Pension Schemes Bill published

The Pension Schemes Bill was published on 5 June 2025.  For defined benefit schemes the Bill’s key measures are changes to the rules around payment of surplus to an employer, provision to allow trustees to recover overpayments without a court order where the Pensions Ombudsman has ruled on the amount due, changes to the rules on PPF levies, and the introduction of a statutory pension superfunds regime.  For more detail on the implications of the Pension Schemes Bill for defined benefit schemes, see our bulletin.

On the day the Bill was published, the Government announced that it will introduce legislation to allow schemes to obtain retrospective actuarial confirmation that historic benefit changes met the necessary standards. This should mean that past amendments are no longer at risk of being invalid solely because no “section 37 certificate” was obtained from the scheme actuary at the time. It is not yet clear whether these changes will be included in the Pension Schemes Bill or in other legislation.

The Bill is due to make significant changes to the law on money purchase schemes. New “Value for Money” (VfM) assessments will require trustees of money purchase schemes to conduct detailed assessments of whether the scheme offers VfM compared to comparator schemes.  Where a scheme is assessed as not providing VfM, the trustees will have to inform participating employers and the Pensions Regulator and consider whether a transfer to a different scheme would provide improved VfM for members.  In some cases the Pensions Regulator can require trustees to transfer members’ accrued rights to a different scheme.  The Government expects the first VfM assessments to take place in 2028. 

Currently there is no requirement on occupational money purchase schemes to provide a mechanism allowing members to draw a pension in retirement.  The Bill will introduce a new requirement to offer a “default pension benefit solution” designed to provide a regular income for members in retirement.  Although much of the detail has been left to regulations, it appears that the requirements will impose a significant compliance burden on trustees. The Government has indicated that the requirements are likely to take effect in 2027 for master trusts and 2028 for other schemes.

Draft legislation published re IHT on pension death benefits

In July the Government published draft legislation and other documentation related to its plan to bring unused pension funds and pension scheme death benefits within scope of inheritance tax (IHT) from 6 April 2027.  A key change from the original proposals is that it will be the deceased’s personal representatives (PRs), not scheme administrators, who will have prime responsibility for paying IHT on pension funds.  However, the draft legislation makes provision for scheme beneficiaries to require scheme administrators to make IHT payments in some circumstances.  For more detail, click here. 

Data (Use and Access) Act 2025 receives Royal Assent

The Data (Use and Access) Act 2025 received Royal Assent on 19 June 2025.   The Act will introduce a new requirement for data controllers to have a complaints procedure.  It is not yet known when this requirement will come into force, though anecdotally we have heard suggestions that this may be Summer 2026.  Trustees as data controllers will need to consider to what extent their existing internal disputes resolution procedure will satisfy the Act’s new requirement for a complaints procedure.

The Act confirms that a data controller is only required to conduct a “reasonable and proportionate” search in response to a data subject access request (DSAR), putting the ICO’s guidance on this issue on a statutory footing.  The Act is also due to confirm that where a data controller reasonably requests more information regarding what a DSAR relates to, this “stops the clock” for the relevant time limits until the data subject provides the information.  This provision is not yet in force, but based on oral comments from the Department for Science, Innovation and Technology, we expect it to come into force around December 2025/January 2026.

Court applies “corrective construction” to scheme rules

In the case of Renishaw Plc v Ross Trustees Services Limited, the court has applied the principle of “corrective construction” in holding that a scheme’s rules should be construed as having a meaning that was not their literal meaning where it would have been apparent to a reasonable and informed person that the literal meaning did not reflect the parties’ intentions.  For more detail, click here. 

Upper Tribunal increases sum specified in contribution notice

In the case of Pelgrave v The Pensions Regulator, the Upper Tribunal has increased the liability imposed on an individual by a contribution notice (CN) under the Regulator’s “moral hazard” powers.  The Regulator may issue a CN imposing liability on a person who is a party to an act or failure to act which the Regulator considers has detrimentally affected in a material way the likelihood of accrued scheme benefits being received.  For more detail, click here. 

