The Pensions Regulator (“TPR”) is responsible for ensuring that all in scope occupational pension schemes comply with their duties under the Pensions Dashboards Regulations 2022 (the “Regulations”). The Regulations introduce new legal duties for trustees and scheme managers – discussed in more detail in our previous blog – and give TPR the power to monitor their compliance and take enforcement action if necessary. With the connection deadlines for some of the UK’s largest pension schemes edging ever closer, TPR has launched a consultation on its draft dashboards compliance and enforcement policy. The draft policy is intended to set out expectations for how trustees and scheme managers can achieve compliance as well as to provide clarity on TPR’s approach to enforcement.

Enforcement principles

TPR has identified a number of principles which it will rely on in order to effectively monitor compliance with dashboards obligations. The consultation document makes it clear that TPR will aim to maximise compliance so that savers can receive “a full and accurate picture of their pensions”. TPR has committed to work collaboratively with schemes and plans to provide tools and education to help trustees and scheme managers meet their duties. In doing so, TPR has committed to adopt a “risk based” and “proportionate” approach tand will only intervene “to the extent necessary to address the harm or reduce the risk”.

Expectations for schemes

The consultation document suggests that TPR will focus on the quality of data held by schemes and on scheme governance as it recognises that these two areas are key to the success of dashboards and ongoing compliance. In particular, TPR expects schemes to:

• document the preparatory steps taken to comply with their duties;
• review the quality of their data and seek continuous improvement;
• have appropriate controls when selecting, appointing and managing service providers;
• establish risk management processes, including monitoring the resolution of issues between the scheme and third parties;
• have processes in place for identifying and reporting breaches of the law.
• Monitoring compliance

TPR will receive regular data from the dashboards system run by the Money and Pensions Service (“MaPS”). These updates will help it to identify breaches (such as failing to connect by the deadline or repeatedly failing to meet MaPS’ service levels). The data will also provide TPR with an opportunity to examine wider trends across the landscape e.g. in schemes all using the same service provider. TPR is entitled to request additional information from schemes where it identifies concerns or where it is looking to identify best practice.

For any instance of non-compliance detected, TPR has the option to issue a compliance notice to trustees or scheme managers requiring them to take, or refrain from taking, steps specified in the notice. The notice will explain which breach has occurred, the evidence TPR used to reach that conclusion and may specify a timeframe in which TPR expects schemes to comply.

Enforcement

The legislation introduces new powers for TPR to regulate the duties imposed on trustees and scheme managers and to pursue third parties where they are judged to have caused the scheme to be in breach of the Regulations. TPR has acknowledged that the delivery of pensions dashboards is “a huge challenge for the industry” and plans to adopt “a pragmatic approach to compliance”. However, TPR has emphasised that “wilful or reckless non-compliance” will be met with robust enforcement action. In these circumstances, TPR will have the power to issue a penalty notice for non-compliance. Each penalty can be up to £5,000 for an individual and up to £50,000 for a corporate trustee.

Conclusion

The consultation on the draft compliance and enforcement policy will close on 24 February 2023 with TPR aiming to publish the final policy in spring 2023. Trustees and scheme managers should look to prioritise implementation planning and delivery in order to demonstrate compliance with the regulatory framework underpinning pensions dashboards.

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