DWP’s Pensions Dashboards consultation on the draft Pensions Dashboards Regulations 2022 - Which? response

Summary

• Which? welcomes the Government’s consultation on draft pensions dashboard regulations. DWP and Pensions Dashboard Programme (PDP) must continue to progress with proposals for dashboards and make headway in delivering on its commitment to consumers, especially given that DWP first committed to launching pensions dashboards by 2019.
• We support the following proposals for pensions dashboards:
  • For information on State Pensions to be included on dashboards from day one, as its inclusion will help provide a more comprehensive picture of an individual’s potential income at retirement.
  • Attempts led by the Financial Reporting Council (FRC) to standardise Estimated Retirement Income (ERI) projections, as methodologies used to calculate projections are currently far too inconsistent across pension providers.
  • For the Financial Conduct Authority (FCA) to regulate and authorise Qualifying Pensions Dashboard Services (QPDS), and proposals for The Pensions Regulator (TPR) to gain new enforcement and compliance powers. More generally, we support DWP’s staging principles and its encouragement of pension schemes who are able to respond to all find and view requests to connect to the digital architecture early, following approval from the Money and Pensions Service (MaPS).
• However, we propose the following recommendations:
  • The Government and PDP must ensure that consumer outcomes are at the heart of the dashboards programme. It should work to ensure that dashboards are functional and fit for purpose, providing users with complete, accurate and up-to-date information about their pension savings. Prioritising these outcomes for dashboards will increase consumer engagement with pensions and encourage informed decision-making.
  • The Government should publicly set out its expectations for when dashboards will be launched to consumers following testing. Outlining a launch date would provide all participants, particularly pension schemes, with a clear steer in progressing with preparations for dashboards and help to avoid any unnecessary delays in the delivery of the service.
  • The Government should require schemes to return a user’s pensions value information on request, rather than allowing schemes up to 10 days to do so. The proposals for defined contribution (DC) schemes to have up to 3 days to return pensions value data and defined benefit (DB) schemes up to 10 days, could significantly undermine the primary purpose of pensions dashboards, which is to bring an individual's pensions information together in one place. Whilst the Government may need to prescribe some exceptional circumstances where schemes are unable to provide value data, the current exceptions are drafted too broadly. It is also unclear how the Government expects users to be re-engaged after logging in to an incomplete dashboard once their pensions value data is ready for each of their pension schemes. Moreover, any gaps and/or delays in response times must be clearly explained to the user.
  • The Government should ensure that data requirements on pension schemes allow for total figures across an individual’s pensions to be displayed on dashboards. Dashboards should include totals for current pot values for DC schemes, and totals for both annualised accrued and annualised projected retirement income figures.
  • Pensions dashboards should include a figure for costs and charges that have been paid for each pension scheme. Greater transparency on charges would provide individuals with a clearer understanding of what they pay for their pensions, helping to inform challenging decisions about when and how they access their pensions savings.
  • Pensions in payments should be included on dashboards. To provide a full picture of an individual's pension savings, pensions that have been taken in payment (for example via full or partial income drawdown or a tax-free lump sum) should be included on dashboards. This is especially important following 2015 Pension Freedoms reforms.
  • DWP and MaPS should, in time, allow for greater innovation in the presentation of dashboards to help drive consumer engagement. Once dashboards are better established, dashboards providers should be able to make effective use of consumer feedback, user data and real-life consumer journeys to make informed changes to the service that will better suit the needs of consumers and facilitate further engagement.
  • When things go wrong, consumers should only have to make a single complaint to any part of the dashboard ecosystem they choose, for example their pension scheme or pensions dashboard provider. The complaint and liability should then be resolved by the firms involved.
• The FCA must publish its draft rules for pensions dashboard providers as soon as possible. How dashboard providers are regulated by the FCA will play a critical role in the success of the PDP’s dashboards initiative, and is inextricably linked to DWP’s draft regulations for dashboards and MaPS standards. It is difficult to anticipate how well consumers using dashboards will be protected without seeing these draft regulations.