data requirements for dashboards, which has seen industry experts calling for the "vast majority" of schemes to be included on the initial dashboard.

Pensions Minster, Guy Opperman, also recently wrote to pension schemes to gather evidence on how ready they are to submit good quality data to the dashboard, having previously warned that schemes should not "just wait for legislation" and could face "draconian penalties" for not being ready.

The DWP is expected to publish further regulations on dashboards in the new year, following the passage of the Pension Schemes Bill, which recently progressed to the House of Commons.

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