Clarity and pragmatism: PASA releases guidance on value data for dashboards

The latest guidance from The Pensions Administration Standards Association (PASA) on the practical considerations of implementing dashboards offers a clear steer, with a focus on useability and consistency for members. However, guidance around expected step-ups and underpins may introduce additional considerations for pension schemes.

As schemes and their advisers gear up to connect to the dashboards ecosystem – albeit now with a later deadline – many of the unresolved questions have been around the ‘value data’ that will be shown to members.

Value data provides members with information about their benefits including an estimate of their projected benefits in retirement and, for defined contribution (DC) pensions, their current pot.

PASA’s guidance gives extensive thought to most of the outstanding questions related to value data and aims to provide information in areas that aren’t covered by the legislation and standards.

The objectives of the guidance are to:

• Avoid multiple parties across the pensions industry considering the same issues from scratch
• Provide members with consistency across schemes where possible
• Encourage the use of existing information and processes
• Minimise the possible operational strain when dashboards are launched to members and on an ongoing basis

A range of sensible options is provided for each issue along with a recommended approach, though it is acknowledged throughout that these will not cover all eventualities. Even where the guidance for a given issue doesn’t cover a scheme’s particular circumstances, it will still give valuable direction on the key considerations.

There were a number of areas in the guidance where useful clarification was provided

‘On request’ calculations

Value data should be available either through real-time calculations or stored values so that members see it as soon as they log on to their chosen dashboard. Where value data is not automatically provided, for example for non-standard cases, this will need to be calculated ‘on request’ i.e. only when requested via a dashboard, but these should be avoided where possible to maximise member experience and to minimise wider risks and disruption to ongoing administration and actuarial services.

Other than for schemes where real-time calculations are already available, we believe calculating ‘on request’ could present a significant challenge to current processes, as existing ‘business as usual’ Service Level Agreements – even for standard calculations – are unlikely to be sufficient for dashboards.

Presentation of members’ benefits on the dashboards

PASA have made suggestions in a number of areas that are aimed at avoiding complexity for both schemes and members:

• Separate deferred benefits into different tranches for revaluation to illustration date then re-combine them for quoting on dashboards if they have the same broad characteristics in payment.
• Where all benefits must be taken at a single age, even if the age from which early retirement reductions or late retirement enhancements vary by tranche, combining benefits into a single figure will normally be preferable – this will be helpful for schemes with a ‘Barber window’.
• Value data should normally be rounded according to the conventions currently used in other member communications. PASA appears keen that schemes can maintain current practice and what members are familiar with rather than reinventing the wheel.
• Calculating benefits using a ‘simplified’ method is a short-term solution and will only be appropriate in a small minority of cases. From an overall time and cost perspective, most schemes will be better off setting up full calculations from the outset.
• Benefits affected by pension sharing on divorce or by Scheme Pays can be included in the stored value data where they allow for the reduction in benefit, otherwise they should be calculated ‘on request’.

GMP equalisation

GMP equalisation should be ignored for dashboards as the information is not typically available and the average amounts are expected to be small. Where conversion has been carried out, the converted benefits should be quoted. This recommendation will come as a significant relief to most schemes.

Key takeaways

Schemes should keep in mind the overall purpose of dashboards: to provide a summary of a member’s benefits in one place, presented as clearly and consistently as possible in an engaging way. Although there will often be more information that could be added, excessive detail could be detrimental to the ultimate aim as well as increasing the burden on the scheme.

PASA’s guidance understands that there is a wide variety of benefits, practices and viewpoints across the industry and recognises that enforcing a single approach would not be helpful or desirable. It therefore sets out recommendations that will likely be appropriate for the majority of schemes as well as the background and rationale that give flexibility for more complicated schemes to make justifiable and consistent choices.

We expect PASA to issue further guidance in due course, including DC members over retirement age and more detail on AVCs.

What can you do now?

Trustees should consider engaging with their administrator, Actuary and/or data consultant to plan how value data calculations will be completed for pensions dashboards in order to efficiently address the points raised in PASA’s guidance.

Breaking news

The Minister for Pensions has confirmed that the last connection date for schemes in scope will be 31 October 2026. A replacement staging timetable setting out when schemes should connect will be set out in guidance to be published later in 2023. We expect this to set out connection dates depending on the type and size of the scheme for schemes with, broadly, 100 or more members.