As Jamie Jenkins, Head of (Global) Savings Policy at Standard Life Aberdeen, reports, auto-enrolment has played an important part in helping to clean up workplace scheme data which will be vital for the success of the planned pension dashboard project.
Since the launch of auto-enrolment in 2012, millions more people are saving into a workplace pension scheme.
Not only has auto-enrolment been a success story in terms of getting people to save, the initiative has played a vital part in helping to clean up the accuracy of pension scheme data. It has driven employers and payroll providers to update and refine information, such as national insurance numbers, which they might not otherwise have done and has been the push needed to get them to digitise manual records.
The pension dashboard project will require accurate, digitised data to work
However, a problem remains with legacy schemes – many of which were manually set up over 20 years ago – such as Small Self-Administered Schemes or Executive Pension Plans, which can be affected by small human errors going unchecked. The problem has been highlighted as the need for accurate and automated data is an issue that goes beyond auto-enrolment schemes and affects the industry as a whole because of the proposed pension dashboard project.
The first phase of the pension dashboard is due to launch later this year and the purpose is to allow individuals to view all their pension information at the touch of a screen in order to engage them to plan as effectively as possible for their retirement.
The dashboard project will be gradually introduced across all workplace schemes over the next few years. However, the information displayed on the dashboard will only be as accurate as the data provided by pension and payroll providers, and of course, employers.
The importance of the integrity of information used
The development of the pension dashboard should drive further momentum in the cleaning up of pension data and responsibility for ensuring the integrity of information used for the dashboard will most likely rest with employers and pension providers.
Legacy workplace schemes will need to start planning for this now as the dashboard will not function as it needs to unless the gaps and errors still remaining in data have been resolved. Most critically of all, the data needs to be provided digitally, in real time, and some schemes are very far removed from being in a position to do this.
Because of the huge investment in the project, the Government has stated that it will legislate where necessary to ensure workplace schemes provide the data needed to make the pension dashboard a success. The Pensions Regulator (TPR) has also said it is prioritising plans to make sure that pension scheme data is regularly checked and reviewed for accuracy.
Pension scheme data is in a much better place than it was
Since the introduction of auto-enrolment, the quality and accuracy of pension scheme data has generally improved, as employers and pension providers have risen to the challenge. Data is in a much better place than it was but it has taken a significant amount of work and will continue to do so.
As part of that work, TPR encouraged pension providers to set up online payment capabilities for employers to pay into a workplace scheme. A number of providers have done so, including Standard Life, which has helped to improve the speed and accuracy of records being transferred.
Pension and payroll providers will need to prioritise the security and accuracy of pension records going forward to support the development of the pension dashboard. And it may well be that the first roll-out phase of the dashboard focuses on the auto-enrolment schemes given they are more likely to have ‘clean’ data.
With the pension dashboard project on the horizon, employers should be checking with their payroll providers and pension providers that they are prioritising the integrity of all pension scheme data.
Standard Life’s online, secure administration platform is available to all employers where they can carry out their workplace pension scheme management such as enrolling new members and managing payments. To find out more, go here.
Jamie Jenkins is Head of (Global) Savings Policy at Standard Life Aberdeen
The views expressed in this blog should not be regarded as financial advice.
It’s important to remember that a pension is a long-term investment and as such its value can go down as well as up. It could even be worth less than was paid.