Pensions Dashboards update: FCA sets rules for firms

20 December 2024

The project to create ‘dashboards’ that make it easier for consumers to keep track of their pension savings has taken a significant step forward. 

The concept of pension dashboards is to give the public access to a clear view of all their pension savings in one place. It is hoped that this will make pension planning easier, and reduce the number of ‘lost pension pots’ over time.

The Financial Conduct Authority (FCA) published a policy statement on 7 November, setting out their rules and expectations for firms looking to operate their own pensions dashboard services. 

With the FCA setting standards for fair, transparent services, this latest development is a positive step for the industry and savers alike. It follows what one industry figure described as ‘a bumpy ride with numerous stops and starts’ for the dashboards initiative. 

What are pensions dashboards?

The idea behind the pensions dashboards service (PDS) is simple yet powerful. These digital platforms will give UK pension savers a clear view of their pension savings and forecasts, including their State Pension and private/personal pension pots, in one online location. 

By centralising this information, pensions dashboards aim to simplify retirement planning. The availability of dashboards should help people avoid the need to contact multiple providers individually for information about the status of their pensions. 

Additionally, dashboards could reduce the frequency of people losing track of old pension pots, which is especially common in an era of frequent job changes. According to the Pensions Policy Institute (PPI), there is more than £31 billion sitting in lost pension pots.

Government dashboard to launch first

In October, Pensions Minister Emma Reynolds announced that, at first, people will only be able to view their pension information via the government’s Money and Pensions Service (MaPS) dashboard. 

The government-backed dashboard will launch first to study consumer behaviour and ensure protections. While commercial dashboards run by private firms are still planned, there is currently no confirmed timeline for their launch.

Emma Reynolds recently said that it was too early to confirm a launch date, but confirmed that the government is "taking steps to help the public realise the benefits of using a pensions dashboard at the earliest opportunity”.

She stated: “We are committed to the existing published timetable for the connection of pension schemes and providers to the pensions dashboards ecosystem, which is expected to begin in April 2025, as well as the overall connection deadline of 31 October 2026.”

The ‘connection’ of pension schemes refers to the requirement for pension firms to connect to the pensions dashboard by the deadline to share details of their members’ pensions. By doing so, savers will be able to see the details of their various pension funds across different providers in one central location.

FCA’s rules and industry reactions

Importantly, the recent legislative change brings pensions dashboards within the FCA’s regulatory scope, meaning firms will need to be FCA-authorised before launching these services. 

The FCA's regulatory framework also outlines the compliance requirements for firms designing and operating commercial pensions dashboards. It includes guidelines on the information and warnings users will receive when accessing or leaving the dashboard. 

Additionally, the framework covers the rules regarding how users can manage data about their pension savings. For example, it looks at whether individuals can send their personal data to themselves, other individuals, financial advisers and so on.

The FCA's new rules for firms ultimately focus on transparency and consumer trust. Firms must act “fairly, honestly, and professionally in consumers’ best interests” and ensure that their pensions dashboard services are “fit for purpose” so that savers can make well-informed decisions.  

Speaking about how the dashboard service will help savers, Mark Ormston, Director of Propositions and Corporate Partnerships at Retirement Line said: “The recent announcements are largely positive as they keep momentum and focus behind one of the biggest changes the pension industry will go through for some time. 

“People should be able to see where their money is as quickly and safely as possible. The sooner pensions dashboards launch to provide greater transparency and hopefully, more complete decision-making, the better.”

Why pensions dashboards matter

The potential of pensions dashboards to encourage greater engagement in retirement planning is significant. When savers see projections that show they may need to increase contributions to secure their desired retirement, they may be more likely to act. 

This aligns with findings from recent surveys, which reveal that many UK workers are underprepared for retirement. 

According to FT Adviser, research from Bowmore Financial Planning found that 77% of defined contribution pension pots matured in 2023 with under £50,000, and 43% held less than £10,000. 

The pensions dashboard should also help to reconnect savers with their lost pensions. Anthony Rafferty, chief executive of Origo – one the key development partners of the service – said: “It’s vitally important that consumers are able to locate their pensions wherever they may be, in order that they have a full picture of their retirement savings to help them to make informed financial decisions.” 

Could pension dashboards see savers make costly transfer mistakes?

Despite the many positive expectations of the new dashboard service, some are worried about certain consequences that may come about. In November, workplace pension provider People’s Partnership warned that the introduction of pensions dashboards could lead to pension transfer losses exceeding £2 billion by the end of 2030. 

According to their research, 42% of savers are likely to use dashboards to transfer their pensions. This could result in poorly informed decisions and leave savers thousands of pounds worse off in retirement, according to People’s Partnership. They have called pensions dashboards a "ticking timebomb" for financial losses unless action is taken.

To prevent this, People’s Partnership is urging the inclusion of clear ‘Value for Money’ metrics on dashboards. These would allow savers to compare fees and overall pension value before making decisions, reducing the risk of detrimental transfers. Their research highlights strong demand for this feature, with 43% of savers wanting simple comparisons, second only to retirement pot projections, which 53% prioritise. 

The road ahead

When the service does launch, pensions dashboards will initially just be accessible through the government’s Money and Pension Service (MaPS) portal. Retirement Line will continue to support the development of pensions dashboards and keep our customers updated on this important initiative, which we believe will reshape retirement planning for years to come.

Sources

The FCA has published a policy statement setting out rules and expectations for firms: Firms in the dark on commercial pensions dashboards delivery date. Money Marketing. Accessed 12 November 2024.

The ‘connection’ timetable: FCA confirms commercial Pensions Dashboards rules but firms in the dark on timescale for delivery. IFA Magazine. Accessed 12 November 2024.

MoneyHelper dashboard to launch before commercial versions to test consumer behaviour: Govt-backed dashboard to launch before commercial version. FT Adviser.  Accessed 12 November 2024.

Introduction of pensions dashboards could lead to pension transfer losses: Pensions Dashboards could accelerate losses from pension transfers beyond £2 billion. People’s Partnership. Accessed 21 November 2024.