Pensions dashboards will give employees more visibility than ever before regarding their retirement savings. All pension pots, and the state pension, will be shown digitally in one place.
What does this mean for employers?
Dashboards will take a lot of work to get up and running. But it’s pension schemes, not employers, which will need to manage this project. Whether employees participate in a master trust, a contract-based scheme or an employer’s own trust-based scheme, it’s the trustees or providers who will be taking the lead on compliance.
Nevertheless, employers have a role to play, too. Making sure that data is accurate will be a key priority for pension scheme providers, to allow the dashboards to operate correctly. For example, if an employer previously provided an incorrect national insurance (NI) number to a pension scheme for one of its employees, that might prevent the employee ‘matching’ with their online pensions record.
Employers may be asked to help check that pension scheme data items – things like NI numbers, but also dates of birth and surname spellings – are correct, and they should be ready to help. The dashboard legislation allows penalties to be issued to employers that do not provide the right data to pension schemes when needed.
The launch date for dashboards is still unknown, but when employees do get access to an overview of their retirement income, behaviour around pensions and retirement may change.
Seeing their total projected retirement income may prompt some to realise their savings are not sufficient. Employees may adjust their behaviour by opting into higher contribution bands or by choosing to work longer.
Others may have questions, perhaps about missing legacy pension entitlements, which may come back to HR teams to deal with.
Looking forward, employers will want to keep an eye on timings as the project develops. It will also be key to continue to focus on the accuracy of data provided to pension schemes, to make sure that the dashboards are as successful as possible.
Oliver Topping is associate director at Sackers