The Committee consisted of the following Members:
Chair: Mrs Sheryll Murray
† Atherton, Sarah (Wrexham) (Con)
† Churchill, Jo (Vice-Chamberlain of His Majesty’s Household)
Cruddas, Jon (Dagenham and Rainham) (Lab)
† Eustice, George (Camborne and Redruth) (Con)
† Fabricant, Michael (Lichfield) (Con)
† Fuller, Richard (North East Bedfordshire) (Con)
Hardy, Emma (Kingston upon Hull West and Hessle) (Lab)
† Henry, Darren (Broxtowe) (Con)
Hollern, Kate (Blackburn) (Lab)
† Linden, David (Glasgow East) (SNP)
† Loder, Chris (West Dorset) (Con)
† Long Bailey, Rebecca (Salford and Eccles) (Lab)
† Mak, Alan (Havant) (Con)
† Mishra, Navendu (Stockport) (Lab)
† Rodda, Matt (Reading East) (Lab)
† Trott, Laura (Parliamentary Under-Secretary of State for Work and Pensions)
† Wild, James (North West Norfolk) (Con)
Ian Bradshaw, Committee Clerk
† attended the Committee
Fifth Delegated Legislation Committee
Tuesday 15 November 2022
[Mrs Sheryll Murray in the Chair]
Draft Pensions Dashboards Regulations 2022
I beg to move,
That the Committee has considered the draft Pensions Dashboards Regulations 2022.
It is a pleasure to serve under your chairmanship, Mrs Murray. The regulations were laid before the House on 17 October. I am pleased to introduce this instrument that, subject to approval, will create the framework in which pensions dashboards will operate.
Pensions dashboards are digital tools that present individuals with their pensions information. The Pension Schemes Act 2021 gave the Government the powers to create these regulations. The regulations place requirements on registerable Great Britain-based occupational pension schemes with over 100 active, deferred or pension credit members, and specify when those schemes must connect to the Money and Pensions Service, or MaPS. The Department for Communities is expected to make corresponding regulations for Northern Ireland. Once connected, pension schemes must follow the requirement to find pensions and send the relevant information to an individual’s chosen qualifying pensions dashboard service.
The regulations provide that the Pensions Regulator may take enforcement action in relation to pension schemes that do not comply. The regulations also cover the requirements to be satisfied in order for a pensions dashboard service to be a qualifying pensions dashboard service, which include connection and functionality, display of view data, reporting and monitoring of the dashboard and enabling an independent person to audit the provider’s dashboard. Further to this, the Financial Conduct Authority has published final corresponding rules in relation to the providers of personal and stakeholder pension schemes, and will be consulting on a regulatory framework for qualifying pensions dashboard services later this year.
The dashboards are to be used by consumers to see how their pensions will evolve over time. Will they be easily accessible? People, particularly those approaching pensionable age—although some are computer-literate, some are not—find so many of these computer programs rather difficult. How accessible will they be?
I thank my hon. Friend for his intervention. The standards will be consulted on by MaPS and the FCA, but it is absolutely intended that they will be as user friendly as possible. A lot of testing will take place to ensure that that is the case.
The regulations, in combination with a planned order to amend the Pensions Act 2004, will enable MaPS and the Pensions Regulator to disclose information to each other in connection with dashboard functions only. That will support MaPS and the Pensions Regulator in their pensions dashboards programme and compliance roles respectively, and support the secure delivery of the ecosystem and pensions dashboard services. The Data Protection Act 2018 and General Data Protection Regulation duties continue to apply to the sharing of information about an individual.
I will briefly revisit why we need pensions dashboards and their potential to change people’s relationships with their pensions. We know about the huge success that automatic enrolment had in getting people saving into a pension, with millions of people now saving. However, research has found that almost three quarters of UK adults have multiple pensions, as people move around the labour market throughout their working life. Some people may not know either who their pension is with, what their pensions are worth or how many pensions they have. Pensions dashboards have the power to change all that.
