Pensions dashboards – full steam ahead (with some tweaks)

• United Kingdom

• Pensions

19-07-2022

The DWP dashboards response in a nutshell

The DWP on 14 July 2022 published the response to its January 2022 consultation on draft pensions dashboards regulations for occupational pension schemes. On 15 July 2022, it published a summary of key policies to sit alongside this. In summary, there are some helpful tweaks to the original proposals but dashboards will proceed largely as planned. The headline points are:

• staging deadlines for the first two cohorts (master trusts and money purchase auto-enrolment schemes with 20,000+ relevant members) delayed by two months
• staging deadlines for public service schemes delayed by five months
• changes to the way hybrid scheme staging dates are assessed
• no new circumstances in which schemes can apply to defer their staging date
• up to a year (rather than three months) to provide value data for new members
• some limited exemptions in respect of schemes in PPF assessment and in wind-up

In more detail: what are the key changes?

We include a reasonable amount of technical detail below. This assumes knowledge of the previous proposals. You can find information on those in our speedbrief and in the consultation paper.

Staging dates

Timelines – Deadlines for the first two cohorts will be delayed by two months and the connection window for the first cohort will be extended to five months. This means that the staging (i.e. connection to dashboards) deadline for master trusts with 20,000+ relevant members will change from 30 June to 31 August 2023 (but connection may still begin from 1 April 2023) and the deadline for money purchase auto-enrolment schemes with 20,000+ relevant members will change from 31 July to 30 September 2023. In addition, public service schemes will be able to stage up to five months later than planned, by 30 September 2024 rather than 30 April 2024.

Hybrid scheme staging – Hybrid schemes will still stage “as one” but most consultation respondents disagreed with the deadline being based on the earlier of the different sections’ notional staging dates. This will change so that numbers of relevant members across both the DB and DC sections are added together and the entire scheme is treated as DB to determine the staging date. The DWP says hybrid master trusts will be treated the same as other hybrid schemes in this regard. All hybrid schemes should re-check their staging date as it may now be different to the one they expected (albeit no earlier than the end of November 2023).

Deferral of staging dates – Despite many calls to do so, the DWP will not expand the proposed criteria for allowing applications to the Secretary of State to defer a scheme’s staging deadline. Deferral may only be applied for where trustees have, before the regulations come into force and subject to various conditions, already embarked on changing their administrator.

Data matching

Data matching and data protection legislation – There is a balance to be struck by trustees in relation to data matching criteria – setting stringent criteria would help in satisfying data protection law but could mean failing to meet dashboards’ legal duties. The response provides some detail on data protection requirements and shares views from the Information Commissioner’s Office but is likely to be of little comfort to trustees. In line with the Regulator’s recent initial guidance on dashboards, trustees are strongly encouraged to focus on the accuracy of their data.

“Possible” matches – The regulations will be amended to clarify what trustees must do when returning a “possible” match.

Value data

Value data for new members – The proposed three month timescale will be extended to allow value data to be provided to new scheme members by the earlier of the first statement being produced for the member and 12 months from the end of the first full scheme year of membership. Those whose benefits have transferred from another scheme will be considered new members – this could ease some dashboard compliance concerns in relation to scheme mergers and other transfers.

Response times for complex cases – The response lists numerous examples of complex cases where it might not be possible to provide value data within the required timescales. No statutory exemption or extension to the timescales will be provided but the requirement that values must be from a statement provided to the member within the last 12 months will be extended to 13 months, to provide some operational flexibility. The DWP also notes that the Regulator has discretion in deciding whether to take enforcement action and will “take individual circumstances into account”. 

AVC data – Schemes can decide which of the trustees or the AVC provider will supply AVC data for dashboards, with the AVC information flagged as linked to the main scheme. In practice the DWP expects data to be provided by whoever administers the AVCs, normally a commercial provider. However, it stresses that “trustees would still be legally accountable for ensuring that this happens and will need to work with their AVC provider accordingly”.

Public service schemes and McCloud remedies – In recognition of the difficulties caused by implementation of the McCloud remedies, value data will only need to be provided for public service scheme members by the earlier of 1 April 2025 or when a “remediable service statement” is issued to the member.

