In this edition of our Insight, we provide an update on the latest pensions dashboards news, the Pensions Regulator’s prosecutions of ERI breaches and the latest from the FCA on the British Steel Pension Scheme redress scheme.
Pensions dashboards update
Pensions Dashboards Regulations to come into force on 12 December 2022
The Pensions Dashboards Regulations 2022 (which amongst other things set out the staging deadlines for schemes) were made on 21 November 2022 and will come into force on 12 December 2022 (see our Insight for further details of the regulations and the PDP’s staging timeline).
PDP releases revised pensions dashboards standards
The Pensions Dashboards Programme (PDP) has released revised standards for connecting to the pensions dashboards ecosystem (the central digital architecture for dashboards) following its July 2022 consultation.
The standards outline the technical and operational requirements that pension providers and schemes, and qualifying dashboard providers, will have to meet in respect of data formatting, standards detail security, and service and reporting duties. The Secretary of State will formally approve the standards before they come into force.
The PDP is running various webinars on the revisions between 5-8 December 2022 and will consult on draft design standards this Winter.
The Pensions Regulator requests feedback on dashboards compliance and enforcement policy
The Pensions Regulator is asking the pensions industry to respond to its new consultation on a dashboards compliance and enforcement policy which outlines the Regulator’s expectations on compliance with the Pensions Dashboards Regulations 2022. The Regulator is “keen to hear from schemes of all sizes, their administrators and integrated service providers to ensure the new policy is understood by, and meets the needs of, the industry.”
The consultation closes on 24 February 2023. The final policy is anticipated to be published in spring 2023.
The Regulator has made it clear that trustees must start preparing for their scheme’s staging deadline if they have not done so already. The first step may be to discuss the requirements for the scheme with the scheme’s administrator – trustees will need to identify their staging date, begin considering the data they hold, and determine how the scheme will connect with the dashboard’s architecture.
The Pensions Regulator’s employer-related investment prosecutions
Worthington scheme prosecution update
We reported in our October Insight on the Pensions Regulator’s prosecution of two former pension trustees of the Worthington Employee Pension Top Up Scheme and a professional adviser for breaches of the employer-related investment provisions contained in the Pensions Act 1995 and the Occupational Pension Schemes (Investment) Regulations 2005. Breach is a criminal offence and can lead to an unlimited fine and/or a prison term.
The case involves loans and an investment amounting to £700,000. Three of the loans were made by the scheme to the parent company of the principal employer.
The case is progressing. One of the former trustees, David Boardman, has pleaded not guilty whilst the other, Stephen Smith, has pled guilty to five of the six charges. The professional adviser, Derek Thomas, has not entered a plea in respect of his four charges. The trial is due to start on 20 November 2023.
Eastman Machine Company scheme – illegal loans
The Regulator has also prosecuted two former trustees (Andrew Kyprianou and Colin Werb) of the Eastman Machine Company Limited Superannuation Scheme for making illegal loans amounting to £236,000 in breach of the ERI statutory provisions to Eastman Machine Company Limited, the scheme’s employer.
Both Kyprianou and Werb have been sentenced to 16 months in prison, suspended for two years. They were also charged with providing false or misleading information to the Regulator in breach of section 80 of the Pensions Act 2004.
Since an August 2022 hearing at which the defendants pled guilty, £270,000 has been paid into the scheme which is now ‘broadly’ fully funded on a buyout basis.
FCA final rules for British Steel Pension Scheme redress scheme
The Financial Conduct Authority has published final rules for the British Steel Pension Scheme (BSPS) redress scheme set up for former members of the scheme who transferred out after receiving unsuitable advice. The FCA has found that 46% of all transfers were not suitable.
The redress scheme will start on 28 February 2023 with firms being required to identify consumers within scope and write to all BSPS consumers by 28 March 2023. Advice needs to be reviewed by the end of September 2023 so that consumers can be given a redress calculation by the end of the year.