New draft regulations show that schemes have much to do to get ready for Pensions Dashboards. For master trusts and defined contribution (DC) auto-enrolment schemes the pressure is on.
Dashboards are online platforms which will allow people to view information about all their pensions, including their state pensions, in one place. The Pensions Dashboards Programme set up by the Money and Pensions Service (MaPS) has been building the digital architecture and expects it to be completed this summer.
Now both the Department for Work and Pensions (DWP) and the Financial Conduct Authority (FCA) are consulting about detailed requirements for occupational and contract-based pension schemes. These focus on how and when pension schemes should connect to the MaPS Dashboard and what information they will have to provide.
What information will schemes provide?
Schemes will help members find lost pensions by matching “find” requests from the Dashboard to data on their systems. They will then also need to provide information about what the pension is worth.
It’s proposed that schemes will tell members:
- the current value of their benefits accrued to date, and
- the projected value of what the pension may be worth in retirement.
For many schemes this will mean undertaking additional calculations.
The suggested response times for providing value information are very short. Where a value is readily available from a recent benefit statement, it would need to be returned immediately. Where it is not readily available, DC schemes would have up to 3 working days and DB and hybrid schemes up to 10 working days to provide it.
When will schemes need to connect to the Dashboard?
For occupational pension schemes, the DWP proposes three staging waves, starting with the largest schemes:
|Size of occupational pension scheme||Proposed staging date|
|Large schemes: 1,000+ members||Between April 2023 – September 2024|
|Medium schemes: 100 to 999 members||Between October 2024 – October 2025|
|Small and micro schemes, under 100 members||Expected to be from 2026, but not covered by the draft regulations. Separate regulations to follow.|
Scheme size will be determined by counting the number of active and deferred members. The decision not to include pensioners means that fewer schemes will be part of the first wave than was previously anticipated.
Large master trusts will be asked to connect to the Dashboard first, followed by DC auto-enrolment schemes, as part of the first wave.
Schemes will be expected to be ready to match members to pensions and provide value data once they are connected, even if the Dashboard has not yet gone live for members (which we understand is unlikely to happen before 2024 at the earliest).
The DWP has indicated that occupational pension schemes will only be able to defer their staging date in limited circumstances – essentially where a transition to another administrator is underway.
Under the FCA’s complementary proposals, personal and stakeholder pension schemes would connect to the Dashboard and be ready to respond to member requests by June 30, 2023. However, some very small providers could elect to defer connection until October 31, 2024.
What happens next?
The DWP and FCA consultations close on March 13, 2022 and April 8, 2022 respectively. The DWP rules could be in force from this autumn with the FCA rules expected to be finalised then and to come into force from March 31, 2023.
Further consultations will follow, including on Pensions Regulator guidance and technical standards for data and connection.
What should schemes do now?
Schemes need to work out whether they are in scope for these regulations, when their staging date is likely to be and get planning so that when their staging date comes round they are ready to connect with the Dashboard and interact with it. For the larger schemes – particularly master trusts and DC auto-enrolment vehicles – this will all be upon us very quickly.
Schemes should consider:
- putting in place appropriate governance structures to help get Dashboard-ready, for example trustee boards may want to establish a Dashboard subcommittee to manage this project,
- options for connecting to the Dashboard architecture – via an intermediary (e.g. administrator or software provider) or directly,
- assessing and improving the data that will be needed,
- what processes and resources will be needed to comply with requests within the proposed response times, and
- how to deal with risk and liability issues such as errors in benefit calculations or accidentally sending data to the wrong person.