Welcome to your weekly update from the Allen & Overy Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.
This week we cover topics including: DWP response to dashboards consultation; PLSA guide on own risk assessments; Guide on tackling deforestation; Equalisation case: limitation issues.
- DWP response to dashboards consultation
- PLSA guide on own risk assessments
- Guide on tackling deforestation
- Equalisation case: limitation issues
DWP response to dashboards consultation
The Department for Work and Pensions (DWP) has published a response to its January consultation on draft pensions dashboards regulations. Some key points from the response are set out below:
- Despite feedback on challenges with the proposed timeline, staging deadlines for most schemes will remain the same. The first two cohorts (master trusts and money purchase schemes used for automatic enrolment with 20,000 or more relevant members) will be deferred by two months, bringing their deadlines to 31 August and 30 September 2023. There will be changes to the way that hybrid schemes (providing both DB and DC benefits) calculate their staging date: rather than being the earlier of the DB or DC cohort’s respective date, it will be calculated as if all members had DB benefits. This may mean an earlier or later deadline, although the DWP expects that for most schemes there will not be a change. Hybrid master trusts will now be treated in the same way as other hybrid schemes (previously they fell under earlier master trust deadlines).
- Industry feedback raised concerns about scheme liability for the misuse/misinterpretation of information, failing to report a match, or reporting an incorrect match. In response, DWP highlights that (i) schemes are not responsible for verifying users’ identity, authorisation of view requests, or processing of view data carried out by dashboards; (ii) the Pensions Dashboard Programme (PDP) will consult on standards which are expected to require dashboards to point out the limitations of the service to users; (iii) ‘possible matches’, where schemes can flag that they may have found a pension but are not certain, should ease concerns about matching errors; and (iv) schemes are already under data protection obligations to ensure data is accurate and up-to-date.
- The DWP will allow a simplified approach for calculating deferred members’ non-money purchase benefits to be used in the first two years from connection and subject to certain conditions (broadly, where a full calculation would involve disproportionate cost and time, and the figure would not be misleading). It will also clarify calculation of annualised accrued values and the response gives more information on how AVC entitlements should be represented. Trustees will be given flexibility on how to present information for non-money purchase members with different tranches of benefit and hybrid benefits (e.g. those with underpins).
- Deadlines for providing data on members’ pension values (immediately where a recent calculation exists, otherwise three days for money-purchase and ten days for non-money purchase calculations) will not be changed. However, the DWP highlights that the Pensions Regulator (TPR) might use its discretion not to enforce where it has not been possible to meet those deadlines. The regulations will be tweaked so that values provided in a statement to the member in the last 13 months, rather than 12, can be used.
- Time periods for providing new members with data on the value of their pension will be extended.
- The Information Commissioners Office (ICO) has clarified that the matching, combining or comparing of data from multiple sources requires a Data Protection Impact Assessment. The ICO also emphasised that schemes should minimise personal data used for matching records, although (highlighting the difficult balancing act in this area) the consultation response goes on to say that schemes should broaden their matching criteria where this will increase confidence in matching the right person.
- Schemes in PPF assessment will be excluded from the requirements in certain circumstances and schemes in wind up will not have to provide value data.
- The circumstances for requesting a staging deadline deferral will not be expanded, but the response notes that TPR has discretion not to take enforcement action if it considers it appropriate.
- The DWP will continue to consider whether future iterations of dashboards could be more interactive, for example facilitating transfers and consolidation.
- The PDP expects to consult on the first full suite of standards (which schemes will be required to comply with) shortly, and TPR intends to consult on its compliance and enforcement policy soon after the DWP has laid the regulations before Parliament.
The DWP has identified two areas where it wishes to get further input: setting and communicating the Dashboards Available Point (the date on which the dashboards will become available to the public), and allowing the Money and Pensions Service and TPR to share information. A consultation was launched on these points on 28 June 2022 and closes on 19 July 2022.
Read the consultation response.
PLSA guide on own risk assessments
The Pensions and Lifetime Savings Association (PLSA) has published a guide for schemes on putting together an own risk assessment (ORA). The ORA is a requirement of TPR’s draft single code of practice (published in March 2021 and expected to be finalised this year). The guide summarises the ORA requirements and sets out ‘practical top tips’ on how to approach compliance; it also sets out some key areas of governance which the PLSA feels schemes should focus on: climate change, stewardship, inclusion and diversity, and cyber risk.
Read the guide.
Guide on tackling deforestation
Global Canopy, Make My Money Matter and SYSTEMIQ have published a guide for pension schemes on removing investments involving deforestation, conversion (the change of a natural ecosystem) and associated human rights abuses from their portfolios. The guide sets out six phases: understanding and mapping risk; setting an effective policy and managing risk; monitoring and engagement; disclosing; eliminating deforestation, conversion, and associated human rights abuses; and nature- and people-positive financing. Each of these phases sets out steps and recommended actions for schemes to take.
Read the guide.
Equalisation case: limitation issues
An initial judgment has been given in relation to limitation periods (time limits on when a claim can be brought) in an equalisation dispute.
Following the Barber decision in 1990, pension benefits for men had to be ‘levelled up’ to those enjoyed by women in the period from the judgment until effective measures were taken to achieve equalisation (this period is known as the ‘Barber window’). In this case, the claimants allege that the administrator (which provided pensions advice and was responsible for drafting the scheme’s deeds) negligently advised them that equalisation had taken place on 1 November 1995 (and administered benefits on the basis that this was the case) but a deed properly effecting equalisation was only executed in 2002. The employer is claiming for the extra liability caused by the Barber window remaining open between 1995 and 2002.
In this initial hearing, the defendant applied for the case to be struck out and/or given summary judgment on limitation grounds. The judge had to consider statutory limitation requirements. This involved assessing the point at which the claimants had the knowledge required for bringing, and a right to bring, the action. He found that the claimants had a ‘realistic’, as opposed to a ‘fanciful’, prospect of succeeding in arguing that this was not until 2017, when the additional liability was recognised and required to be funded. He also found that the alleged negligent acts and omissions did not stop with the provision of inaccurate advice in relation to equalisation prior to the 2002 deed, but continued through to the end of the administrator’s retainer. Therefore, he did not strike out the case or provide summary judgment, and the case will proceed to trial.
Read the case.