The government’s timetable for dashboards’ integration is likely to be too ambitious for the Local Government Pension Scheme, with administering authorities bogged down by other challenges, its pensions committee has warned.
The Department for Work and Pensions published draft dashboard regulations in January setting out data requirements for integration, as well as specifics on ‘find’ and ‘view’ functionality, the onboarding process, and the Pensions Regulator’s enforcement powers.
The industry has been critical of proposals for both find and view functionality to be present at launch, citing the enormity of the challenge. Some called for a rethinkof the plan, but the government confirmed it was sticking by its preferred model.
It acknowledged that the size of the task might lead to incomplete information being presented on dashboards at launch, and set out ways that this could be mitigated. It did, though, raise the prospect of further delays to public sector schemes’ integration.
We are doubtful that a staging deadline of April 2024 is achievable. The draft regulations allow schemes to defer their staging date, but this is only allowed in specific circumstances
LGPC
At present, schemes will come onboard in three waves. Large schemes with more than 1,000 members will be introduced between April 2023 and September 2024, before medium schemes (100-999 members) will join between October 2024 and October 2025. Small and micro schemes (with fewer than 99 members) do not have a specific date set, although the consultation stated it is likely to be from 2026.
Public sector schemes, however, must also grapple with the implementation of the McCloud remedy, itself a significant challenge. Twenty per cent of all members in scope of the dashboard are in public sector schemes, leading more than half of respondents to a Pensions Dashboards Programme call for input to stress that these pension funds should be onboarded “as early as possible in the first stage”.
Accordingly, the government proposed a staging deadline for public sector schemes of April 2024. However, in light of the McCloud burden, it added: “We may therefore need to consider what other mitigations might be needed to ensure the successful staging of [public sector pension schemes] in line with our staging principles.”
Staging deadline ‘not achievable’ for LGPS
A bulletin from the Local Government Pensions Committee, published in February, seemed to back industry fears that public sector schemes could experience further delays, casting doubt on whether the April 2024 staging date was feasible for the LGPS.
Local administering authorities will need to be ready and able to connect to the dashboards’ digital infrastructure, as well as provide member data, by that date.
The LGPC is currently compiling its response to the government’s consultation on the draft regulations, but its bulletin said the response would “express concern” about LGPS’ ability to meet the deadline “given the other pressures they face”.
“We expect the McCloud remedy regulations to come into force from October 1 2023. LGPS-administering authorities will already be under huge pressure at this time to revisit calculations in respect of leavers since April 1 2014,” the bulletin explained.
This includes recalculating member and survivor pensions, paying arrears and interest, dealing with “resulting tax implications”, recalculating deferred benefits, exchanging information with other authorities for members who have transferred, and potentially revisiting past commutation payments, cash equivalent transfer value quotations, and death grants.
Govt proposes ‘find and view’ dashboards amid public sector delay
The government will be moving forward with the ‘find and view’ functionality on pensions dashboards from launch day, despite industry concerns about the size of the task ahead, while it acknowledged that public sector schemes will only be onboarded in 2024 due to the “considerable work” caused by the McCloud remedy.
“For these reasons, our response will state that we are doubtful that a staging deadline of April 2024 is achievable. The draft regulations allow schemes to defer their staging date but this is only allowed in specific circumstances,” the bulletin said.
The LGPC response will also raise other concerns arising from the draft regulations, such as the exclusion of deferred refunds from the dashboards, uncertainty over what “value data” must be provided in certain cases, the fact that the regulations do not yet account for the specifics of LGPS governance, and questions about whether figures relating to the McCloud remedy will need to be included in annual benefits statements.
The consultation closes on March 13.
