Pension firms have been given a deadline of August 2023 to have data ready for the launch of pensions dashboards.
The majority of firms will need to supply member data to the Money and Pensions Service by this date, according to final rules published by the FCA today. However the general public is not expected to be able to use these dashboards until the summer of 2024.
The FCA has also given some concession to smaller firms, with fewer than 5,000 pension pots in accumulation. They can apply for an extension until October 2024.
Pensions dashboards should enable millions of people to view all of their retirement pots online, including private, workplace and state entitlements.
Aegon’s head of pensions Kate Smith adds: “The pensions dashboards final details are coming thick and fast now. As expected the largest FCA-regulated pension providers will be included in the first cohort connecting to the pension dashboard ecosystem, alongside the largest DC pension schemes and master trusts.
“By 31 August 2023 providers must be ready to receive and respond to requests from the public to search, find and return pension information on request.”
She adds that the general public isn’t expected to be able to access pensions dashboards until the second half of 2024 and by then most pension schemes will have connected to the dashboard ecosystem, giving people a full picture of all their pensions online for the first time.
Policymakers hope dashboards will help reconnect people with over £26 billion of ‘lost’ pension pots and, over time, boost retirement engagement.
AJ Bell head of retirement policy Tom Selby says: “Confirmation of when all pension firms will need to provide data for pensions dashboards brings the project another step closer to becoming a reality.
“The need for dashboards was laid bare by research published last week which suggested a staggering £26.6 billion of pension cash is ‘lost’ – meaning the owner and administrator have become disconnected. This problem has been exacerbated by a combination of automatic enrolment, frequent job switches and more people moving home, particularly during the pandemic.”
Interactive Investor senior personal finance analyst Myron Jobson adds: “Several years in gestation, today’s rules finally mean there is light at the end of the tunnel. That means more clarity for people who want to take control of their pensions – and that’s a game changer.
“Pensions dashboards have been long in the making and can’t come soon enough to help savers make better informed decisions regarding their retirement nest egg.
“It will encourage people to take a greater interest and ownership of their retirement plan, and potentially encourage people to shop around and consolidate into a better value product.
“It’s widely accepted that simplicity is key to the success of the pensions dashboard initiative. There may be bumps in the road, but today’s rules are a milestone moment. Sorting complex information underlying pension schemes into easily digestible nuggets of information is vital.”
He adds: “The pensions dashboard will by no means be perfect on day one. The FCA’s final rules now state that, where costs and charges information for a particular pension is not currently available online, the signposted website must, as a minimum, explain clearly to the consumer how they can obtain details about the costs and charges that apply specifically to their plan. This adds unwanted friction in what is meant to be a seamless initiative.
“A concerted programme of education around how to interpret the dashboards will also be key to achieving the Government’s stated aim of boosting pension knowledge and engagement.”
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