The Government has confirmed the timetable for implementing pensions dashboards in its response to the consultation on the draft Pensions Dashboards Regulations 2022. While the largest auto-enrolment master trusts and money purchase schemes together with public service pension schemes will be given a little longer to connect than had been proposed, the connection deadlines for most schemes are unchanged. This means the first schemes will be required to connect to the dashboards in just over a year – by 30 September 2023.
At the same time, the Government has also confirmed that:
- the Pensions Regulator will be able to take enforcement action against employers where they are responsible for a scheme’s compliance breach (e.g. where an employer fails to pass on workers’ information to a scheme or provider in time or where they provide incomplete or inaccurate information)
- schemes are required to prepare a Data Protection Impact Assessment as part of the steps they must take to comply with the UK’s data protection laws
- response times for providing pension value data will remain at 3 days (for money purchase benefits) and 10 days (for non-money purchase benefits) where the data is not readily available, with reliance being placed on the Regulator’s discretion not to take enforcement action in complex cases, and
- the FCA will be responsible for addressing concerns regarding advertising on dashboards and the risks associated with the ability to export data from dashboards.
To find out more about pensions dashboards and the Government’s consultation read our previous blog.
Trustees and pension providers are responsible for ensuring they are ready to connect to the dashboards ecosystem by their scheme’s connection deadline (or ‘staging date’). It is likely to take around 12 to 18 months for most schemes to prepare. Therefore, where they haven’t done so already, trustees and scheme managers should:
- determine when their dashboards staging date will be (legal advice may be required in some cases, for example, in relation to hybrid schemes (i.e. schemes that provide money purchase and non-money purchase benefits))
- discuss with their scheme advisers, scheme administrator and other relevant third parties what they need to do to get ‘dashboard ready’ and put in place a project plan
- identify how they intend to connect to the dashboards (e.g. via their scheme administrator or another third party or via an in-house solution)
- consider with their advisers and administrator what steps they should take prior to their staging date to improve the accuracy and quality of their scheme’s dashboard data and to fulfil their data protection obligations, and
- consider with their advisers and administrator how they will calculate the pension value data that will need to be provided to members.
While the Government confirmed its plans to press ahead with the introduction of pensions dashboards from September 2023, it has decided to make some changes to its proposals in light of the consultation responses it received. The key changes include:
- schemes with non-money purchase benefits will be able to adopt a simplified approach to calculating the value of deferred members’ revalued benefits for up to two years after their staging date, where it would not be possible to provide a full calculation without incurring disproportionate costs or within a reasonable timescale and where trustees or managers are content that the simplified accrued value will not be misleading. After this initial period, deferred benefits will have to be calculated in accordance with the scheme’s rules;
- trustees and scheme managers will have greater flexibility to select the ‘retirement date’ which will be shown on the dashboards;
- tweaks to the regulations to clarify the process for resolving possible matches. This includes clarifying that a scheme must delete the find request information if an individual for whom a possible match has been identified does not contact the scheme within 30 days. Where an individual makes contact within 30 days, trustees and scheme managers will be responsible for determining how much time should reasonably be allowed to resolve the situation before the find request information must be deleted (as required by data protection legislation); and
- rather than the staging date for hybrid schemes being determined by the number of deferred and active members in the largest section, it will now be determined by treating the total number of active and deferred members across the money purchase sections and non-money purchase sections as if they were members of a non-money purchase scheme to determine the staging deadline. This so-called ‘simplified’ approach means some hybrid schemes will have an earlier staging deadline than under the original proposal, and some will have a later one, but for most there will be no change.
In its consultation, the Government proposed that pension value data should be returned by schemes immediately where it is readily available. Where that is not the case, schemes will have up to 3 days to provide the data for money purchase benefits and 10 days for non-money purchase benefits. Although respondents identified a number of issues which could make it difficult for schemes to meet these deadlines, the Government has resisted calls for the final regulations to set out a list of exceptions to these deadlines. Instead, it points to the fact that “the compliance framework [allows] TPR discretion in deciding whether to take enforcement action in respect of a breach of the Regulations and TPR will take individual circumstances into account”. It is hoped the Pensions Regulator will set out how it intends to deal with scenarios such as this in its pension dashboards compliance and enforcement policy, which it is due to publish for consultation later this year.
The draft Regulations allow trustees and scheme managers to apply to the Secretary of State to defer their scheme’s staging date in very limit circumstances (which relate to a pre-existing intention or obligation to change scheme administrator). The Government has resisted calls for this option to be extended to cover additional scenarios. This is disappointing and may, for example, inhibit the ability for schemes to change scheme administrator after the regulations come into force, even where they consider this to be in their members’ best interests.
Easements for some schemes
The Government plans to introduce some relaxations for schemes in a PPF assessment period prior to their staging date and for schemes that are winding-up. Public service pension schemes affected by the McCloud judgment are also to be given an extended period before they are required to provide pension value data to the dashboards.
Data protection and matching
Concerns have been raised from many quarters about the interaction of a scheme’s dashboard obligations with the UK’s data protection laws. In particular, questions have been raised about how trustees and scheme managers should balance their obligation to identify a sufficient number of positive matches to ensure a good user experience with the need to avoid providing data to the wrong user.
The Government’s response summarises the Information Commissioner Offices’ (ICO) views on some of these issues. This makes clear that:
- the ICO echoes the Government’s view that “it is vital schemes are doing what they can to improve the accuracy of the data which will be integral to the success of pensions dashboards. The accuracy principle under Article 5(1)(d) of the UK GDPR requires that organisations ensure data remains accurate and up to date”
- schemes will be required to prepare a Data Protection Impact Assessment (DPIA) to cover dashboard matching, including identifying the associated risks and the steps being taken to mitigate these, and
- the level of security that a scheme implements should align to the level of risk, should be documented in the DPIA and should take account of the ICO’s guidance on security of processing data.
Advertising and data export
Several respondents raised concerns about the scope for inappropriate advertising and pop-ups to appear on pension dashboards (including from pension scammers) and about the risks associated with the proposal to enable users to export their dashboard data (e.g. to the dashboard providers’ or a third party website). The Government has left it to the FCA to address these risks in the rules it will put in place for qualifying pensions dashboard service (QPDS) providers.
Alongside its consultation on the dashboard regulations, the Government has issued a follow-up consultation on the process for confirming the so-called ‘dashboard available point’ (i.e. the date on which dashboards will be made available to the general public).
Yesterday, the Pension Dashboards Programme issued a separate consultation on the standards that will govern the operation of pension dashboards. These standards cover issues such as the data formatting requirements schemes will be required to adopt, how schemes interface with the dashboards ecosystem, how information will be presented on the dashboards and the reporting requirements that will apply to schemes and dashboard providers.
Later this year, we can also expect:
- the FCA to consult on rules for QPDS providers, and
- the Pensions Regulator to consult on its dashboards compliance and enforcement policy.
The broad outline of the legal and regulatory framework that will underpin pensions dashboards is now confirmed. As a result, there are a number of issues that scheme’s now need to consider including identifying how they will connect to the dashboards, considering the steps they need to take to improve the accuracy and quality of their dashboard data, determining their matching criteria and identifying and addressing the potential data protection risks.
Trustees and scheme managers that haven’t done so already should speak to their scheme advisers and administrator promptly to put in place a plan to ensure they have addressed these issues and that they will be ready to connect on time.
If you wish to discuss how the new Codes of Practice may impact your scheme or organisation please contact one of our specialists below or speak to your usual Herbert Smith Freehills’ contact.