Pension funds will only be allowed to defer their dashboards staging deadline if they are transferring data to a new administrator or are in the process of retendering their scheme administration, new guidance has revealed.
And even in these situations, trustees or scheme managers will have to prove that complying with the staging deadline “would be disproportionately burdensome” or “would put the personal data of members at risk”.
This guidance, published by the Department for Work and Pensions on December 12, intends to assist schemes with applications to defer their dashboards staging deadline by up to 12 months.
As the Pensions Dashboards Regulations 2022, which were laid out in parliament in November, came into force on December 12, the latest date for making an application for deferral would be December 11 2023, the DWP said.
Changing administrator alone would not be considered sufficient reason
DWP
The secretary of state for work and pensions is responsible for considering these applications, and schemes will only be able to defer their staging deadline once.
Reasons for deferral
Despite the two situations in which a deferral could be approved, the government stated that “changing administrator alone would not be considered sufficient reason”.
“In some cases, for example, it might be that the new administrator has already connected other clients to the dashboard digital architecture and can provide a similar service immediately,” the guidance said.
The DWP explained that if a scheme has embarked on a programme to transfer data to a new administrator before the regulations come into force, it is expected this has “been done in good faith”.
“The secretary of state will not therefore grant deferrals where it appears that a trustee or manager has sought to change their administrator, or has delayed the change, to deliberately avoid needing to meet the connection requirements by their staging deadline,” it said.
If a scheme is required to retender the contract for their administrator, the DWP expects the timetable for achieving this to be reasonable.
Deferrals will not be granted “where it is suspected that a trustee or manager has sought to intentionally delay the timetable to avoid needing to meet their connection requirements”, it added.
The guidance also details what circumstances the government considers to be a “disproportionate burden”, therefore allowing schemes for a deferral.
These are situations where the monetary cost of compliance with the rules “was significantly higher than it otherwise would be if the scheme was not undergoing a change of administrator, and the additional cost was not considered to be in the best interests” of members.
Trustees and scheme managers are expected to provide evidence to show “that reasonable alternative options”, such as using an integrated service provider, have been considered “and determined to be unviable”, the DWP said.
If schemes opt for the rationale that complying with the staging deadline would put “personal data of members at risk”, then it will need to supply evidence of this, the guidance added.
Dashboards staging deadlines
Large pension providers – those with 1,000 or more active and deferred members – will be the first ones to connect to the project, having a deadline of August 31 2023.
Next, money purchase schemes used for auto-enrolment will have to connect from the end of September 2023, and then non-money purchase schemes from the end of November 2023. Public service pension schemes will connect at the end of September 2024.
Medium sized schemes – with between 100 and 999 active and deferred members – will connect in a second wave, from the end of October 2024.
Supporting evidence is essential
The government highlighted the importance of submitting relevant documentation for the referral application, recommending “that summaries are provided of pertinent information contained within any documentation submitted, as well as an explanation as to why it is relevant”.
Schemes are allowed to submit a deferral application at least two months before their relevant staging deadline.
Sackers associate director Oliver Topping has previously noted that “early contact with the DWP can help gauge the chances of a successful deferral application”.
“While deferral is only likely to be available to a subset of schemes, those schemes considering an application should start their planning (and collating the supporting evidence) as soon as possible,” he said.
