I will come on to the question of identity in a second when I address the amendment tabled by my noble friend Lord Young. Clearly, we want to do our utmost to ensure that the system is secure and that data can be accessed only by those entitled to access it.
I share the aim of noble Lords to make dashboards as useful as possible to individuals planning for their retirement. To that end, we are considering many of the aspects in these amendments as potential features of pensions dashboards in the future. Having said that, I need to come back to a point that I made earlier. The development of a pensions dashboard service that gives consumers a single point of access to their pensions information is a complex undertaking.
I remind the Committee that there are over 40,000 schemes, around 25 million people with private pensions wealth and a huge amount of state pension information. My noble friend Lady Altmann was absolutely right to stress that. It is why we have asked the industry delivery group to work with representatives from the pensions industry and consumer groups to ensure that the service is accurate, secure and consumer focused. Once again, I underline the word “secure”. I have to sound a cautionary note to noble Lords who want to broaden out the service in short order. Again, my noble friend Lady Altmann is quite right: adding any further complexity at this stage, however well intentioned, risks delaying the delivery of pension dashboard services to individuals.
I am sure we can agree that it is important that the design of this service is consumer focused. It must consider potential risks to the consumer and provide benefits to individuals planning for their retirement. The industry delivery group will undertake further user research and testing to ensure that that is the case. Any additional functionality should be made available only if three conditions are met: a clear consumer need should have been identified; safeguards and protections must be in place; and any functionality must be controlled and tested.
With those thoughts and aims in mind, I turn, first, to the amendments tabled by my noble friend Lord Young. In Amendment 45, he raises the important point of identity verification. This is crucial in giving consumers and pension providers confidence in the security of their data. In order to ensure a consistent consumer experience, the dashboard infrastructure should have one digital identity standard agreed across the industry. The level of identity verification used must
be consistent with the internationally recognised standard published by government—the good practice guidance on identity proofing and verification. The good practice guidance is designed to be as inclusive as possible, so that as many people as possible are able to securely access the online services.
The creation of a digitally secure identity is complex. Last year, the Government introduced the digital identity unit, which is now leading work to develop a digital identity solution that can be used across the public and private sectors. The industry delivery group will work with the digital identity unit to enable the delivery of a secure, effective and inclusive identity service for users of the pensions dashboard. I understood what my noble friend said about Verify, and I assure him that the industry delivery group has this issue squarely on its radar. It is being informed by industry experts and consumer groups, and it will carefully consider available options and make recommendations on the best identity solution for pensions dashboards. The solution may not be Verify.
ID verification will have to meet the standards for all parties, including state pension, and that requires a high level above that for an individual scheme. Whatever happens, I can assure my noble friend that dashboards will be free at the point of use for consumers; that includes identity verification. Digital identity remains a priority for government and we are considering ways in which to continue this work with departments across government. We hope to make announcements on that in due course.
On Amendment 38, the Government fully support beneficiaries with entitlements having access to their pension information via dashboards. I can tell my noble friend Lord Young that this clause, as already drafted, enables this to happen. The delivery of this facility will be considered by the industry delivery group. However, his amendment does not distinguish between beneficiaries with entitlements and potential beneficiaries, without current entitlements to the scheme. Creating provision for a person with a potential entitlement introduces considerable legal and technical challenges about data protection and confidentiality in relation to the principal scheme member. The members themselves should have control of the access to such information, and this should happen only with consent. We should be wary of undermining confidence that an individual’s own pensions data will be kept safe, confidential and secure.
On Amendments 43 and 44, the Government recognise that some people will have a range of assets, including their homes, which could be used to form part of an individual’s retirement income. I understand all that my noble friend said in favour of adding to the dashboard in this way. However, I question whether such amendments are either wise or necessary. Many income projection tools are available through independent financial advisers to support individuals with this. The amendments open up the possibility of financial advisers being able to add information and make calculations directly on to a dashboard. This would significantly extend the scope of pensions dashboards, adding more complexity and risk to delivery.
That cautionary note is quite a good segue into Amendment 39 in the name of the noble Baroness, Lady Sherlock, on financial transactions. The document Pensions Dashboards : Government R espons e to the C onsultation sets out that qualifying pensions dashboard services will not initially have the capability to facilitate transactions. They will start with a “find and view” function, allowing only individuals to see their information. Further functionality will be carefully considered, taking into account the potential risks to consumers alongside the potential benefits.