Normal pension age (NPA) projections – Due to concerns over the different possible interpretations of NPA, this will be replaced by a different legal term, “retirement date”, used in the Disclosure Regulations 2013. Trustees, particularly of DB schemes, will need to consider what this term means for their members, as it may not be entirely clear. This change could potentially also give trustees the flexibility to provide projections to members over NPA.

Tranched DB benefits – Where DB benefits comprise various tranches, different retirement ages, step-ups etc, the regulations will give the option to provide either a combined value or different sets of values.

Value data for deferred DB members – In response to concerns about the difficulties in providing a revalued accrued value for deferred members, a simplified option will be available where a full calculation would involve disproportionate cost or time and the trustees are content it would not be misleading. Use of the simplified calculation must be flagged and this option will only be available for two years after the scheme’s connection date.

Money purchase annualised accrued and projected values – The response confirms that these will only be required from 1 October 2023, once a pension illustration has been given in accordance with the revised version of Actuarial Standards Technical Memorandum 1 (AS TM1), which has recently been consulted on.

Value data for underpin benefits – Trustees will have some discretion around what methodology to apply, based on what they consider best represents the value of the benefit.

Cash balance scheme projections – Where the scheme is intended to provide only a lump sum, no annual pension projection will be required.

Other issues

Schemes in PPF assessment – The draft regulations will be amended to fully exempt schemes already in PPF assessment before their staging deadline. However, where any sections of the scheme are not in assessment, the whole scheme would need to stage. Schemes entering PPF assessment after they have staged will no longer have to provide value, context or signpost data.

Schemes in wind-up – Schemes in wind-up will still need to connect to dashboards but should only provide value data if the trustees consider it appropriate to do so.

Notifying Money and Pensions Service (MaPs) of disconnection – The draft regulations said that MaPS must be notified of any disconnection from dashboards “immediately”. Recognising that this may be impractical, this will change to “as soon as possible”.

Other references to “immediately” – There are various other requirements in the draft regulations that have to happen “immediately” (e.g. matching, returning administrative data etc). MaPS will provide further information on what this means but DWP expects it to be “as quickly as it can be done” with the expectation of responses generally being delivered within 60 seconds for matching (with a target of 15 seconds) and otherwise within seconds.

Next steps

We have not yet seen the updated regulations to accompany this consultation response. These will reveal more about the fine detail of the final requirements, which is particularly important in respect of value calculation methodologies. We would expect the regulations to be published soon but no firm timing was mentioned in the consultation. We are also waiting for various other pieces of the dashboards jigsaw, including:

• DWP’s response to its short consultation on the ‘Dashboard Available Point’ (i.e. when dashboards will “go live” to the public) and information sharing between MaPs and the Regulator, which closes on 19 July 2022
• MaPS/Pensions Dashboards Programme standards – a suite of documents setting out more detail (some mandatory) on processes and how to comply with dashboard requirements. The DWP (in the consultation response) has said that this will also include design standards for dashboards, including “a clear explanation to individuals using those services, which point out the limitation of the service” – this will hopefully go some way to addressing liability concerns around dashboards. These are due to be published for consultation soon, with consultation on the draft design standards now expected to open on 19 July 2022
• the Regulator’s draft compliance and enforcement policy (due shortly after the regulations are laid before Parliament)
• the Financial Reporting Council’s response to its (now closed) consultation on revisions to AS TM1, which covers money purchase projections for dashboards, expected to be available in autumn with the new version in force from 1 October 2023.

Subject to the limited exceptions described above, trustees holding out hope for a significant delay or reprieve on dashboards will be disappointed. The consultation response is clear that the government “remains fully committed to making pensions dashboards happen at the earliest opportunity”. There is no longer any excuse not to have this at the top of trustee meeting agendas.

In practice, trustees will most likely use administrators, software providers or integrated service providers to assist with dashboard compliance but, as the Regulator told trustees in its initial guidance, “While you can use third parties to help you meet your duties, you will ultimately remain accountable…”

If you would like more information on what you should be doing to prepare for dashboards (including a list of suggested action points), please contact your usual Eversheds Sutherland adviser or the contacts below.