Regulator to launch new trusteeship strategy

In a speech to the PMI on 5 June 2025, the Pensions Regulator’s CEO said that the  Regulator (TPR) will be working with the government on its planned consultation on trusteeship and governance set to commence later in the year, and that TPR will be launching a new strategy setting out how it will seek to raise standards of trusteeship.

The speech gave some indication of likely areas of focus for TPR.  TPR is concerned at the risk of DC schemes over-investing in low return assets and wants to see clearly defined investment objectives.  Later this year TPR and the FCA will launch a joint market-wide data collection exercise which will include information about asset allocation in major DC schemes.  TPR also expresses concern about long tenure, multiple appointments and conflicts of interest and says that it will develop an “assurance framework” to ensure trustee boards’ effectiveness is reviewed every two or three years.  TPR says it will work to develop higher standards of accreditation for trustees, citing the importance of continuing professional development.  TPR notes the critical role played by administrators in the operation of pension schemes.  It says it wants to "harness the collective buying power of schemes” to effect change in the administration market.  TPR also says that raising data quality is one of its key priorities.

Guidance “New models and options in defined benefit pensions schemes”

The Pensions Regulator has published guidance for trustees and employers of defined benefit and hybrid schemes covering running on the scheme and different financial, governance and insurance options, some of which may form part of end game planning.  The guidance contains some case studies with examples of questions trustees would need to consider in the various scenarios.

Regulator authorises modification of scheme to release trapped surplus

The Pensions Regulator (TPR) has exercised its power to authorise a scheme trustee to modify a scheme in winding-up to allow the surplus to be paid to the scheme’s employer(s).  This is only the second occasion on which TPR has exercised this power.  For more detail, click here. 

Receiving scheme trustees liable for failure to provide information needed to progress transfer

The Deputy Pensions Ombudsman (DPO) has found the trustees of a receiving scheme liable for their failure to provide the information required by the transferring scheme in order to pay the transfer value (Mr Y CAS-59303-Y0Z8).  

There is no statutory duty on trustees to accept transfer values, and scheme rules usually give the trustees discretion over whether to accept them.  The DPO found that the trustees of the receiving scheme initially had no duty to the member.  However, she found that once the trustees agreed to accept the transfer value and provide the information requested by the transferring scheme, they came under a duty to the member to carry out the necessary administrative steps to implement the agreed inward transfer with due skill and care and without delay.  

Our thoughts

This is a significant determination, as it establishes the principle that, although trustees are generally under no legal obligation to accept a transfer, the Pensions Ombudsman will regard them as assuming a duty of care to the member if they agree to do so. That means that the receiving scheme can be liable to the member for any loss suffered if the transfer is delayed due to the receiving scheme trustees failing to carry out the necessary steps in a timely manner. In the case before the Ombudsman, there was a delay of over a year in providing the routine information requested by the transferring scheme.  It remains to be seen whether the Ombudsman will order receiving scheme trustees to pay compensation in cases of less extreme delay.

Civil partner’s inheritance from deceased’s estate was a relevant factor for death benefit decision

The Pensions Ombudsman has held that a surviving civil partner’s inheritance from the deceased member’s estate was a relevant factor to consider when making a decision as to who should receive a lump sum death benefit held on discretionary trusts (Mr T CAS-64304-R5R1).  For more detail, click here. 

No breach of duty of trust and confidence when employer did not request pension increase

The Pensions Ombudsman has held that an employer’s decision not to request the scheme trustee to grant a pension increase under the scheme rules did not breach the employer’s “duty of trust and confidence” notwithstanding that the scheme rules required the employer to have regard to an aim of providing increases at a higher level (Mr Y CAS-99766-L5X6).

No duty for scheme manager to protect member from tax charges due to change in tax residency

In the case of Mr S (CAS-90949-P2D1) the Deputy Pensions Ombudsman (DPO) has held that a pension scheme manager’s scope of duty does not include protecting a member from taxes incurred because of a change in tax residency.

