Pensions dashboard costs soar by £54million with no launch date yet set for public
There have been delays to the proposed pensions dashboards programme
The costs of creating a system to help people see all their pensions together online have jumped by £54million, with no date yet set for when it will be made available to the public, a spending watchdog has said.
Delays to the pensions dashboards programme have partly been due to a lack of digital skills and ineffective governance, the National Audit Office (NAO) said. The estimated cost of the programme has jumped by 23%, from £235million in 2020 to £289million in 2023.
A “range of factors” has led to the estimated cost of the programme increasing by £54 million, the report said. “These include an increase in supplier costs, changes to the Money and Pensions Service’s (MaPS) underlying costing assumptions, and the period covered being extended by two years to 2031-32,” the report said.
The previous £235million estimate had covered 10 years from 2019-20 to 2029-30, including five years of live running. The report said that from April 2019 to March 2024, MaPS spent £59million on the pensions dashboards programme.
Since 2019-20, the programme has been funded mainly through two industry levies that also fund MaPS’ other operations, it said. They are the financial services industry levy, which is levied on regulated financial institutions such as banks and building societies, and the general pensions levy, which is levied on occupational pension schemes.
An estimated 16.3 million people could benefit from pensions dashboards, which give them a single view of their private, workplace and state pensions. However, a report by the National Audit Office (NAO) has stated that the launch of dashboards for the public has been delayed due to legal issues.
Having a consolidated overview of multiple pension pots could assist individuals in planning for retirement, addressing shortages, and locating “lost” retirement savings. It is estimated that £26.6 billion in pension pots are currently unclaimed. Pension providers and schemes are obligated to connect to the government’s digital infrastructure that supports dashboards by October 31, 2026, one year later than originally planned.
Previously, there were 23 separate connection deadlines based on the size and type of pension schemes. The first deadline was August 31, 2023, and the final deadline had been set for October 31, 2025. In 2019, the Department for Work and Pensions (DWP) delegated responsibility for delivering the program to the Money and Pensions Service (MaPS), an “arm’s-length” organization.
However, according to the NAO, the DWP did not have initial assurance that MaPS had the capacity and capability to deliver a large digital program like this. Between 2020 and mid-2022, according to the NAO, the DWP and MaPS made progress in delivering key components of the pensions dashboard system.
However, in December 2022, MaPS informed the DWP that the delivery timetable was no longer feasible. A review by the Department for Work and Pensions (DWP) last year pinpointed multiple issues that had hampered the delivery of the pensions dashboards programme, including a shortage of skilled digital staff and ineffective governance.
These concerns had been flagged in previous assessments by the Infrastructure and Projects Authority, according to the National Audit Office (NAO). The NAO has noted that the programme is undergoing a reset, with the DWP and the Money and Pensions Service (MaPS) making headway in certain areas.
In response to the lessons learned, the DWP and MaPS have begun implementing changes, such as revising governance arrangements and enhancing collaboration with arm’s-length bodies, the report highlighted.
Gareth Davies, the NAO’s chief, commented: “Delivery delays due to shortfalls in digital capacity and capability have pushed back the final deadline for pension providers and schemes to connect to the PDP (pensions dashboards programme) by a year, with no date currently set for citizens to benefit.”
He added that despite progress during the reset phase, it’s crucial for the DWP and MaPS to maintain close cooperation to ensure the successful completion of the PDP and to enable public access to this vital service. Dame Meg Hillier, chair of the Public Accounts Committee (PAC), remarked: “Clear and simple pensions dashboards would help people properly understand their pensions preventing them from missing out on entitlements hidden in ‘lost pots’ and helping them plan for their future.”
A report by the National Audit Office (NAO) has found that the pensions dashboards programme has been delayed due to a lack of skilled resources and ineffective governance. The NAO said that the Department for Work and Pensions (DWP) must learn lessons from what happened on this programme and strengthen how it works with its arm’s-length bodies including the Money and Pensions Service (MaPS).
A DWP spokesperson said: “As the NAO recognises, the pensions dashboards programme has made significant progress towards delivering a service which will transform how savers plan for their retirement. Action taken by the DWP to reset the programme to get it on track for successful delivery means connection testing will begin from August 2024 before a wider onboarding of pension schemes and providers from April 2025.”
Oliver Morley, CEO of MaPS said: “This report reflects the hard work of a dedicated team to inject real momentum into the dashboards programme, with support from the Money and Pensions Service, Department for Work and Pensions and wider stakeholder community. We’re making sustained progress, delivering the information industry needs to be able to connect and so enable us to transform financial planning for generations to come.”
Becky O’Connor, director of public affairs at PensionBee said: “Given the potential impact of the programme for millions of pension savers, it is important to have robust scrutiny and to ensure lessons are taken for the future. The NAO report seems to draw a line under the reset, so all eyes will now be on getting to the staging guidance deadlines.”
Pete Glancy, head of policy at Scottish Widows, revealed that the value of pension assets in the UK exceeds £3trillion. He said: “All of this will make it easier for people to determine whether they need to save more, what their personal retirement journey might need to look like, and whether it is worthwhile consolidating pension pots which are performing poorly into pots that might offer better value for money.”
“In the longer term, we believe that pension dashboards will become a ‘national treasure’. However, this is a complex project, and whilst any delays or cost over-runs are always unwelcome, it’s important that the Government together with the pensions industry gets this right.”