Thursday, June 23 2022

Draft regulations governing pension dashboards, released January 31 by the Department for Work and Pensions, detail data requirements for dashboard integration, find-and-view functionality , the integration process and timing for schemes of different sizes, and the powers given to the Pensions Regulator to enforce the law.

In his foreword to the consultation, Pensions Minister Guy Opperman said: “Pension dashboards will revolutionize the way people interact with their pensions. They will make it easier to access pension information by allowing people to see what they have in their various pensions at the touch of their smartphone, laptop or computer.

He acknowledged that the proposals were “ambitious” and represented a “significant challenge” for the government and the pensions industry.

Major systems and vendors will have been planning the introduction of dashboards for some time now, so while there may be some teething problems for some in connecting to the ecosystem, it is unlikely that there is willful non-compliance

Darren Philp, Smart Pension

“The government is playing its part in ensuring that the dashboards provide a comprehensive view of what a person can receive in retirement, as information on state pensions will be included in the dashboards from the first day,” Opperman continued.

“We are confident that these proposals will be widely supported by people with retirement savings, by the pensions industry and by people from all political stripes. They deliver on our commitment to making it easier to introduce retirement dashboards and have the potential to transform retirement planning forever. »

DWP opts to “find and display” despite criticism

The consultation established that the government expects the dashboard to include both search and view functionality from launch, allowing members to not only see their pension entitlements, but also the value of those rights.

Industry figures have previously raised concerns that the challenge of delivering “find and view” functionality from day one would be difficult, with some calling for a rethink of the proposals.

The DWP acknowledged the difficulty posed by “find and view”, but said it was still the preferred approach.

He added that there is still a chance that dashboards will show incomplete data at launch. He said that while individuals “may have a low tolerance for an incomplete scorecard at first”, this could be mitigated if gaps, such as programs not yet staged, “are clearly identified and it is is specified when these gaps would be filled”.

Richard Smith, a member of the Pensions Administration Standards Association Dashboards Task Force, said: “Dashboards pose two major, but completely separate, challenges for schemes: being able to find pensions (because personal data is accurate and consistent) and be able to return the required information about the pensions found (i.e. prescribed administrative, signaling and value data).

“We hope to get a good overview of the beta tests that are to be done this fall, crucially with personal data from real systems, and how much of a challenge will be for the industry, including the scale and complexity of the ‘maybe it fits’ resolution.

“Programs can progress with [the second challenge] at this time, but whether challenges one and two together are realistically achievable, industry-wide, will likely not be clear until much later in 2022 or, more likely, around 2023.”

Darren Philp, director of policy and communications at Smart Pension, told Pensions Expert: “Pension administration and member engagement needs to be brought into the 21st century and while it can be argued, certainly some From a benefit perspective, which one only needs to look at first, Plans and providers need to modernize their technology and give members and clients the information they need to help them plan for retirement.

“A search-only service at this stage would be somewhat disappointing and the government is right to be ambitious.”

Public sector delays

According to the government schedule for the staging, the programs will be integrated in three waves.

Large schemes, with more than 1,000 members, will be introduced between April 2023 and September 2024, before medium schemes (100 to 999 members) join between October 2024 and October 2025. Small and micro schemes (with less than 99 members) do not have a specific date set, although the consultation indicated that it would probably be from 2026.

The DWP, however, admitted that public sector schemes were a problem. Representing approximately 20% of all affected active and deferred members, they have been impacted by the McCloud action and the need to transfer all members from legacy pension plans to reformed pension plans, posing a significant challenge to data and administration.

The consultation explained that more than half of respondents to the Pension Scoreboard Program call for input said that public sector schemes should be included “as early as possible in the first stage”.

But the DWP noted the “considerable work” involved in the McCloud appeal, which not only involves challenges for the pension schemes and administrators involved, but also primaries and legislation in Parliament, which requires a lot of time and of resources.

In light of this, the consultation proposed a staggering deadline for public sector schemes at the end of April 2024.

He added, however, that “recent engagement in government has further highlighted the scale of the challenge surrounding the implementation of the McCloud remedy”.

“Following the consultation, we may need to consider what other mitigation measures may be required to ensure the successful staging of [public sector pension schemes] in accordance with our staging principles,” the consultation said.

Sir Steve Webb, former pensions minister and LCP partner, argued that ‘ministers have repeatedly over-promised and under-delivered on this target’.

He said: “The biggest headaches include setting up civil service schemes, which themselves have major headaches to manage, and defined benefit pension schemes, where complex new calculations may be needed. It is vital that the government ensures that there is no further slippage in this project and that the benefits of dashboards are made available to the public as soon as possible.

Ian Colvin, head of LGPS benefits consultancy at Hymans Robertson, added: “It makes sense to give public service pension plans time to deal with the implications of McCloud ahead of the date their pension plan is in place. dashboard, especially since the intent is that McCloud data be retained for dashboard purposes.

“We believe the timeline is achievable, but it is highly dependent on legislation and guidance (which will be different for different regimes) being timely and achievable,” he noted.

“It would not be desirable for McCloud’s delays to push back [public sector pension schemes’] staging dates, but there is a risk that staging before McCloud’s details have been ironed out would also compromise the integrity of the project due to missing/incorrect data.

Minimal fines?

In the section detailing compliance and enforcement, the DWP explained its intention to give TPR the power to issue compliance notices to administrators, plan managers and third parties, as well as sanction notices in the event of noncompliance.

At its discretion, the regulator may impose penalties of up to £5,000 for individuals and £50,000 “in other cases”.

“The success of pension dashboards will depend on the cooperation of thousands of organizations working together to provide individuals with information about their pensions. The government has concluded that the quickest way to achieve this is to make attendance compulsory,” he said.

PDP will host consultation webinars

The Pension Dashboard Program has released guidance detailing the scope of its standards following the launch of government consultation.

The guidelines cover data usage, as well as design, reporting and technical standards, while establishing a “connection code” governing security and operational requirements for systems connecting to dashboards.

To help stakeholders respond to the DWP consultation, the PDP will also host a series of webinars next month. The first, on February 8, will provide an overview of the consultation, while subsequent events (February 10, 17 and 24) will cover dashboard delivery and use, industry readiness and display retirement values.

“A key element of this is the development of a robust and effective enforcement regime that allows appropriate enforcement action to be taken in the event of non-compliance with any of the proposed requirements and significantly deters non-compliance. “

Although the maximum fine is less than, say, the application fee for starting a group defined contribution scheme (£77,000), experts generally felt the proposal was proportionate.

Karl Lidgley, Client Manager for Third Party Administration at Hymans Robertson, said: “The schemes and the industry in general will do what is best to ensure members comply with the legislation and it is unlikely that they do not comply without good reason. Therefore, the maximum potential fine for non-compliance appears overall proportionate and fair.

Philp agreed, saying, “Large systems and vendors have been planning the introduction of dashboards for some time now, so while there may be some teething problems for some in connecting to the ecosystem, it is unlikely that there is willful nonconformity among this group.”

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