On 14 July, the Government posted its response to its consultation on the draft Pensions Dashboards Regulations 2022 (the "Regulations") which ran from 31 January to 13 March this year. The response confirms there will be no fundamental change, with the Government remaining "fully committed to making pensions dashboards happen at the earliest opportunity". However, there has been some tinkering around the edges. The key changes are:

Staging

  • The staging deadlines for the first two cohorts have been extended by two months so that master trusts with 20,000 + relevant members now have to connect by 31 August 2023 instead of 30 June and money purchase schemes used for automatic enrolment with 20,000 + relevant members now have to connect by 30 September 2023 instead of 31 July 2023.
  • The staging deadline for public service pension schemes has been changed from 30 April 2024 to 30 September 2024 to allow for further time to implement McCloud.
  • The proposals relating to staging deadlines for hybrid schemes have been simplified. Hybrid schemes should add up the total relevant members across their DB and DC sections and then treat the entire scheme as DB to determine their staging deadline. The earliest staging deadline for hybrid schemes will be 30 November 2023. 
  • There are no other changes to staging deadlines.

Connection

  • Master trusts with 20,000 + relevant members will have a 5 month connection window as opposed to the 3 months originally proposed so will be able to connect to the Pensions Dashboard between 1 April 2023 and 31 August 2023. All other schemes will continue to have a 1 month connection window prior to their staging date.
  • There are new provisions regarding connection for schemes in PPF assessment and wind-up:
    • if the entire scheme is in PPF assessment before its staging deadline, it will be exempt from connection. However, if one or more sections is not in assessment, the entire scheme must connect.
    • schemes that are initially exempt but subsequently come out of PPF assessment must connect by the later of 6 months from the end of the assessment period and its staging deadline.
    • schemes in wind-up must still connect according to their staging deadline but should only provide value data "if the trustee or manager of the scheme considers it appropriate to do so".

Matching

  • Despite calls to do so, the Government has decided against mandating the provision of national insurance numbers to allow data matching. Individuals will be required to provide first name and last name, date of birth and current address to facilitate matching but will only be "strongly encouraged" to provide national insurance numbers and this data will not be independently verified.  
  • Further provision is to be made in relation to possible matches.  For these, schemes will have to provide a limited form of administrative data and an error message to allow the individual to contact the scheme to provide information to resolve the match. If they don’t contact the scheme within 30 days or do make contact and the scheme can’t resolve the match within a reasonable time frame provided for by the scheme, the scheme must delete the limited administrative data.

Value data

  • For DB benefits with tranches, different retirement ages and step-ups, when providing value data trustees will be given more flexibility to provide either:
    • a combined value covering all the tranches of benefit, along with a single common retirement date; or
    • a separate set of values for different combinations of tranches of benefits, along with a retirement date in relation to each.
  • For deferred DB members, the Regulations require accrued values to be calculated in accordance with scheme rules and valued to the illustration date. The Regulations will be amended to allow a simplified approach to be used, but only for a limited timeframe within 2 years of a scheme’s connection date. A simplified calculation will be an accrued value which is calculated to the illustration date by adjusting for inflation (which may include the relevant inflation figures or the appropriate percentages from the most recent update of the Revaluation Order).  The simplified option should only be used where a full calculation cannot be provided without incurring disproportionate costs or outside of a reasonable timescale and where trustees are content that the alternative accrued value would not be misleading as to the value of the benefits. A flag to indicate that the simplified calculation has been used must be returned.
  • The original draft Regulations did not cover how to present value data for hybrid schemes. However, the consultation sought views as to whether where one benefit is calculated with reference to both DB and DC formulas (e.g., one with an underpin of the other), only the greater value should be provided. The Government now proposes giving trustees of hybrid schemes flexibility to decide on the most appropriate methodology that best represents the value of the member’s benefits.
  • Where DB schemes provide AVCs, the Government has confirmed that if a commercial AVC provider provides data to the dashboard, trustees remain legally accountable to ensure this is done. Trustees will, therefore, need to work closely with AVC providers and should factor in sufficient time to do so, particularly when dealing with legacy AVCs.
  • For DC schemes, the exceptions from issuing projections under Regulation 17 (6)(c) of the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013 will also apply to providing projected pot or annualised projected values through the dashboard. This means that these will not need to be provided where:
    • the value of the member’s accrued rights to money purchase benefits under the scheme was less than £5,000 on the last illustration date; and
    • since the previous illustration date, no contributions (including transfers of pension rights and pension credits) have been made to the scheme by, or on behalf of, the member; and
    • the trustees have previously given notice to the member that the information listed in Part 2 of the Schedule 6 to the 2013 Regulations will not be given to the member again unless further contributions have been made.

DC trustees will also not be required to provide projected information if the member is within 2 years of their retirement date. In any case where these exemptions apply, trustees or managers may choose to provide projected information voluntarily.

Action for Trustees

Whilst we await an amended version of the Regulations, there is now sufficient clarity for schemes to press on with their plans to connect to the Pensions Dashboard. There is much to do and trustees should not underestimate the likely squeeze on third party administrator resource as schemes press forward with their dashboard project. For a reminder of next steps to ensure compliance and the penalties for non-compliance please read our article The Road to the Pensions Dashboard.