Out-Law News | 01 Feb 2022 | 2:53 pm | 4 min. read
The UK Department for Work and Pensions (DWP) has launched a consultation on proposed regulations for pensions dashboards.
Pensions dashboards are intended to let people access their pensions information online, securely and all in one place, helping them to plan for retirement more effectively.
The DWP consultation includes ‘indicative draft’ regulations that set expected requirements for a pensions dashboard service, as well as the data and compliance requirements for schemes and providers. The regulations also allow for commercial dashboard providers, known as Qualifying Pensions Dashboard Services (QPDS), which must be authorised by the Financial Conduct Authority (FCA) and adhere to all Money and Pensions Service design standards.
The DWP noted that the “ambitious” data requirements for pension schemes would require them to respond to requests for “administrative” and “signpost” data immediately, since these types of data do not require calculations and should be readily available. Where schemes already hold “value” data, because it has been included in benefit statements for example, they would also be expected to provide the information to dashboards immediately. In other cases, value data should be provided within three days, except for non-money purchase schemes and hybrid schemes which would be given a 10-day deadline.
Tom Barton, pensions and savings expert at Pinsent Masons, said: “This consultation is a major step in the journey towards fully functional pensions dashboards in a relatively short time horizon. We’re now looking at operational detail and legal roles and responsibilities for all of the stakeholders around the pensions industry. There’s a lot of detail to be digested by dashboard providers and by those running pension schemes who’ll need to provide all the data. This makes it a complex collision between technology supply and pensions law – and when this last happened with auto-enrolment, it’s fair to say that there were teething troubles in getting systems to align with a very prescriptive legislative and regulatory regime.”
State pension information, provided by the DWP, is expected to be available “from day one” to make dashboards as useful as possible.
Any additional information that commercial or QPDS providers might choose to show on top of the required data will be set out in FCA rules, and the DWP said it planned for dashboards to develop and become more sophisticated over time – with the possible inclusion of modelling tools or the potential to facilitate member-initiated transfers or consolidation.
Ben Fairhead, pensions litigation expert at Pinsent Masons, said: “On the face of it, a dashboard could be a scammer’s paradise, but it is encouraging that there is an early awareness of the risks. Hopefully other recent measures such as changes to rules governing transfers between schemes will provide some protection against a new wave of scam activity although time will tell whether sufficient safeguards are put in place.”
Once the regulations are implemented, pension schemes will be required to connect to the dashboard technology in a staged rollout, starting with large schemes with more than 1,000 relevant members between April 2023 and September 2024, before smaller schemes follow suit. Master trusts with 20,000 or more relevant members will also be included in the first stage of the rollout.
Medium schemes could connect to dashboards between October 2024 and October 2025, according to the consultation, which also proposed a deadline of 30 April 2024 for collective defined contribution (CDC) schemes and public service pension schemes. Small and micro schemes are then expected to connect from 2026.
Once schemes have connected to a dashboard, they will be required to stay connected – even if they’ve chosen to connect before their compulsory staged connection date. The draft regulations, which are expected to be subject to changes after the consultation, will only apply in England, Wales and Scotland. Separate pensions dashboards legislation will be drawn up for Northern Ireland.
Barton said all areas of the industry would have to participate in the DWP’s consultation to make it a success, along with planned dashboard-related consultations led by the FCA, The Pensions Regulator (TPR), the Financial Reporting Council and the Pensions Dashboard Programme.
“Areas of nervousness still include transactional capability beyond just ‘find and view’ capability. There’s scope here for unwise decisions and transfer regret, which the policymakers have recently been working to address with stronger nudge and scams measures,” Barton said, warning that the security of dashboard users’ data and identities posed an issue too.
“Alongside data protection law, a set of principles has been designed to address this, with various supporting new regulations. It’s going to be really important for schemes to work through all of this to make sure they are compliant and not exposing themselves to risk,” he added.
“Trustees and providers are going to have to get to grips with a lot of new compliance, layered up on top of an already highly regulated pensions landscape. This will be painstaking – and will need to work in tandem with suppliers to ensure that the technology service being delivered actually works against dashboard and other adjacent legal requirements. Helpfully, TPR intends to remind schemes of their deadlines and the activities expected of them, including expected timescales for completing those activities,” Barton said.
“Getting data in the right shape now is an important starting point, and thoughts should be turning to any gaps – and the ways schemes might best be able to deliver annual income amounts. This sort of thing is best considered by reference to existing system and administration practices rather than in the abstract. Unless the issues are flushed out through the consultation, there’s a danger that systems will not be able to deliver to any prescriptive standards – or at least not in the case of atypical schemes and benefits,” he added.
Participants in the pensions dashboards system are likely to be considered independent data controllers, and the ICO will have responsibility to investigate and take action over breaches of data protection law. TPR would also be given discretionary powers to issue compliance notices, with fines of up to £50,000 for corporate entities. The Pensions Dashboard Programme is expected to issue a UK GDPR publication in summer 2022 with more details about the role of individual consent in the way dashboards operate.
Barton said: “Trustees and providers may need to enter into updated or new contracts with third parties who support in the processing data. This will protect security and guard misuse of data. There will be a governance piece, too, in selecting the appropriate partners for dashboard related compliance.”
The DWP consultation closes on 13 March 2022.
31 Jan 2022