Pensions dashboards have been a hot topic of conversation in the UK for several years now. Our earlier blog sets out some background and discusses how they might operate in practice. Given that the current economic climate could be impacting how individuals prepare and plan for retirement, it is potentially even more important that individuals are aware of the funds available to them on retirement as we navigate the current cost-of-living crisis.
It is certainly hoped that the introduction of pensions dashboards will support better retirement planning by facilitating increased member engagement, which should in turn encourage individuals to become more in tune with their financial planning goals. This is particularly relevant given comments from former pensions minister Guy Opperman suggesting that an estimated 12 million people in the UK could be under-saving for their retirement.
Background
The Pension Schemes Act 2021 established the legislative framework for the pensions dashboard ecosystem, while draft regulations published in 2022 set out the requirements in more detail. As a reminder, pensions dashboards are digital platforms which allow individuals to view information about their pension savings (including their state pension) in one secure online location. Pensions dashboards are intended to revolutionise the way in which individuals manage their pension savings in advance of retirement by:
• providing easy access to pension savings across multiple pension pots;
• reconnecting individuals with any lost pension pots;
• helping individuals to understand the value of their pensions in terms of estimated retirement income.
Outcome of consultation
The Department for Work and Pensions (DWP) issued a response to its consultation on pensions dashboards on 14 July 2022 in which it highlighted the importance of progressing with the rollout of pensions dashboards from September 2023. However, the response notes that the DWP has decided to tweak its proposals to take account of the concerns raised by various stakeholders during the consultation period.
Changes to staging dates
While many of the staging cohorts remain unaffected by the government's response to its consultation, the DWP has confirmed that the deadlines for the first two staging cohorts will be deferred for two months. The change applies to master trusts with 20,000 or more relevant members whose staging date will move from 30 June 2023 to 31 August 2023. It should also be noted that the connection window for large master trusts will be increased from three months to five months so that schemes in a position to do so may begin connection from April 2023. The second cohort impacted by the staging date change is large money purchase schemes providing automatic enrolment whose deadline will change from 31 July 2023 to 30 September 2023.
The DWP also addressed concerns associated with the implementation of dashboards alongside the McCloud remedy which has proved to be a sticking point for many public sector pension providers. To mitigate the impact of the McCloud remedy implementation, the DWP has delayed the staging date for public sector pension schemes from 30 April 2024 to 30 September 2024.
Deferring the deadline
The draft regulations permit schemes to apply to the DWP to defer their connection deadline for up to 12 months. This is designed to provide flexibility for schemes in the process of changing administrator, provided that certain conditions are satisfied. The consultation response issued by the DWP confirmed that the criteria contained in the draft regulations will not be expanded any further. Instead, trustees and pension providers will be required to rely on The Pensions Regulator ("TPR") to exercise its discretion to not take enforcement action if a scheme is unable to comply with the relevant staging requirements due to circumstances outside their control.
Exceptions to the rule
The DWP has stated that the draft regulations will be amended to make certain concessions for schemes in PPF assessment or wind-up. Schemes in the process of winding-up will still need to connect to dashboards but should only provide value data if the trustees consider it appropriate in the circumstances. Schemes in PPF assessment before their staging deadline will be exempt from the requirement to connect but if any sections of the scheme are not in assessment, the whole scheme will be required to connect.
The draft regulations make no reference to small and micro schemes, but the DWP has confirmed that these schemes should begin the onboarding process from 2026.
Practical steps for trustees and scheme managers
Trustees and scheme managers will be responsible for ensuring that they are able to connect to the dashboard ecosystem by their scheme's staging date. TPR has therefore urged trustees and scheme managers to lay the groundwork for implementation sooner rather than later. To ensure that their respective schemes are "dashboard ready", trustees and scheme managers should take the following actions:
• identify the relevant staging date for their scheme;
• identify their preferred method of connection (for example, via their scheme administrator, a third-party integrated service provider or an in-house solution);
• liaise with their advisers, administrator and other relevant third parties to implement an appropriate project plan;
• assess the accuracy and digital accessibility of their current data and consider what steps they should take to improve the quality of their scheme's dashboard data with input from their advisers and administrators.
For more information or advice in relation to the pensions dashboards requirements, please contact a member of our pensions team.
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