It may reassure the noble Baroness, Lady Drake, that although the Government have been clear that we want to enable consumer-focused innovation in the long term, this does not necessarily lead to transactions on dashboards. I also respectfully remind her of the mantra that we have uttered many times: that the consumers’ interests must come first. We set out in our consultation document three overarching design principles, which underpin the pensions dashboard ecosystem. These are: first, to put the consumer at the heart of the process by giving people access to clear information online; secondly, to ensure that consumers’ data are secure, accurate and simple to understand; and, thirdly, to ensure that the consumer is always in control over who has access to their data.
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Having said that, individuals wishing to use dashboards will be able to delegate access to Money and Pensions Service guiders or FCA-authorised and regulated financial advisers via the dashboard. But individuals will, as I have just said, always have control over who has access to their data and will be able to revoke that access permission at any time.
Woe betide anyone who infringes the rules. The FCA has said that it is willing to use a range of compliance measures. The FCA’s rules are legally binding and, if a firm contravenes them, it may be subject to enforcement action. The FCA has a range of sanctions available to it. The level of service provided by dashboards will be set out in regulations under the Bill. I remind the Committee that those regulations are all subject to public consultation and the affirmative resolution procedures, with the parliamentary scrutiny that this involves. Dashboard services will need to meet the requirements and standards set out in these regulations before they can connect to the dashboard infrastructure. We are well aware that each additional level of functionality needs to be approached with care.
It is of course very important that individuals access advice and guidance before making decisions on undertaking significant pensions transactions. Regulations are already in place on this, and we will consider how best to use dashboards to signpost sources of information and guidance. For example, we could require qualifying dashboards to signpost to free and impartial guidance through the Money and Pensions Service. Consumers will also be able to consent to authorised, independent financial advisers or Money and Pensions Service guiders having time-limited, delegated access to their information on a dashboard, as I indicated a moment ago.
Amendments 50, 53, 62 and 67 were tabled by the noble Baroness, Lady Sherlock, and my noble friend Lord Flight. These cover the provision of information
on an estimated retirement income, and costs and charges to the individual via a dashboard service. The Government share the desire that this information is shown in the future. The Bill already allows us to require schemes, via secondary legislation, to provide projections of retirement income and costs and charges. We must recognise that costs and charges are not the sole indicator of value for money; they need to be understood alongside other factors. Further, schemes have different ways of applying costs and charges, so information provided on the dashboard may not be easily comparable. We need to consider what information is shown, and how, as we would not wish for individuals to make decisions about their pensions based on costs and charges alone.
In the same vein, we need to make sure that any information on projected retirement income is easily understood and consistent. We also need to understand how an individual interacts with such information, so we can ensure it does not prompt decisions that potentially have poor outcomes. This applies equally to Amendments 53 and 63, tabled by my noble friend Lord Flight. Requiring the publication of a plan within six months of these measures coming into force risks decisions being made to meet a legislative deadline, rather than in the best interests of the consumer.
Finally, I turn to Amendments 40 and 57, tabled by my noble friend Lady Altmann. I share her aim that a forecast of state pension income is presented on dashboards as soon as it is appropriate and practical. We are currently working with Her Majesty’s Revenue and Customs on a technical solution to ensure that state pension information is provided by dashboards. The ability to provide forecasted state pension income information is being considered in the design of this solution. Consumers are currently able to view their forecast state pension income on the Government’s online service, Check Your State Pension. The design of this service reflects the considerable user testing that was undertaken to understand what was important for individuals.
Our intention is to learn from the experience gained and the user research carried out during the development of the Check Your State Pension service, alongside any specific recommendations made by the industry design group. I can confirm to my noble friend that all dashboards will be supported by the same digital infrastructure and as a result will display the same level of pensions information from the same number of schemes.
I hope that noble Lords appreciate the need for a balance here between specifying detailed information in legislation now and the impact that this might have on consumer interests and the delivery of the dashboard. With apologies for having spoken for so long, I hope that those remarks will have clarified why the Government have approached these issues as we have. I also hope that I have thrown light on the detailed issues raised by noble Lords during the debate.