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On the face of it, all schemes within scope must connect to the Pensions dashboard digital architecture by 31 October 2026 at the latest.
However, schemes on the road to buy-out (or undergoing any other change of administrator) could be granted the right to defer by up to a year, possibly allowing a buy-out to complete before dashboard connection becomes necessary.
On a side-note, such schemes also have an individual (non-mandatory) connection deadline, which could be earlier than 31 October 2026 depending on scheme type and size. You can check your “connect by” date using the Pensions Regulator’s tool.
Schemes only have until 8 August 2024 to apply to defer their mandatory connection deadline. In response, the Secretary of State has discretion to defer the scheme's deadline by up to 12 months. This article outlines key considerations for Trustees contemplating an application to defer and how we can support schemes in this process.
Criteria for deferral
If the buy-out is expected to complete before 31 October 2026, an application to defer may not be necessary. Successful completion of buy-out would reduce the number of relevant members to zero, and therefore place the scheme outside of the scope of the Pensions Dashboards Regulations 2022 (the Regulations).
However, if there is a risk of delays or if the anticipated completion date is after 31 October 2026, it may be prudent to consider applying for a deferral.
The Regulations require the scheme to have 'embarked' on ‘a programme to transfer its data to a new administrator’ – which might include a buy-in/buy-out programme, prior to 9 August 2023. While these terms are not defined, we would understand this to extend to the completion of buy-in in pursuit of the wider buy-in/buy-out project.
Speak to us for advice on whether your scheme meets this criterion.
The application for deferral must also demonstrate that meeting the connection deadline would be disproportionately burdensome or put the personal data of members at risk.
While the strength of each application will vary, many schemes on the road to buy-out will have at least some grounds to demonstrate the above.
Key commercial considerations
Irrespective of the scheme's prospects of a successful application, the decision to apply is of course subject to wider commercial considerations. Trustees should evaluate the risks posed by the current deadline against the potential benefits of deferring by up to 12 months. This assessment should consider:
- the scheme's current stage in the buy-in/buy-out project, including whether a 12 month deferral is enough;
- costs associated with applying for deferral; and
- the likelihood of a successful application.
We can support you by
- Considering and advising on:
- the scheme's eligibility; and
- the commercial viability of applying.
- Preparing an application on behalf of your scheme.
Authors: Ellie Taylor, Tomos Davies
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.
Date published
11 July 2024
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