Pensions Insight: 26 March to 2 April 2024

This week’s insight covers the Department of Work and Pension’s release of a staged timetable for the much-anticipated pensions dashboard as well as an overview of DWP’s report on its inquiry into defined benefit pension schemes.

Department for Work and Pensions (the DWP) publishes staged timetable for pensions dashboard

On 25 March 2024, the Department for Work and Pensions published the staged timetable for relevant pension schemes to connect to the pensions dashboard ecosystem. Although the timetable is not mandatory, under the Dashboards Regulations (and equivalent FCA rules), trustees and pension providers must have regard to the guidance when connecting (and be able to show how they have had such regard). Not to do so would be a breach of statute as would failing to connect by the 31 October 2026 statutory connection deadline.

The timetable depends on the size and type of the scheme. Occupational pension schemes will assess member numbers (includes all non-pensioner members) at a ‘reference date’, this being the scheme year end date between 1 April 2023 and 31 March 2024.

Larger schemes are to be connected first with 30 April 2025 being the first date for master trust schemes that provide money purchase benefits only with 20,000 or more members and FCA regulated pension schemes with 5,000 or more members.

The connection dates for ‘medium’ schemes (100 to 999 members) run from 31 January 2026 to 30 September 2026.

The overall 18-month period runs from 30 April 2025 until 31 October 2026, compared to 31 months under the original timetable.

Schemes which cannot connect by the staging date in the guidance because they are switching administrator can defer and do not need to formally apply for deferral provided that they connect before 31 October 2026 – deferring beyond this date requires a formal application to be made in accordance with a statutory deferral process. However, they should let the Pensions Dashboards Programme and the Pensions Regulator (TPR) know about the deferral ‘at the earliest opportunity’ and it is recommended that they consider the separate guidance on deferred connection which contains ‘useful information’.

Action: All schemes in scope should continue with their preparations for connecting (or start their preparations if they have not already done so).

The Department for Work and Pensions Committee publish its report on DB schemes

The Committee has provided five key recommendations following its inquiry into defined benefit (DB) pension schemes, their regulatory framework and whether this supports good governance and outcomes and how DB schemes can be consolidated or benefits bought out:

• Current scheme funding position: To avoid a return to scheme deficits and to help ensure DB schemes “remain an active feature of the pensions landscape”, the Government should set out how it plans to ensure pensioners have sufficient retirement income and the role DB has in this.
• New DB scheme funding regime: In relation to the new DB funding regime, DWP should ensure that Parliament has all the necessary information to make an informed judgement before asking it to vote on legislation – this recommendation is a response to criticisms regarding Parliament having to vote on the new funding and investment regulations without TPR’s final revised DB scheme funding code being available. The Committee also recommends that TPR’s objective should be to protect future as well as past benefits, not just protect the PPF – the Committee believes that TPR’s objective to protect the PPF has led to over caution on risk aversion and risks the future of open schemes.
• Extraction of scheme surplus: DWP should assess its regulatory and governance framework to “ensure member benefits are safe” and take steps to mitigate the risks before it proceeds. DWP and TPR should ensure the scheme member’s reasonable expectation for benefit enhancement is met.
• Governance: Considering the role of trustees to be acting in the best interests of the scheme, DWP should:
  • allow scheme members to be involved in the appointment of sole trustees and recognise the potential for conflicts of interest;
  • make accreditation mandatory for professional trustees and look at how lay trustees can be provided with sufficient time and resources to become accredited;
  • ensure every board has at least one accredited trustee;
  • introduce a trustee register and log which trustees have completed TPR’s trustee toolkit; and
  • the Government should consult on the proposals of the superfunds legislative framework regarding member benefit protections and bring in primary legislation ‘as soon as possible’.
• PPF Levy and FAS: The DWP should legislate to index Pension Protection Fund compensation in respect of pre-1997 benefits (and consider other possible changes) and change the levy to provide the Pension Protection Fund with flexibility to be able to reduce its levy to zero. It should also review the compensation provided by the Financial Assistance Scheme.