03 Nov 2022
As the FCA publishes its final pensions dashboard rules, which must be implemented by 31 August 2023, RSM UK is concerned trustees face ever increasing regulatory pressure. The new pensions dashboard rules state that, by 31 August 2023, FCA Regulated pension providers must:
- Complete connection of their personal and stakeholder pension schemes to the Money and Pensions Service (MaPS’) digital architecture in line with MaPS’ connection, security and technical standards
- Be ready to receive requests to find pensions and search records for data matches
- Be able to return pensions information to the consumer’s chosen pensions dashboard, enabling them to view their data.
Elisabeth Storey, pensions audit director at RSM UK says: ‘While this deadline has been extended from 30 June 2023, the regulatory requirements still add further pressure to trustees already grappling with increasing regulations around investment disclosures (ESG and TCFD requirements), complying with the Single Code, dealing with recent market turmoil (and in some cases revisiting their investment strategies), whilst making decisions about which method to use for GMP Equalisation. All this is on top of the day job of running the pension scheme and ensuring members are receiving the right benefits at the right time. With all this to contend with, many trustees may not yet even have pensions dashboards requirements on their agenda, but they need to plan ahead now.
‘We welcome the introduction of pensions dashboards which will enable consumers to find simple information about their pensions, improving retirement planning. But we have already seen huge resource pressures on pension scheme administrators over the summer, with noticeable impacts upon audit timetables. There is real concern that, with limited resource to cope with the demands, trustees will need to make decisions about what to prioritise. If dashboards are not already on the board’s agenda, this must be addressed by trustees as soon as possible, not least to ensure that steps are being taken to ensure data accuracy. In some cases, other pressing priorities, such as delivering GMP Equalisation, may slip as a result.’
Trustees need to consider the following:
- If data held is inaccurate, there is a risk that dashboard searches could either return data for the wrong person or fail to identify a pensions record. TPR (The Pensions Regulator) or ICO (Information Commissioner’s Office) could take enforcement action against trustees, therefore processes and controls to ensure accuracy of data are paramount.
- Any data not held electronically must be digitised so that it can be returned through the dashboard system. RSM recommends a data audit to identify any improvements to the accuracy of data and any required changes to systems and processes.
- As so many different requirements are impacting the pensions industry, resources to ensure compliance with the different projects are at a premium. It is therefore important to check whether your current administrator (third party or in-house) has the resource capacity to ensure schemes are ready for the staging date.
- With capacity restraints, some trustees may find that their current providers are not equipped to assist with dashboard compliance, or that their current providers need to use overseas support. This may raise some questions about where scheme data will be stored, and whether contracts need updating.
Elisabeth Storey concludes: ‘With the regulator being given new powers to issue compliance notices and penalties to trustees and managers if they fail to comply with pensions dashboards, trustees will have some decision to make. Under the proposed regulations, TPR could issue penalties of up to £5,000 to individuals, and up to £50,000 to corporations, for a single compliance breach. These penalties could be applied to third parties if they caused the breach, which is why planning ahead now is crucial.’