We have conservatively estimated that reuniting people with lost pensions could be worth £541 million to individuals over 10 years, and it could be much more. The Pensions Policy Institute estimated in its most recent paper on lost pots that the total value could be up to £26.6 billion. Instead of relying on a box of paper under the stairs, pensions dashboards will help individuals to find their lost and forgotten pensions quickly and easily, and all in one place.
We are setting up a brand-new digital service that will connect thousands of individual pensions schemes covering millions of memberships. As Members may expect, a huge amount of work and thought has gone into developing these regulations. We have worked throughout with our delivery partners, the pensions dashboards programme as part of the Money and Pensions Service, the Pensions Regulator, and the FCA. I thank them all for their expert input into this cross-cutting project. We have also gained insight from those in the pensions industry and consumer groups through two public consultations and other fora.
The delivery of pensions dashboards needs to be both timely and operationally manageable for both the pensions dashboards programme and the pensions industry. The regulations set out a phased approach, known as staging, to connect different categories of scheme to MaPS. By prioritising schemes in order of type and membership size, we can maximise the member coverage on pensions dashboards in the shortest possible timeframe. Schemes will connect to the MaPS digital architecture, which is the technology that underpins dashboards. The architecture, and all parties and technical services that connect to it, form the dashboard ecosystem.
All Members are eager to see dashboards made available to the public. The point at which that will happen is referred to in the regulations as the “Dashboards Available Point”. The Secretary of State will issue a notice at least six months ahead of that point, having considered matters such as the coverage of memberships and service levels. This notice will give the pensions industry time to prepare to answer queries resulting from people engaging with their pensions information.
Lastly, it would be remiss of me not to update the House on the delivery of this programme. I am pleased to say that the pensions dashboards programme has delivered the digital architecture underpinning this project, and it is currently testing and refining the service in readiness for schemes to begin connecting from April 2023. Early participants will begin connecting in the new year. We are grateful to schemes for their co-operation, which is helping to prepare the ground and setting an example for others to follow.
I am satisfied that the draft Pensions Dashboards Regulations 2022 are compatible with the European convention on human rights. Subject to the view of this House, the approval of the regulations puts us one step closer to delivery for consumers. I commend the regulations to the Committee.
It is a pleasure to serve under your chairship, Mrs Murray. These important regulations potentially affect not only everybody in this room, but everybody in the country, so it is vital that the Government get them right. Labour supports the pensions dashboards policy and today’s statutory instrument, which we hope takes us a stage closer to fruition. However, I have some important questions on both the general principle and some specific points of detail on progress, which the Minister may like to write to me about.
It goes without saying that large IT programmes are subject to a certain amount of risk, and it is important that the Government take that into account. Some of what the Minister said this morning reassures me, but I have some further questions about data quality. I obviously will not go into enormous detail, because such matters are highly technical, but it would greatly reassure pension savers to know a little more about the risk management the Government are undertaking to protect data quality and personal information and to ensure that data is accessible. For example, people often change their name upon marriage or move job multiple times during their working lives, all of which is important to take into account, and the risk of fraud must be minimised. I hope the Minister will be able to elaborate on those points.
In addition, and in support of that previous point, I hope sufficient time will be taken to test the roll-out of this important approach. It involves a large amount of IT, complicated data issues, and the matching up of different databases of information on a large number of people.
I hope the Minister may be able to reassure me on one or two specific points. Is it possible to let pension savers have a better idea of the indexation of pensions? Some defined benefit schemes are fully indexed with inflation, but others partially follow inflation. During this cost of living crisis, it would be of great reassurance to savers to know the future value of their savings. I understand that the Department has so far decided not to include that level of information, so might the Minister be able to look into that and write to me?
I thank you, Mrs Murray, for the opportunity to speak this morning, and I look forward to hearing more from the Minister in due course.
It is a pleasure to welcome the Minister to her new post. I know she will do a great job.
I place on the record the SNP’s support for this statutory instrument and will just develop a couple of thoughts on pensions policy. Previously I was the spokesperson for work and pensions and getting dragged into debates like this does feel a bit like “Hotel California” sometimes. One thing I was quite struck by when I was shadowing that post was the complete lack of pensions literacy that exists not just across the country, but sometimes even in the House of Commons.
