Sample010 discusses my suggestion that dashboards should show defined benefit (DB) pension income amounts as at now.
DB accrued or revalued to date
On their annual statements, most open DB schemes already show pension accrued to date (i.e. based on pensionable service to date and current salary / earnings). It should therefore be relatively straightforward for this amount to be returned for the user to view on their chosen dashboard.
Any complexities to be overcome can be discussed here as they are identified.
For deferred DB members, different schemes currently take different approaches for communicating deferred pensions to deferred members during their period of deferment:
a) Some schemes run a bulk annual revaluation calculation on all their deferred members and produce annual statements and then make these available on the scheme’s member portal, to which members are directed. Some of these schemes store the revalued deferred pension amount as a data item, others do not.
b) Other schemes, on receipt of a request from a deferred member, run an individual automated calculation to bring benefits up-to-date, possibly as part of a wider retirement or transfer out calculation. This is often done without storing updated figures as data items (although an image of the communication sent to the member is stored).
c) Finally, other schemes merely reissue to the member the statement of deferred benefits as at date of leaving, possibly directing the member to an online retirement modelling tool on the scheme’s website.
This diversity of current practice across different DB schemes very well illustrates the difficulties which exist for displaying standard data on pensions dashboards.
The current disclosure regimes, which have developed over many years, allow a range of different approaches to be taken, and schemes have consequently taken those different approaches. The current disclosure regimes were not developed with the display of standardised data on pensions dashboards in mind.
Looking forward to a solution, DWP has made two conflicting policy commitments on this:
1) The IORP II Directive, which became UK law in January 2019 introduced a requirement for schemes to provide annual statements to deferred members (i.e. revaluing amounts annually), and DWP has said they would bring this into force via pensions dashboards.
2) However, in the April 2019 pensions dashboards consultation response (in para 157) the Government said that “in the first phase of development we expect there to be no more information than is already available to people on statements issued annually (such as annual benefits statements) or on request.”
If DWP sticks with policy commitment 2), they will be “baking in” today’s varied approaches, meaning that some of the deferred DB pensions shown on initial dashboards will be out-of-date, and others will be revalued to date. This will be very confusing for users of dashboards.
Personally, I believe DWP should stick with policy commitment 1), i.e. implement IORP II in effect and require all deferred DB pension amounts to be revalued annually, and be returned to dashboards should the member make a find request from their chosen dashboard.
Showing all DB pensions as at now is key. The final piece of the jigsaw is showing DC pension income amounts as at now as well, and this is discussed in Sample011.