Herbert Smith Freehills has submitted its response to the UK Government's consultation on pension dashboards.
Opened for comment by the Department for Work and Pensions, the consultation noted that, in just five years, the proportion of eligible employees participating in workplace pensions schemes rose from 55 to 84 percent. It also revealed that a significant proportion "do not know" and "have not given much thought" to managing their pension*.
Against this backdrop, the UK Government has sought views on the viability and usefulness of pensions dashboards.
In response, Tim Smith, professional support lawyer at Herbert Smith Freehills, suggests that an online dashboard would be a "positive development which has the potential to increase engagement with pension savings", but he argues that "there is currently not enough certainty about the data that schemes will have to provide or about who has ultimate responsibility for its accuracy and security."
Smith said: "The proposed governance structure fails to identify who will actually own the software on which each dashboard operates. Identifying the owner is critical because they will be responsible for ensuring the software remains secure. Individuals should also have recourse against dashboard providers where they suffer loss as a result of a failure of a dashboard and dashboard providers should be required to have sufficient resources or adequate insurance cover in place to cover any losses that may be sustained."
Responding to the consultation, Herbert Smith Freehills calls for four key areas to be addressed by Government. These include:
- clarity over ownership of the dashboards, together with details of the recourse available in the event of data breaches and inaccurate information
- appropriate safeguards being introduced to prevent organisations driving individuals towards their own products, if commercial dashboards are permitted
- greater detail about the data requirements and the additional work this will create for schemes and providers, in particular defined benefit schemes, to deliver meaningful 'real time' information, and
- a separate consultation focusing on the contractual terms to govern data provision by schemes and providers to the dashboards, including those relating to data protection.
Herbert Smith Freehills cautions against the roll out of the dashboard being rushed and raises questions over how the dashboards will be advertised and funded.
Smith added: "The consultation says very little about how the dashboards will be advertised, despite the fact that this is critical to the success of this project. Lessons must be learnt from the launch of PensionWise, which whilst it is highly rated by those who use it, has achieved nowhere near the levels of usage that were hoped for or that the service deserves. This is due to a lack of money being spent on advertising.
"This mistake must not be repeated with the dashboard. However, this begs the question – where will the money come from to fund this both at the outset and on an ongoing basis?"
* Figures quoted in DWP consultation materials as seen via https://www.gov.uk/government/consultations/pensions-dashboards-feasibility-report-and-consultation/pensions-dashboards-working-together-for-the-consumer