The pensions dashboard is incredibly welcome; we all want to see it, notwithstanding some of the shadow Minister’s points about the delivery of the IT. If it is to be successful, however, we need to look, in a twin-track way, at things such as making Pension Wise a lot more freely available to folk. Far too many people in their mid-50s are making decisions on pensions without adequate advice and guidance. Frankly, they are making decisions that are financially disadvantageous to them.
I also want a bit more reform of automatic enrolment. I would like the age for automatic enrolment moved from 22 to 16. I left school at 16 and started working, and it would be right and proper for automatic enrolment to be rolled out to those who start in the labour market straight away. I would also like to see it rolled out from the first pound, rather than an arbitrary threshold, but I appreciate that is not the purpose of today’s debate.
When the Pension Schemes Act 2021 was being taken through Parliament, the SNP expressed some concerns about commercial organisations having access to the pensions dashboards. It is on that basis that we would prefer that MaPS be allowed to run it for the first year before we have the extra commercial interest come into play, just as a way of consumer protection.
The instrument is to be welcomed, notwithstanding some of the wider concerns that I have outlined. I very much hope that my constituents, whether in Fullarton Park or right across the east end of Glasgow, can have both dignity and prosperity in retirement. Pensions dashboards will ultimately allow them to do that and will give them a much more informed view of pensions, which everybody across the country must have.
I am grateful for both Opposition parties’ support for these important regulations.
I will write to the hon. Member for Reading East on some of the specifics, but will just cover some of his points. On the steps being taken to ensure data accuracy on dashboards, it is obviously crucial that the data in front of an individual is accurate. Trustees and managers have existing legal obligations relating to data quality, and all the data is obviously being pulled from existing pension providers. The Pensions Regulator has set out expectations on data quality in its record-keeping guidance. This includes that data are measured at least once a year. The regulator’s guidance on dashboards is also clear that trustees and managers need to ensure that values provided are accurate and urges them to work with administrators to improve data if required.
I absolutely take the hon. Gentleman’s point about changes, including to addresses. They are an issue throughout the pensions system. It is something that we need to do a lot more work on, but I will write back to him on that specific point.
As for testing and the preparedness of the pensions schemes, schemes and administrators must act now, if they have not already, to prepare their data and engage with administrators and other suppliers on how they will meet their legal duties. The Pensions Regulator has already published guidance on practical steps that trustees and schemes managers should be taking now. They are also writing to all pension schemes at least 12 months ahead of the connection deadline with a call to action to ensure that the data they use is accurate and complete. They will contact schemes several times in the run-up to their duties to help them remain on track. I had a meeting with the Pensions Regulator yesterday to discuss exactly such issues, and I will continue to have such meetings to ensure that it is providing all the support it can to schemes.
On testing, there will be a lot of user testing—it is built into the approach. The hon. Gentleman is completely right in his caution about IT schemes. I am sure that he and I will correspond regularly on that, and we need to build testing into the programme.
The hon. Member for Glasgow East asked several questions, and I thank him for his support. The lack of pensions literacy is a big problem. It is, ironically, one of the things that has led to automatic enrolment being a success, but we need to tread the tightrope between making sure that people are as informed as possible and making sure that they are building up their pension pot. I would absolutely like to work with him on advice, guidance and ensuring that people are making the best use of their pension pot.
I should probably have a further conversation offline with the hon. Gentleman about amending the age for automatic enrolment. Automatic enrolment is a success, and we would like to see that expanded, and I would like to have further conversations.
As for MaPS and the dashboard launch, we strongly believe that it is important to have a Government-backed dashboard, and the Government have committed to launching the Money and Pensions Service dashboard from the “Dashboards Available Point”. It will also be the point at which authorised qualifying pensions dashboard services may begin to provide a pensions dashboard service as well, but they are highly regulated, and that again is something we can pick up further through the process.
I know that colleagues across the House care passionately about the success of pensions dashboards, and I thank all members of the Committee for their contributions today. Pensions dashboards will reunite individuals with their lost or forgotten pots and engage potentially millions of savers. It is important that we press ahead with this ambitious project so that savers can realise the benefits. I therefore commend the regulations to the Committee.
Question put and agreed to.