Pensions Regulator outlines approach to enforcing dashboards compliance

With the connection deadlines for some of the UK's largest pension schemes less than nine months away, the Pensions Regulator has launched a consultation on its dashboard compliance and enforcement policy. The Regulator recognises that delivering pensions dashboards is a huge challenge for the industry. As such, it has indicated that it will seek to support trustees who are taking active steps to comply with their new obligations, whilst taking a tougher approach against wilful or reckless non-compliance.

Dashboard Regulations

The UK Pensions Regulator is responsible for ensuring that occupational pension schemes comply with their duties under the Pensions Dashboards Regulations 2022 (the Dashboards Regulations).

The Dashboards Regulations will place new legal duties on trustees and managers of occupational pension schemes with 100 or more members, which are designed to ensure that dashboards are successful and deliver a positive user experience. In particular, trustees of in scope schemes will be required to:

• register with the Money and Pension Service (MaPS)
• connect to the dashboards infrastructure by a prescribed deadline and maintain an ongoing connection thereafter
• ensure their scheme is in a position to receive personal information on savers, and search and match savers to their pensions
• put in place a matching policy which includes the criteria their scheme will use to identify positive matches and, perhaps more importantly, possible matches
• provide their scheme's members with information about their pensions through the dashboard of the individuals choosing where a positive match is made, and
• co-operate with MaPS when preparing to connect, maintain records and report prescribed information to the Regulator and MaPS on a regular basis.

The Regulator also expects trustees to have read and implemented MaPS standards and dashboards guidance (including best practice guidance), where appropriate.

Enforcement principles

The Regulator has identified a number of principles which will guide its approach to ensuring trustees comply with their dashboard obligations. As ever, the Regulator will adopt a risk-based and proportionate approach to enforcement. Its approach will also:

• be focused on outcomes for savers, with a primary aim of ensuring savers get a full and accurate picture of their pensions
• be clear in its expectations and include tools and education to help trustees meet their duties
• be pragmatic, with the Regulator working with schemes to reach the best outcome savers, and
• be robust, where the Regulator sees wilful or reckless non-compliance.

The Regulator will focus on the quality of data held by schemes, as the success of dashboards relies on this, both in terms of matching savers to their pensions and also making sure that savers can trust the information presented to them. It will also focus on scheme governance, as it recognises that robust internal governance is key for ongoing compliance. Good governance will also enable schemes to identify issues and risks early and put in place appropriate mitigations.

The Regulator believes the industry is best placed to devise common solutions which support the roll out of pensions dashboards. It is committed to working with industry to develop these and to resolve issues as they arise.

Key risks

When monitoring compliance and deciding when to take enforcement action, the Regulator will focus on behaviours and breaches that pose the greatest risk to a saver's ability to obtain a complete and accurate picture of their pensions, and therefore make appropriate decisions, via the dashboards.

Ensuring schemes maintain an ongoing connection to the dashboards infrastructure is critical to the success of dashboards and to ensuring savers are able to find and view all their pensions. Therefore, the Regulator will focus, in particular, on connection compliance, which means it will be looking out for:

• schemes not connecting by their statutory deadline
• schemes only supplying data for part of their membership or benefits (e.g. supplying data for active members but not deferred members or providing data for members' main scheme benefits but not ancillary benefits such as additional voluntary contributions), and
• schemes failing to remain connected to the dashboards in line with MaPS' standards.

Monitoring compliance

The Regulator will receive regular data from the dashboards systems to enable it to monitor compliance. These updates will help it to identify breaches (including connection breaches), to identify trends across the landscape (such as the performance of schemes all using the same third-party provider) and to identify whether the same scheme is failing to meet MaPS’ service levels repeatedly.

The Regulator also has the power to request additional information from schemes where it identifies concerns or where it is looking to identify best practice.

Enforcement

Where there has been a breach or suspected breach of the dashboards legislation, the Regulator will consider if an investigation is appropriate and, if necessary, take regulatory action (including enforcement). Where a third party's actions have contributed to or caused the non-compliance the Regulator will have power under the Dashboards Regulations to require the third party to take appropriate action.

The Regulator will also have the power to issue fines for non-compliance on trustees and third parties of up to £50,000 per breach.

The recipient of a compliance or penalty notice under the Dashboards Regulations may make a written application for the Regulator to review it within 28 days.

Actions for trustees

Preparing for dashboards is a significant challenge and trustees need to  ensure they have a suitable implementation plan in place to ensure their scheme is ready to connect from its staging date. As part of this plan, trustees will need to:

• review the quality of their dashboards data and take steps to improve it where necessary
• decide on their scheme's approach to matching and produce a matching policy, and
• carry out a data protection impact assessment.

Trustees should also update their contract with their scheme administrator and other any parties involved in delivering and maintaining their scheme's dashboards connection, to ensure each parties' responsibilities are clear and to address what happens if things go wrong.

If you would like to discuss any of the topics covered in this blog speak with your usual HSF adviser or contact one of our specialists.

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