Mr S was due to become tax resident in Spain from 1 January 2022.  He requested his existing pension provider to make transfers to a SIPP.  Mr S intended to draw a tax free lump sum from his SIPP before becoming tax resident in Spain.  If he received the lump sum after that point, it would be subject to a 45% tax charge.  Despite Mr S starting the transfer process months in advance of 1 January 2022, Mr S’s pension provider failed to make the transfers in time for Mr S to draw a lump sum before then.  At the point of making his Ombudsman complaint, Mr S had not drawn a lump sum, but said that any money he drew down in the future would be subject to Spanish tax.

The Deputy Pensions Ombudsman (DPO) held that the scope of a pension manager’s duty did not include protecting a member from charges incurred because of a change in tax residency.  This was the case even though Mr S had made his pension provider aware of the potential tax issues in advance and the pension provider had acknowledged that there had been delays in paying the transfer values.  The DPO did award Mr S £500 for distress and inconvenience caused by the pension provider’s delays and poor service.

PPF levy invoicing on hold

The Pension Protection Fund (PPF) has announced that it is putting its 2025/26 levy invoicing on hold and expects to provide a further update in the Autumn.  The PPF is in principle willing to set the levy at zero for 2025/26.  However, under the current law, this would prevent the PPF from raising the levy in future years.  The PPF has therefore made provisional arrangements to charge a levy for 2025/26 in order to preserve its ability to charge levies in future.  The Pension Schemes Bill contains measures designed to address this issue.  The PPF has therefore decided to monitor the Bill’s progress before making a final decision on the 2025/26 levy. 

Mandatory director identity verification from 18 November 2025

The Economic Crime and Corporate Transparency Act 2023 is introducing new requirements for company directors to verify their identity with Companies House. Since 8 April 2025 it has been possible for company directors to complete their identity verification on a voluntary basis.  From 18 November 2025:

• it will be compulsory for any new directors to verify their identity in order to be appointed; and
• existing directors will need to confirm they have verified their identity at the same time as they file their next annual confirmation statement;
• identity verification requirements will start to apply to a “person with significant control” (PSC) with the specific deadline depending on whether the PSC is also a director and, if that is not the case, on the individual’s birth month.

HMRC change of policy re VAT on investment costs

On 18 June HMRC announced a change of policy regarding the VAT treatment of pension scheme investment costs.  HMRC’s previous policy was that where there was “dual use” of investment costs by the scheme employer and trustees, a method of apportionment on a fair and reasonable basis was required to determine how much input tax could be deducted by each party.  HMRC’s new policy is that it will no longer view investment costs as being subject to dual use.  Instead, all the associated input tax will be seen as the employer’s and deductible by the employer, subject to normal deduction rules.  HMRC says that it will publish guidance by Autumn 2025 to explain the policy change.

Government to revive Pensions Commission 

The Government has announced that it is reviving the Pensions Commission, noting that incomes of retirees are set to fall over the next few decades if nothing changes.  The first Pensions Commission built consensus for the introduction of auto-enrolment.  The job of the new Pensions Commission will be to consider the long-term future of the UK’s pension system and to produce proposals for change beyond the current Parliament to deliver financial security in retirement through a pensions framework that is “strong, fair and sustainable”.  The Commission will submit its final report to the government in 2027.

PASA publishes “De-risking Jargon Buster”

The Pensions Administration Standards Association (PASA) has published a “De-risking Jargon Buster” which is designed to provide accessible and clear explanations of commonly used de-risking terms and options.

State Pension Age review: call for evidence 

The Government is required by law to review the State Pension Age (SPA) periodically and to appoint an individual to prepare an independent report on factors relevant to the review.  The independent person for this purpose has published a call for evidence on how the SPA should be determined.  Questions asked include the advantages and disadvantages of linking SPA to life expectancy and of using the SPA to manage the long-term cost of the State Pension.  Views are also sought on the possibility of automatically adjusting the SPA in line with certain factors and what other factors should be considered.  The call for evidence closes on 24 October 2025.