Pensions Dashboards – Sound legal structure?

23 / 11 / 2022

Pensions dashboards have been a key area of interest in the UK for some years now. Our previous update, referred to, amongst other things, some of the main issues and concerns around pensions dashboards including the ambitious timescales for compliance and the exposure of trustee boards to the Pensions Regulator’s (TPR) ability to issue fines and penalties for breaching the requirements. 

Key point – Dashboard compliance may seem daunting to schemes but, with advice including legal advice as appropriate, will be achievable.

Background

The Pensions Schemes Act 2021 lays the foundation for pensions dashboards services, with an indicative version of draft regulations published in January 2022. These regulations were followed recently by an updated set which are due to come into force on 12 December 2022 (the Regulations). The Regulations have been amended to take account of the DWP’s responses to its consultations on both sets of regulations. 

By way of reminder, pensions dashboards are an online platform providing pension scheme members with the ability to see their pensions across all of their schemes, including their state pension. Pensions dashboards are designed to make it easier for members to receive information on their pension savings and in turn increase member engagement by providing a service that is easy to use and readily accessible. 

The Money and Pensions Service (MaPS) has established the Pensions Dashboards Programme (PDP). The PDP’s vision is to “enable individuals to access their pensions information online, securely and all in one place, thereby supporting better planning for retirement and growing financial wellbeing”.

Application of the Regulations

The Regulations apply to trustees of “relevant occupational pension schemes“, which are any schemes with 100 or more active or deferred members. This includes DB and DC schemes.

Smaller schemes with less than 100 members are not yet subject to the new regime. However, there will be the option for these schemes to opt in voluntarily on application to MaPS and the DWP expects these schemes to have completed the onboarding process from 2026.

Preparing for launch

The Regulations provide the legal basis for relevant schemes to prepare their own dashboard system. Trustees will need to reach out to software providers and website designers which will connect to the dashboard ecosystem. Scheme administrators will be at the forefront of offering these services to trustee boards, so it will be important to communicate with them early to move things forward.

Provision of information requirements

The dashboard system will need to receive both “find” requests (a request to receive personal information on relevant members, search and match members to their pensions) and “view” requests (a request to provide members with information about their pension).

Broadly speaking, the Regulations refer to the information the dashboard system will need to display, which includes:

  • Administrative data: information about the member’s pension scheme, including scheme name, nature of benefit and membership category.
  • Signpost data: information about a website address so members can access information on member-borne costs and charges, the statement of investment principles and implementation statement.
  • Value data: information about accrued and projected pension values.
  • Contextual information: this includes items such as the illustration date and whether a value is expressed as regular income, lump sum or pot values.

The dashboard system will also need to display details of the member’s employment and on their pension provider. 

Timescales for compliance

Our previous Pensions Compass update in March 2022 set out the proposed phased staging dates for pension schemes according to size to connect to the dashboard ecosystem. The Regulations set out specific timescales for providing view data. 

There have been significant concerns raised in the pensions industry around the timescales schemes have to comply with the requirements. Originally, pension providers were to be given at least three months’ notice to prepare for the introduction of pensions dashboards, known as the “Dashboards Available Point” (DAP). The DWP has now extended this to at least six months’ notice before dashboards go live, in recognition of feedback from the industry. The Government has stated “by making this change to at least six months’ notice, the regulations provide greater certainty for the pensions industry to make final preparations for the public launch of pensions dashboard services“. 

There is no date that has yet been set for the DAP, although this is expected to be around mid-late 2024.

Key changes to the Regulations

After a period of further consultation and feedback, the following changes have been made and are reflected in the Regulations:

  • The DWP has decided to push back the connection deadline for master trusts with 20,000 or more relevant members. Originally this was to be 3 months from 1 April 2023, but is now 5 months from 1 April 2023 (31 August 2023). DC schemes used for automatic enrolment with 10,000 or more relevant members also have a longer deadline, having changed from 31 July 2023 to 30 September 2023. 
  • The Regulations have been amended so that entire schemes already in a PPF assessment period before their staging deadline will be exempt from the requirement to connect to pensions dashboards. However, schemes that enter PPF assessment after they have connected to pensions dashboards will be required to maintain connection. 
  • Schemes that are winding-up will still be required to connect to the pensions dashboard by their applicable staging deadline. 
  • The DWP has delayed the staging date for public service schemes from 30 April 2024 to 30 September 2024. This is in response to concerns raised around implementing pensions dashboards alongside the McCloud remedy (the removal of age discriminatory practices across public sector pension schemes). 
  • It will be possible for a scheme to defer its staging deadline for up to 12 months, in limited circumstances. These may include circumstances where a scheme is changing administrator.

Further details of all staging dates are provided on TPR’s website. TPR will also be contacting all schemes at least 12 months before their staging deadline to provide details of their applicable deadline.

TPR’s Consultation on its proposed compliance and enforcement
policy for pensions dashboards opened on 24 November 2022 and
closes on 24 February 2023.

Compliance and enforcement

Despite concerns raised about certain aspects of the compliance provisions around fines and the overall scope of TPR’s enforcement powers, the DWP has stated that these provisions are appropriate and proportionate to the wider dashboards project. Accordingly, the DWP does not intend to make changes to the fines and penalties set out in the January 2022 regulations, so they remain in the current Draft Regulations. 

Pensions Dashboards Programme (PDP)

PDP’s October 2022 Update explains progress on its testing and refining programme and on its proposed standards on which it consulted earlier this year. In November 2022 PDP issued proposed revised standards. Once the Dashboards Regulations have come into force (expected 12 December 2022) approval will be sought from the secretary of state for the PDP standards to become mandatory standards under the Regulations.

Next steps

Much of the legal groundwork for pensions dashboards has now been provided. Whilst the legal basis of pensions dashboards has advanced in the last few months, the practical realities of ensuring schemes are ‘dashboard ready’ ahead of their staging dates remain uncertain. There is clearly much to do ahead of these deadlines and TPR has produced a useful checklist so that trustees and managers can make a start. The scale of the project may appear daunting, but it is possible to tackle the requirements with the guidance available and a thorough project plan, with legal advice where necessary. 

Wedlake Bell can offer scheme specific training on the new dashboard duties for trustees who need assistance in this area.