The Pension Schemes Bill completing its passage through Parliament was an important milestone for the Pensions Dashboards Programme (PDP).
It unlocks the next stage of law-making around pensions dashboards, which will concern the duties on pension schemes and providers to connect individuals with their pensions via dashboards.
The Pension Schemes Act includes the powers for the Secretary of State for Work and Pensions and the Financial Conduct Authority (FCA) to create the legal requirements for pension schemes and providers to connect to the pensions dashboards digital ecosystem, so individuals can view all their pensions in one online, secure place via dashboards.
The Act also requires the Money and Pensions Service (MaPS) to provide a public service pensions dashboard and the government committed to parliament that no commercial dashboard should launch before the MaPS dashboard.
Journey to Royal Assent
The Bill has been on a bit of a journey. First introduced to Parliament in October 2019, the general election and Parliament’s dissolution halted its progress. Reintroduced to the current Parliament in January 2020, the Bill progressed through its stages in the House of Lords by July, before going to the House of Commons, and finally returning to the Lords in January 2021.
Throughout its passage, the debates in relation to pensions dashboards centred on how to protect consumers from harm. This included how to prevent fraud and how to ensure individuals are not led towards making rash decisions about their pensions, which could be detrimental to their financial wellbeing.
The Lords initially amended the Bill to prohibit financial transactions on dashboards, and to pause the operation of commercial dashboards, until a year after the launch of the public service MaPS dashboard. However, the government overturned these limitations in the Commons. They maintained that secondary legislation and FCA regulation of dashboards, informed by thorough user testing, should determine the evolution of pensions dashboards, rather than primary legislation. Their argument was this would allow for innovation, while putting the right level of consumer protections in place.
The government reaffirmed its position that dashboards will launch with a find-and-view capability. This will enable users to locate their pensions and view key read-only information about them, including about their pensions’ administration and financial value. The government also made commitments to transparency and engagement with parliamentarians prior to laying proposed dashboard regulations.
Secondary legislation and next steps
The passing of the Bill is a key milestone, but to make pension dashboards a reality, there’s still much work to do. The government will consult on and then make regulations (secondary legislation) to compel occupational pension schemes to connect with the pensions dashboards ecosystem and set out the timetable for this to happen. The FCA will make corresponding rules for personal pensions.
Providing a pensions dashboard itself, will become a new regulated activity, subject to an HM Treasury amendment of the Regulated Activities Order, using powers in the Financial Services and Markets Act. This means that commercial organisations that wish to become dashboard providers, such as banks and fintechs for example, will be subject to the Financial Conduct Authority’s authorisation process and conduct rules that the FCA will develop and consult upon in due course.
Once finalised, these regulations and rules will provide the pensions industry with legislative certainty about what pension providers and schemes, as well as dashboard providers, must do in relation to pensions dashboards, plus specific dates by which they must comply.
In the meantime, the pensions industry must start to prepare for its coming legal duties to connect. We published initial data standards in December 2020, setting out what information pension schemes and providers will receive from the dashboards ecosystem and what they will have to return to dashboards. We’re calling on providers to improve their data and get it in shape for their customers and members to access via dashboards.
We’ve worked with the Department for Work and Pensions through the passage of the Bill. Now that it’s passed, the PDP, as well as our regulatory partners at the FCA and The Pensions Regulator (TPR), will continue to support government as it develops the regulations. We are working together to develop the governance framework for the pensions dashboards ecosystem, the consumer protection regime to keep individuals safe and the redress model.
Legislation to underpin our activity is only one part of the story. At the Pensions Dashboards Programme, our work continues to make pensions dashboards happen. This year, we are procuring a supplier to build the digital architecture, sourcing an identity service to verify that users are who they say they are, developing implementable data standards plus user-centred design standards, as well as working with industry to develop an onboarding strategy for providers and schemes.
So, there’s still a lot to do to make pensions dashboards a reality, but we should celebrate this achievement: the passing of the Bill lays the foundation stone in building towards pensions dashboards.