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Pensions Dashboards: Change is on the horizon

What is the background to the Pensions Dashboards Regulations?

The Pensions Schemes Act 2021 (PSA) made a number of changes to pensions law and regulation, not all of which have been implemented. The pensions dashboards – a digital platform that provides online access for members to receive information about their pension savings – is one of these areas. The policy intention behind dashboards is to encourage individuals to make more informed decisions about their pension savings and retirement planning.

The PSA sets out the legal framework for pensions dashboards. Since then, there have been a number of consultations on the regulations which will set out the detail of the dashboard requirements, the latest consultation response being published only a few days ago. This briefing summarises where we are with the Pensions Dashboards Regulations 2022 (the Regulations).

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Who do the Pensions Dashboards Regulations apply to?

The Regulations will apply to ‘relevant occupational pension schemes’. This means any schemes with 100 or more active and/or deferred members, and it includes both DB and DC schemes.

Schemes with fewer than 100 members will not be subject to the new rules for now, but the DWP does intend for these smaller schemes to be brought into the new system in the future.  There will be an opportunity for these smaller schemes to opt to connect to the dashboard voluntarily however, so long as the Money and Pensions Service (MaPS) and The Pensions Regulator (TPR) agree.

Time Frames

Relevant schemes will be required to connect to the dashboard infrastructure in stages, depending on their size and type. This is referred to as ‘staging’ in the Regulations.

  • In relation to master trusts, schemes with 20,000 or more members will have to connect to the dashboard by 31 August 2023. Master trusts with fewer members will have slightly later date, the exact date being tiered in relation to scheme size.
  • Money purchase auto-enrolment schemes with 20,000 or more members will need to connect by 30 September 2023 and again smaller such schemes will have tiered deadline dates depending on size.
  • CDC Schemes of all sizes will need to connect by 30 April 2024.
  • DB schemes, all other DC schemes and all hybrid schemes (including hybrid master trusts and hybrid CDCs) with 20,000 or more members will need to connect by 30 November 2023 again with later deadlines tiered in relation to size.
  • Public Services schemes of all sizes will need to connect by 30 September 2024.

Details of the exact staging dates for all schemes can be found on the TPRs website.

Schemes in a PPF assessment period before the connection deadline will be exempt from having to connect. Schemes which come out of a PPF assessment period will have to connect within 6 months from the date of exit or by its original staging date, whichever is later. Schemes which have connected to the dashboard infrastructure and then entered PPF assessment will still need to maintain connection.

Similarly, schemes which are winding up are still required to connect to the dashboard by their given staging deadline.

Trustees do not have to figure out their deadline date alone. TPR will be writing to all schemes at least 12 months before their deadline to inform them of the exact date.

The DWP will issue a formal notice to all schemes prior to the dashboard services being made available to the public. Originally this notice was 90 days, but the government has confirmed in the last few days that this notice period is to be extended to 6 months.

The Regulations also allow applications to be made by schemes in some specific circumstances to defer their staging deadline by up to 12 months.

Pensions Dashboards Regulations: The details…

Relevant schemes will be able to develop and host their own dashboard systemA popular way of doing this will likely be through a sub-page of the scheme/employer website or perhaps a standalone website created for this purpose. Trustees will need to liaise with software providers and/or website designers to create this system and connect it to the national dashboard infrastructure. As more and more schemes are starting to think about transitioning to a dashboard service, scheme administrators are offering services to trustees facilitating the creation and hosting of these platforms.  Discussions with professional administrators (for schemes that utilise one) will be a good starting point.

A scheme’s dashboard system will need to be capable of receiving both “find” requests (a request sent by a national pension finder service to all schemes within the dashboard infrastructure) and “view” requests (a request to see the relevant pensions information).

Once the member has access to the dashboard, the system will need to be able to show members:

  • Pension arrangement data: information about their pension provider;
  • Administrator data: information about the organisation which the member should contact to find out more about their pension
  • Employer data: information about the member’s employment
  • Value data: For members with money purchase benefits this will include their accrued pot value, an annualised accrued value and an annualised projected value. All of this data should be up to date, from a calculation performed in the last 12 months. For DB members this will include information about their final pension value and the basis on which this has been calculated.

Exemptions from the Pensions Dashboards Regulations

All members of eligible schemes must be provided with data relating to their accrued benefits.

There are however a number of exemptions meaning that members in some categories do not need to be provided with projected pot values.

Members with accrued rights of less than £5,000, and who have made no contributions since the previous illustration date, do not need to be provided with projection data; however, they will need to be notified that no data will be provided until further contributions are made. There is also an exemption to providing projection data where a member is within two years of their retirement date.

Compliance and enforcement

TPR will have powers to take enforcement action against trustees who breach the Regulations. Compliance notices and penalty notices will be the main tools in TPR’s armoury – the maximum penalty for an individual will be £5,000 and £50,000 in all other cases.

Practical Tips

Trustees need to be aware that the Pensions Dashboard Regulations are on the horizon. The first steps for all trustees will be to identify their staging date and commence the process of getting their data in order, and understanding how to connect with the dashboard infrastructure. This will involve detailed discussions with the scheme administrator or software provider as well as with the scheme’s legal advisor as there will be various legal points, such as data protection, cyber security and ensuring compliance with the Regulations, which need addressing.

Once the initial process has started, trustees will want to consider how to communicate the availability of the dashboard to members and set up processes to monitor and manage performance, risks, record keeping and reporting.

Given the complexity of the new requirements, trustees may wish to outsource their compliance to a third party administrator. This may be their existing scheme administrator. Trustees will however retain responsibility for complying with the requirements, so the scheme’s legal advisors should be closely involved in monitoring the process as well as with the drafting of any administrative agreements to ensure the third party complies with the requirements.

Pensions Dashboards Regulations: How Walker Morris can help

The Regulations are yet to be finalised, however, trustees need to start reviewing the data that they hold and the systems that they hold it within. Trustees should be aware that they do not have to navigate the draft Regulations alone. If you have any queries or concerns, or if you are interested in receiving legal and practical advice in relation to the Regulations or any other pensions-related issue, please contact Walker Morris Pensions specialists, Liz Graham or Ruth Bamforth.

Liz
Graham

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Joint Head of Pensions

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Ruth
Bamforth

Partner

Joint Head of Pensions

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