Dashboards are coming: are you ‘dashboard ready’?

DWP has just issued a consultation to seek views on a range of policy questions relating to the creation of pensions dashboards[1]. An indicative draft of the prospective regulations is included to show how DWP envisages the policy become law. This draft legislation is also telling of the government’s commitment to make dashboards a reality. These latest developments should be considered a wake-up call for trustees and pension providers that they need to get ‘dashboard ready’.

The consultation

The consultation affirms the government’s decision to prioritise the connection of the largest pension schemes first (in addition to making information on State pensions available from day one). The current staging profile for the progressive connection of pension schemes to the digital architecture is set out in Schedule 2 of the regulations. Schemes with 1,000 or more relevant members (that is actives and deferreds) have a compulsory staging period that starts in just over a year’s time!

It is also confirmed that there could be more than one dashboard. Individuals will be able to access a dashboard service that is publicly owned, provided by the Money and Pensions Service (MaPS). In addition, other organisations which meet prescribed requirements – to be a “qualifying pensions dashboard service” – will be allowed to develop and host their own dashboards.

What do trustees need to do?

Provide information

For dashboards to be a useful tool, and to support the operation of finding and displaying an individual’s pensions information, trustees of occupational pension schemes, as well as individuals using dashboards, must provide data. Individuals will need to provide personal data, known as ‘find data’, which will allow trustees to search their records for a match and, if successful (i.e., there is a match), trustees will subsequently return scheme data for that individual, known as  ‘view data’.

The view data DWP proposes trustees must provide is broadly within the scope of the existing Occupational Pension Schemes Disclosure of Information Regulations 2013 and, for the most part, is available to individuals on statements issued annually or on request. That said, there are areas where DWP proposes additions “to ensure that the needs of individuals using dashboards are met”. View data is then to be returned to the individual using the dashboard.

Pensioner members will be out of scope of dashboards. However, for other members, DWP proposes a requirement on schemes to provide both ‘accrued’ and ‘projected’ values, including values which represent annual income amounts.

For money purchase benefits, schemes will follow the methodology set out in the Actuarial Standards Technical Memorandum (AS TM1) when providing values. AS TM1, which is already used for statutory money purchase illustrations, will be updated by the Financial Reporting Council.

For defined benefit (DB) pensions, trustees need to provide active scheme members with an accrued pension value. This would be the amount payable if pensionable service were to end at the illustration date, presented as if the individual has reached normal pension age. This should be calculated in accordance with scheme rules, and assuming no increases in salary.

For deferred members, the intention is for the value to be re-valued to the illustration date in accordance with scheme rules and presented as if the individual has reached normal pension age.

For DB pensions, the policy is for trustees to also provide active members with a projected value, calculated following scheme rules (assuming the member continues in pensionable service, continues to build up benefits until normal pension age, and there is no increase in the individual’s salary). The value should be presented as if the individual has reached normal pension age.

Timescales for provision of information are ‘tight’; essentially real-time.

Understand the operation of dashboards (inc. data protection)

The regulations will require trustees to:

• Connect to the digital architecture[2] so that they can receive find and view requests
• Receive find requests, undertake matching and register any found pensions to match individuals to their pensions
• Receive and respond to view requests to make individual’s information available to them at the dashboard of their choosing

Consideration is given to the interaction with data protection legislation. However, within the pensions dashboards ecosystem, there will be multiple relationships that involve the processing of personal data and, ultimately, it is for each party to determine its own role.

MaPS or The Pensions Regulator (TPR) will set reporting standards for trustees that will require them to maintain certain records and report certain information. Also, regulations will provide TPR with powers to issue compliance notices, third-party compliance notices, and penalty notices. Financial penalties for individual dashboard-related breaches can be up to £5,000 if the person is an individual and £50,000 in other cases.

Getting ready to connect

• Is your pension scheme data ‘fit for purpose’.
• Will you be able to connect to pensions dashboards no later than your staging date and provide relevant information in response to ‘find requests’ within the prescribed timescales?

As part of the connection process, trustees will be expected to have completed all of the pre-connection steps set out in connection standards, by their relevant deadline.

Trustees should be speaking to their scheme administrators and advisers now.

[1] Pensions dashboards: consultation on the draft Pensions Dashboards Regulations 2022 (publishing.service.gov.uk)

[2] To understand how the various components of the digital architecture will work, see – https://www.gov.uk/government/consultations/pensions-dashboards-consultation-on-the-draft-pensions-dashboards-regulations-2022/pensions-dashboards-consultation-on-the-draft-pensions-dashboards-regulations-2022#annex-b