Pensions Insight: 5 to 12 June 2023

In this insight we provide an update on the new 31 October 2026 connection deadline for pensions dashboards, the Retained EU Law Bill, the Pensions Regulator’s (TPR) defined contribution (DC) blog on protecting savers from economic volatility, the expected autumn auto-enrolment expansion consultation, a UK-US data bridge and a Pensions Ombudsman cyber incident.

Pensions dashboards: 31 October 2026 connection deadline for all schemes, updated TPR dashboards guidance and PASA guidance

Pensions Minister’s statement and amending regulations – single 31 October 2026 connection deadline

The Pensions Minister’s 8.6.23 statement and amending regulations (the Pensions Dashboards (Amendment) Regulations 2023) laid on the same day, confirm a new 31 October 2026 connection deadline. This follows Laura Trott’s 2.2.23 announcement of a Pensions Dashboards Programme reset.

Now, all occupational pension schemes with 100 or more relevant members (actives, deferreds and pension credit members) at the scheme year end between 1 April 2023 and 31 March 2024 (the reference date) will have to connect the whole scheme by 31 October 2026 – this replaces the staging profile, staging deadlines and connection window that were previously in place under the Pensions Dashboards Regulations 2022.

Connection guidance and staging

Instead of being set out in legislation, trustees will have to refer to guidance from the Department for Work and Pensions (DWP) and the Money and Pensions Service (MaPS) on the staging timeline which will set out a scheduled connection date for schemes by size and type.

To allow for the launch of dashboards as soon as possible, MaPS and TPR will contact schemes in scope to “encourage connection ahead of the single connection deadline, in line with the connection dates set out” in the guidance. TPR’s guidance (see below) will also be updated to cover staging.

Connection date for schemes that meet the criteria after the reference date

Schemes that did not exist or have fewer than 100 relevant members at the reference date but 100 or more on or after 1 April 2024 must connect by the later of:

• six months from the end of the scheme year in which the scheme meets the 100+ member criteria; and
• 31 October 2026.

Connection deferral

The deferrals process will also be updated to take account of the new timescales.

Deferrals to the connection deadline may be made for up to a year in limited circumstances – essentially where, before the amending regulations come into force, the scheme is transitioning to a new administrator or there is a contractual requirement to retender the scheme’s administration which conflicts with the connection deadline. The DWP has published deferral guidance which is currently being updated to reflect the new requirements. The amending regulations extend the period for making a deferral application to within 12 months of the amending regulations coming into force.

Early and voluntary connection

Early connection will be revoked given there is no longer a connection window. However, schemes with 99 or fewer relevant members that are not statutorily required to connect may do so voluntarily.

Schemes in PPF assessment

Schemes that enter a Pension Protection Fund (PPF) assessment period following sponsoring employer insolvency do not need to connect unless the scheme does not end up in the PPF. If only a section of the scheme goes into PPF assessment, the connection requirements still apply.

Updated TPR guidance

On 8 June 2023, TPR updated the overview and when your scheme needs to connect with dashboards sections of its initial dashboards guidance to cover the new developments.

PASA dashboards values guidance

Also on 8 June 2023, the Pensions Administration Standards Association published Dashboards Values Guidance for defined benefit (DB) and defined contribution (DC) schemes on ‘good practice’ approaches to dealing “with a number of common issues not addressed by legislation or Standards”. This includes areas such as late retirements, partial retirements, DB revaluation, underpins, partial retirements and additional voluntary contributions (AVCs).

As regards the latter, AVCs present potential issues given trustees will have overall responsibility for providing dashboard information relating to them yet are reliant on the AVC provider to provide this. The possible three options for providing AVC data on dashboards are: (1) the main scheme administrator providing both DB and AVC details; (2) the DB and AVC values being given separately but linked so that the dashboard can connect them; and (3) both sources being unlinked. PASA is going to issue a questionnaire to AVC providers to see which of the three options they could support.

Next steps for trustees

Despite the delay to the introduction of dashboards, trustees should continue with their preparations given there will still be a lot for schemes to do before they are ‘dashboards ready’. Trustees can use TPR’s checklist to help them prepare.

Retained EU Law (Revocation and Reform Bill) – progress update

On 6 June 2023, the House of Lords agreed to certain amendments that had been made by the House of Commons (see our Insight) including the removal of:

• the Lords’ parliamentary oversight provision in the clause 1 sunset provision relating to retained EU law;
• a requirement that the Government identify which laws would be revoked under a separate sunset provision which will automatically repeal retained EU law derived from directly effective EU treaties and EU directives at the end of 2023; and
• a statutory instrument sifting and additional scrutiny provision which the Lords wished to see inserted – instead they have agreed a more limited provision.

TPR blog on protecting DC savers from economic volatility

TPR’s 6.6.23 blog urges trustees of defined contribution schemes to ensure they maintain focus on ‘protecting savers from economic volatility’ especially those who are nearing retirement. It is this cohort that has the smallest amount of time to make good any shortfalls and who are being disproportionately affected by the adverse impact that increasing interest rates and inflation is having on bonds (given many pre-retirement investment strategies including lifestyle funds move to typically less risky investments such as bonds in the lead-up to retirement).

TPR wants DC schemes to:

• consider outcomes not just costs;
• make sure the default pre-retirement strategy is ‘fit for purpose’ in present market conditions;
• give “up-to-date context in annual statement and supporting materials” to reflect the fact that annual benefit statements are backwards looking and may not show ‘early signs of recovery’ in equities – this is especially relevant for younger members; and
• ‘engage’ with members nearing retirement to consider and adjust their plans, if need be, bearing in mind the risks of removing cash alongside the value of maintaining investments which have growth potential.

Action: Trustees of DC schemes should consider liaising with their scheme’s administrators to check that member communications provide adequate saver ‘support’ including necessary signposting to Pension Wise and MaPS and, where appropriate, information about post-reporting period events. They should also speak with their investment adviser as regards whether the default pre-retirement strategy “is targeting the right outcome and is fit for purpose in the current market environment”, noting the requirement to review the default strategy and performance triennially (and without delay after significant change in investment policy).

Consultation on extension of auto-enrolment expected this autumn

Speaking at a recent pensions industry event, the Pensions Minister has confirmed that the Government plans to consult this autumn on the extension of automatic enrolment to cover 18-21 year olds and to remove the lower earnings limit for qualifying earnings. These measures have been proposed in a Private Members’ Bill that was introduced to Parliament on 27 February 2023.

UK and US commitment in principle to data bridge

On 8 June 2023, the UK and US Governments made a joint statement confirming that both countries have “committed in principle to establish a data bridge” for the UK Extension to the EU-US Data Privacy Framework that will permit the “free flow of data between organisations in the United Kingdom and participating organisations in the United States.” The bridge is subject to the UK’s assessment and additional work being completed and the US designating the UK as a qualifying state. Having a data bridge will remove the need for alternative data transfer methods such as standard contractual clauses which the Government regards as ‘costly’ and burdensome. The statement forms part of the Atlantic Declaration announced on the same date that sets out a new plan for UK and US co-operation on economic challenges.

Pensions Ombudsman cyber incident

On 5 June 2023, The Pensions Ombudsman confirmed that it is investigating a cyber incident – it is liaising with relevant agencies and has disabled some of its systems such as application forms and LiveChat as a ‘precautionary measure’. It will provide a further update in due course.