Pension Dashboards – call for input on staging – Sackers’ response to consultation
The Pensions Dashboards Programme (“PDP”) has issued a call for input on staging, which outlines the proposals for the order and timing of when data providers (including occupational schemes) will connect to the pensions dashboard ecosystem. This comes ahead of the formal DWP and FCA consultations on the regulatory package expected later in the year.
- The timetable does not sound unreasonable, but we do not have any real visibility of how long schemes would need to prepare for connection to the dashboards.
- Ideally, the legislation would be published as soon as possible, giving schemes sufficient time to digest and then plan as appropriate. At the moment, we would say that clients are conceptually aware of the forthcoming requirements, and are working to ensure their data is of good quality, but there is not yet enough detail on the Dashboard programme to get schemes to start work on this or prioritise it.
- It is important that any proposed timescale is realistic, and sustainable: any significant slippage in timings might reduce the credibility of the programme, and lead to those with less resource delaying / deprioritising their attempts to join.
- We agree that commencing the “find” before the “view” application gives more time for schemes to get their data in order. However, it may be worth noting that if the gap between the two is allowed to be too long, this may result in some member disengagement.
- There needs to be clarity on how staging dates will interact with scheme changes – for example, where schemes are embarking on transfer, consolidation, or winding up projects. There needs to be flexibility within the regime to allow schemes in such a position to defer joining or be excluded from joining (as appropriate) (see also Protections, below). We note that an exception from the new more detailed value assessment has been provided for schemes which have notified the Regulator under sections 62(4) or (5) of the Pensions Act 2004 that winding up has started.
- We would note that this work is of course somewhat bound up with current government work strands on Simpler Annual Benefit Statements, and on the consolidation of small schemes. It would be useful if the application of the various policies could be joined up, given their potential implications for each other.
This area sits hand in hand with timings.
- We believe that schemes may be unwilling to onboard voluntarily (ie prior to compulsion), as they will wish to have protection in terms of issues such as data protection liability, and may also be unwilling to incur costs until necessary. Schemes will want to be assured of the legal basis for requiring the data, and the legislation will need to be clear on data protection issues, in terms of control of and liability for the data involved.
- The dashboards regime could be similar to that for automatic enrolment, whereby those who volunteered early were deemed to have an earlier staging date, and thereby granted the same legislative protections from that date as they would have received on commencing at compulsory stages.
- The Regulator will need discretion and flexibility to deal with scenarios where deviation from the requirements has been necessary; where there has been good reason for failure to comply, in particular, where scheme changes make compliance impractical.
Integrated service provider (“ISPs”)
Schemes will have questions on how the relationship with ISPs is to develop. They will need to have contractual provisions in place with ISPs (eg, in relation to data protection), and multiple negotiations may be required. Does the PDP envisage schemes having to tender for ISPs, or being provided with a structured suite of providers?
Consideration of what is appropriate in terms of timings would need to factor in what support schemes (and smaller schemes in particular) might need in terms of contractual arrangements with ISPs.
Third party administrators (“TPAs”)
If a TPA will be servicing the dashboard requirements on behalf of a scheme, contracts with the TPA will need to be reviewed and updated to make sure that they adequately cover the new services required, and the right risks.
Although staging is to be by size, the way each scheme is administered will make a huge difference. Onboarding, and preparation for it, is likely to be much more difficult for those without a TPA / operating their administration in house, and there will also of course be economies of scale for TPAs.
Different types of scheme:
- Please can it be made very clear (if this is the intention) that segregated sections within a scheme will not be dealt with separately? For example, where a scheme is a large DC scheme used for automatic enrolment, it seems that the entire scheme would be pulled in to the regime at the first stage. For a large sectionalised scheme, this would mean that certain sections are dragged in long before they would otherwise be if they were separate schemes (eg, DB sections’ onboarding would be brought forwards, which will add to a scheme’s workload and complexity enormously).
- Similarly, please can it be made clear whether the proposed non-commercial master trust exemption will apply the “20,000 memberships” test across the scheme (ie including any DB memberships, for example in a hybrid master trust) or whether this threshold will apply only to automatically enrolled DC memberships?
- Even amongst schemes of a similar size, there is potential for considerable variation (see also above, in TPA section). Some large schemes may have, for example, a number of different providers (eg for AVCs) from whom they will need to get information before being able to pass it on. This will add complexity, cost and time.
- The call for input invites evidence on whether FCA-regulated providers of personal pensions should be given longer to onboard. However, if occupational schemes in the first cohort hold policies with them (eg legacy AVC policies), they might then be at risk of breaching their requirements if they are unable to get the information they need from the FCA-regulated providers in turn. We find that schemes can have very little leverage with legacy providers in this market which often still hold historical paper records. Trustees must be protected from automatic fines where the matters are out of their control. We would suggest that either these providers will need to be asked to comply earlier (so that occupational schemes have access to their information), or that their exclusion drags through (so if they do not or cannot provide the necessary information, occupational schemes are then relieved of their obligation to do so). Alternatively, there could be a limitation by reasonableness on the attempts required by occupational schemes to deliver the data?
- In general terms, how long is it anticipated that it will take for FCA-regulated providers to be ready? Again, a balance will have to be struck between allowing sufficient time for information to be gathered properly / fully, and maintaining momentum / impetus.