Pensions Dashboards – ready or not, they’re coming (albeit later!)
The Pensions Dashboards Regulations have been approved by Parliament and have now become law. The framework will therefore not change in light of the government’s recent decision to delay the programme, but the timescales for staging and onboarding will be “re-set”. The regulations require trustees to connect to the dashboards infrastructure by a staging date, be ready to say more or less instantly whether they have a match in the case of every person nationally who requests pension information, and if there is a match, provide recent figures for the revalued deferred pension payable. Many schemes will find that they are not currently in a position to comply, and the work needed will take some time. Trustees should be considering with their administrators the actions they may need to take at this stage.
Where are we now?
Since our last newsletter on this topic, the DWP and the Regulator have carried out various consultation exercises in a bid to shape the final dashboard regulations. The final form of the Pensions Dashboards Regulations were finally made in November 2022 and came into force on 12 December 2022. Much of the content is non-controversial.
The Government has also recently announced, following an initial review of the consultation responses, that there will be a delay to the roll out of the pensions dashboards programme. The framework will not be changed but the timescales will be “re-set” in order to give time to develop the technology for successful connection.
The key points for trustees to note, therefore, are as follows:
- Changes to certain staging dates – The “staging dates”, (i.e., the date by which a pension scheme has to connect to the dashboard system) for certain categories of pension schemes have been altered. The regulations move the date for the first two cohorts (i.e., those applying to the larger master trusts and defined contribution schemes) back by two months. These will change following the recent Government announcement to delay the pensions dashboards programme, although the extent of the delay is unclear. Hybrid schemes with both DB and DC sections will be required to follow the timescales that would be applicable to them if they were DB only, which might mean onboarding takes place later than you initially thought.
- Notice re DAP– The “DAP” (i.e., the “dashboards available point”) is the date at which the dashboard services go live. Before this date, the services are not available to the public – the idea is that schemes onboard in accordance with their respective staging dates (as above) in readiness for the DAP. Taking into account the responses to a recent consultation, the draft regulations have now been amended to increase the notice period for the DAP from 3 months to 6 months, with the aim of giving trustees and administrators more certainty as to when to make final preparations for the public launch of the dashboard services. Following the recent Government announcement, the DAP will be pushed even further into the future.
- Simplified deferred benefit value data – As suggested in the original consultation, the final Regulations were drafted to permit a simplified approach when calculating deferred members’ defined benefit benefits. The simplified calculation allows trustees to use a method to revalue benefits that they consider to be appropriate. This simplified method is only permitted for a limited period of 2 years from the scheme’s connection date, however, after which more accurate figures must be provided.
- Liability for data errors – The requirement to provide accurate data instantaneously under the Regulations is still an issue for concern for trustees and administrators. The Regulator has earmarked the concept of “possible matches” (i.e., a match which allows trustees to flag where they may have found a pension, but are not 100% sure), as sufficient mitigation. Whilst this may provide a reprieve from the Regulations, a “possible” match may lead to further member queries and complaints and so a balance will be required in practice.
Regulator consultation on compliance and enforcement strategy
The Regulator published its consultation on its compliance and enforcement strategy in relation to dashboard duties before Christmas. The Regulator is insistent that its focus will be on “wilful or reckless non-compliance” and that it will approach the use of its powers in a proportionate way. The areas of particular interest to the Regulator will be connection compliance, matching errors and outdated value data.
Under the Regulations, the Regulator will have powers to issue “compliance notices” and “penalty notices.” The purpose of a compliance notice is to remedy non-compliance. Under a penalty notice, a fine is issued (subject to a maximum of £5k for individuals and £50k for corporates). It is important to note that penalty notices can be issued on an individual basis across a trustee board – i.e., applying to some trustees and not others. This will cover, for example, circumstances where a breach occurred prior to a trustee joining a trustee board. Questions remain about how the Regulator would approach multiple breaches in relation to a large group of members, but all resulting from the same issue; the Regulator may give more guidance on this point following the consultation exercise.
Ready or not, pensions dashboards are coming – albeit later than we all expected, and it is not clear where this delay will take us. This may well be a welcome relief to those schemes in the early waves of connection.
But they are still coming. Trustees should therefore work urgently with their administrators to ensure that scheme data is fit for purpose and complies with the expected data standards. In particular, trustees should consider:
- Budgeting extra costs and resources;
- Checking the Scheme’s staging date – particularly if their scheme is a hybrid. We are expecting an announcement regarding the extent of the delay in due course;
- Taking appropriate legal (and other expert) advice on the various decisions that the dashboards require (for instance, confirming what NPA is under the schemes rules as this isn’t always straight forward); and
- Consider whether privacy notices also need to be updated to allow for provision of data to the Dashboard. To date there hasn’t been any specific guidance from the ICO on this and it is unclear whether this is forthcoming so trustees will need to think carefully about how they apply these.