Industry calls for more data clarity on pensions dashboards

In its consolidation of themes raised by the pensions industry, published on Wednesday, the PDP said that a “number of respondents” to its recommendations for mandatory scheme duties highlighted concerns around ERI data, including around the industry’s ability to provide these figures, with defined benefit schemes particularly affected.

The PDP said the industry had also raised concerns on the likelihood of consumer confusion when presented with incomparable projections.

The design principle of the dashboards programme states that the system will initially be used only for presentation purposes, and that the dashboards will not be able to calculate projected pensions. The responsibility is therefore placed on providers and schemes to supply an ERI figure for each member.

We hope that the dashboards will increase people’s engagement with their pensions

Sarah Pritchard, Financial Conduct Authority

These calculations will be especially difficult in DB schemes, where for active members prospective annual retirement income can be calculated from their latest annual statement using current earnings.

The PDP said that several responses volunteered opinions on what data should be required to return to members at dashboards and how this would contribute to ERI calculations.

“Responses made on behalf of large membership bodies representing pension administration providers and defined contribution and DB schemes recommended a find-first approach,” the PDP said. It argued that there would be “value for consumers, particularly those approaching retirement, in being reconnected with any lost pensions, and this would allow time for standardisation of how ERI amounts are calculated before values are displayed on dashboards”.

Other respondents volunteered views that ERI figures should be available on the dashboards from day one, citing “consumer need and the importance of including values for credibility and consumer engagement”.

The PDP noted that a “significant number” of responses said that they need clarity on ERI requirements before they can specify a timescale for providing view data.

Some noted that if ERI standardisation required system changes, this would extend the time they would need to connect. 

The PDP said that around a third of respondents suggested that pension values will take longer to provide than administrative information, and some indicated a find-first dashboard would be achievable in a shorter timescale.

Of respondents that specified a timescale for connecting and being able to meet the obligations to provide administrative data, the majority stated a timescale of 12-24 months.

In September, the Society of Pension Professionals warned that pensions dashboards will have to provide illustrative figures to DB members, as it will not be possible to have accurate quotations due to the complexity of current benefit structures.

As reported by Pensions Expert, the industry body made a series of recommendations to the Department for Work and Pensions and PDP on how ERI calculations should be approached from the beginning of the project rollout.

User testing to tackle concerns

In response to the concerns raised around ERI figures, the PDP said it will undertake “research and user testing” concerning what data should be displayed to users. 

“Within our ongoing research, we are investigating the appeal of and users’ views on potential dashboard display content, including the types of data that could be required by pension schemes and providers to return to dashboards, and users’ tolerance of partial information about their pensions,” it said.

“In addition, we are carrying out some early prototype testing with users, which will help us understand how our users will react to different displays of information. This is not full prototype testing but will give us useful insights and inform future end-to-end journey prototype usability testing.”

The first prototype will display only administrative information about the pension and the provider. No pension figures will be shown in that iteration.

The second will display the same information as the first prototype, but will also include the accrued figures for each pension, while the third prototype will display the same information as the second but will also include the projected income figures for each pension.

A fourth prototype will display the same information as the third but will use an alternative design.

The testing will take place in early October 2021, with an analysis of the findings taking place by November 2021, according to the PDP.

Timeline troubles

The PDP said that many respondents indicated that they needed greater clarity, particularly around data requirements, before they could give accurate estimates about when providers would be ready to connect to the dashboards system.

In September, Chris Curry, principal of the PDP, said that the scheme is “on track” to meet its timeline requirements. He added that the key dates will be confirmed when the DWP publishes its draft regulations for the Pension Schemes Act, either at the end of this year or early 2022, “which is likely to set out when pension schemes will need to start providing their data to the pensions system, the pensions dashboards ecosystem and infrastructure”.

At the Pensions and Lifetime Savings Association’s annual conference on Thursday, Sarah Pritchard, executive director of markets at the Financial Conduct Authority, said that work was under way to “introduce rules to require providers to submit their data, and in due course to authorise other providers of pensions dashboards”.

“We hope that the dashboards will increase people’s engagement with their pensions,” she said.

Yet the PDP has said that many pension providers were “unable to estimate the lead time they need to connect to the dashboards infrastructure until they had further clarification of the data and technical requirements”.

Of those that did provide an estimated lead time, around three-quarters suggested that up to 24 months would be required. Most respondents agreed that the lead-in time starts when certainty is available — for example, when regulations, rules and full technical specifications are in place.

While the proposed sequencing was generally met with broad agreement, there were some concerns around the timeline for delivery, the PDP said. Some respondents said that it was “too ambitious”, while others suggested staging should be faster.

Some feared that the DWP’s consolidation agenda and competing regulatory demands on the industry, plus integrated service provider preparedness and availability, could disrupt the recommendations.