In this edition of our Insight, alongside other recent key pensions developments, we provide a summary of the pensions dashboards regulations.
Pension dashboards: draft regulations published
The DWP has published the draft Pensions Dashboards Regulations 2022. These were published as indicative draft regulations in January and were the subject of two consultations (see here and here). The regulations will be made into law after being approved by both Houses of Parliament.
By way of recap, a pensions dashboard will be an online system through which individuals can obtain information about their pension benefits, including state pension, in one place. The regulations outline the dashboard obligations of qualifying providers and pension schemes and include the following matters.
Which schemes are in scope?
In summary, registrable occupational pension schemes with 100 or more members (excluding pensioner members) and UK-based non-registrable public service pension schemes will be required to connect to the dashboard’s ecosystem by their staging deadline.
The requirements for being a ‘qualifying’ pensions dashboards provider – initially the only provider will be the Money and Pensions Service (MaPS), but it is intended that other organisations will be able to become providers if they meet certain ‘qualifying’ criteria as set out in the regulations. These will include having to meet certain standards and being authorised by the FCA.
The regulations set out the requirements for schemes in scope which principally include:
- connecting: schemes must co-operate with and connect to the digital architecture and governance framework (the ecosystem) by their staging date;
- find and view requests: schemes must be able to:
- receive a ‘find’ request from an individual who has requested pensions information and undertake ‘immediate’ matching to see if the individual is or could be a member; and
- respond to a ‘view’ request from a matched individual by providing certain prescribed information about the scheme and their benefits – administrative data (scheme, administrator and employment information), signpost data (website details for accessing costs and charges information, the SIP and the implementation statement), and value data (accrued and projected pension information which will differ according to benefit type and member category);
- providing information: certain ‘operational information’ to MaPS, the Pensions Regulator or the FCA must be provided by schemes in accordance with certain standards; and
- record-keeping: schemes must keep certain dashboards records for at least 6 years.
Compliance and enforcement
The Regulator will oversee compliance and will have the power to issue compliance and penalty notices for breaches.
The staging dates for schemes are set out in Schedule 2 of the regulations. This is the date by which a scheme within scope must connect to the dashboard. The Regulator will be in touch with all schemes at least 12 months before their connection deadline.
- Large schemes (1,000+ active and deferred members, master trusts, public service and CDC schemes) – Staging dates: between 31 August 2023 and 30 September 2024
- Medium schemes (100 to 999 active and deferred members) – Staging dates: between 31 October 2024 and 31 October 2025.
Deferrals may be made for up to a year in limited circumstances – essentially where, before the 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 staging deadline – the DWP has published draft deferral guidance.
Dashboards Available Point
Pensions dashboards will be made available to the public when the ‘Dashboards Available Point’ has been reached. The Secretary of State will provide at least six months’ notice of this date.
By providing data, trustees will be processing personal data and, as data controllers under the UK General Data Protection Regulation, they will need to comply with their data protection duties in this regard. Compliance will include:
- considering whether to undertake a data privacy impact assessment before processing;
- determining a legal basis for the processing;
- reviewing and, if necessary, updating the privacy notice which is the notice containing certain data processing information which schemes must provide to relevant individuals that they hold data about;
- ensuring that accurate data is provided;
- making sure that data is processed securely; and
- managing data processors which will include administrators and software providers.
Regulator publishes consolidated enforcement policy, new enforcement strategy and updated prosecution policy
On 25 October 2022, the Pensions Regulator published:
The Regulator’s accompanying blog on enforcement explains that although the Regulator has not fundamentally altered its approach, the new documents clarify the overall process and the matters that the Regulator will consider during a case.
Scheme management enforcement policy
- The policy replaces the DB, DC and public service enforcement policies but does not cover automatic enrolment or master trust and CDC schemes.
- It incorporates the overlapping powers and information gathering policies that the Regulator consulted on in 2021 and includes the new powers given to the Regulator in the Pension Schemes Act 2021.
- The policy is relevant for trustees and managers of all occupational pension schemes, employers, service providers and advisers.
- It is web-based with separate chapters, so more easily accessible.
- Further clarity has been provided in the final version with case examples where appropriate noting that these must be produced within the confines of having a principles-based approach that concentrates on risk and harm factors.
This sets out how the Regulator approaches all of its enforcement work apart from auto-enrolment and discusses the Regulator’s approach, aims (essentially prevention, remedy, restoration and deterrence), options and publication.
- This sets out how the Regulator will approach prosecution of both criminal and other kinds of offences that relate either to the same facts or events or to the Regulator’s functions.
- Appendix 1 provides a useful table of the different criminal offences and the relevant legislation.
- The policy covers the Regulator’s general approach, who can be prosecuted, the investigation process, the use of its powers and liaison with other agencies.
- Generally, responders were positive about the production of a consolidated enforcement policy and the updates to the prosecution policy.
- A number of comments and suggestions were made in various areas – the response sets out where changes have been made to the policies as a result, why certain changes have not been made and provides additional commentary where necessary.
Pensions Ombudsman: Pensions Dishonesty Unit determination
The Pensions Ombudsman has published his Determination in one of the first cases to have been investigated by the recently set up Pensions Dishonesty Unit, the Unit established by the Ombudsman to ensure that ‘wrongdoers’ repay money unlawfully obtained directly to scheme members. (See our Insight).
The Ombudsman found that the trustees of the Black and White Financial Solutions Occupational Pension Scheme had committed multiple breaches of trust and acts of maladministration including ‘facilitating a form of pension liberation’.
The scheme had been set up by two directors of the sponsoring employer, the Black & White Financial Solutions Ltd, an unregulated ‘pension funding’ business. The company bought potential client details and offered these potential clients a pensions review, which if accepted meant they received information on a ‘cash rebate pension strategy’ under which members of the scheme could receive commission payments from the investment company and a fixed return. The employer received 15% commission of which the members were unaware.
The trustees have been directed to repay to the scheme the sums invested which totalled £858,679 (minus the value of loan agreements and monies already paid to members).
WPC inquiry on LDI
The Work and Pensions Committee is conducting an inquiry on the ‘lessons to be learned’ from the recent issues that arose in respect of pension schemes that use LDI as a result of volatility in the gilt yield markets. The call for evidence closes on 15 November 2022.
Political appointments: Guy Opperman returns as Pensions Minister and Chloe Smith replaced by Mel Stride as the Secretary of State for Work and Pensions
Prime Minister Rishi Sunak has appointed Guy Opperman as the Minister of State for Work and Pensions. Mr Opperman was previously the pensions minister between 14 June 2017 and 8 September 2022 and so returns to this role after only a short break.
Mr Alex Burghart who was recently appointed as the Parliamentary Under Secretary of State for Pensions and Growth, a new role within the DWP, is now a Parliamentary Secretary in the Cabinet Office.
Mr Sunak has also appointed Mel Stride in place of Chloe Smith as the Secretary of State for Work and Pensions.