Legislation
Amendments to section 37 certificate “fix” provisions in Pension Schemes Bill
In December the Government tabled amendments to the provisions of the Pension Schemes Bill that are designed to provide a “fix” for past pension scheme amendments that are at risk of being void due to a failure to obtain a “section 37 certificate” from the scheme actuary at the time. The amendments mean that the relevant provisions will now come into force as soon as the Bill receives Royal Assent (likely to be in April/May 2026). The December amendments also make some changes to the detail of which amendments are in scope of the fix, for example where the amendment has been the subject of court proceedings or where trustees have taken “positive action” based on their belief that an amendment was void.
FRC guidance for actuaries on section 37 certificate “fix”
In January the FRC published its actuarial guidance on the “fix” for the problems caused by the Virgin Media ruling which held that a failure to obtain a “section 37 certificate” from the scheme actuary when required would render the amendment void.
Key takeaways are:
- where there is uncertainty over whether a section 37 certificate was needed, but the actuary considers it reasonable to conclude the confirmation could have been given, the statutory fix can still be used;
- generally, an actuary being asked to provide confirmation for the purposes of the fix:
- must consider it “reasonable to conclude” (rather than being certain) that a section 37 certificate could have been given for a rule change at the time. This means reaching a reasoned and justified conclusion taking into account all relevant facts and circumstances identified after taking a proportionate approach to gathering data;
- can make appropriate assumptions about the scheme or about information that isn’t available;
- may use information from a later date than the amendment to infer whether a section 37 certificate could have been given (but not where the information could not have been available to the actuary at the time, eg actual later rates of inflation);
- there may be cases where the actuary can give confirmation based solely on the nature of the rule change or the actuary’s experience.
As it’s unlikely that individual member data from the time of a rule change will now be available, the actuary can look to indirect evidence to support their professional opinion, including trustee minutes, member communications, correspondence and contracting-out certificates and documents produced after the rule change was made.
A particular cause of complexity for some schemes was differences between the earnings definitions used under the scheme rules compared to those required for section 37 confirmations. Indirect evidence can be used here, including asking an employer to sign a statement regarding past earnings or even reliance on the actuary’s own experience of employee earnings in the same industry. The guidance covers a range of “assurances” that the actuary may want to seek from employers.
Trustees and employers should now consider with the scheme actuary what further information the actuary may require to give any necessary new confirmations. The Pensions Regulator has said it will publish its own guidance “in the spring” to support trustees.
Finance Bill containing inheritance tax changes published
In our previous Update we reported on the draft legislation in relation to the Government’s plan to bring unused pension funds and lump sum death benefits within scope of IHT from 6 April 2027. The Finance Bill containing the relevant provisions has now been introduced into Parliament. For more detail, click here.
Changes to salary sacrifice from April 2029
In our last Update we reported on the Budget announcement that, from April 2029, only the first £2000 of pension contributions that an employee makes via salary sacrifice each year will be exemption from National Insurance contributions (NICs). In December the Government published the National Insurance Contributions (Employer Pensions Contributions) Bill to make the changes.
Trustees should engage with their employers to discuss any changes that the employer may be considering making to its salary sacrifice arrangement and how that may impact on contributions payable to the Scheme.
New requirement for data protection complaints procedure
The Data (Use and Access) Act 2025 (DUAA) introduces a new requirement for data controllers under data protection legislation to have a complaints procedure allowing a data subject to make a complaint about an alleged infringement of UK GDPR. The requirement comes into force on 19 June 2026. Scheme trustees are data controllers in relation to scheme members and beneficiaries and any other individuals about whom the trustees hold personal data. Trustees will therefore need to ensure they comply with the new requirement.
There is significant overlap between the DUAA complaints procedure requirements and the existing requirement under the Pensions Act 1995 for trustees to have an internal disputes resolution procedure (IDRP). However, the group of people entitled to bring a complaint under the data protection complaints procedure is potentially wider than under the IDRP. Broadly, the persons entitled to make an IDRP complaint are current and former members and beneficiaries and persons who claim to fall within these categories. A person is entitled to bring a complaint under the DUAA complaints procedure if the data controller holds personal information about them. In a pensions context this could include not just members and beneficiaries but also, for example, a person working for the scheme trustees and about whom the trustees hold personal information.
Action required
We think that in most cases it will make sense for trustees to review their existing IDRP and update it as necessary to ensure it complies with the new DUAA complaints procedure requirements. This will require the scope of persons eligible to complain to be broadened for complaints that allege an infringement of UK GDPR. Trustees will also need to update their privacy notices to refer to the right to make a complaint under their complaints procedure.
Cases
High Court rules on meaning of “accrued rights or interests” in amendment power
In the case of 3i PLC v Decesare, the High Court had to rule on the meaning of the term “accrued rights or interests” in the scheme’s amendment power. The scheme’s amendment power prevented amendments that would “diminish…the accrued rights or interests of any Member or other person in respect of benefits already provided under the Plan” without the consent of the member concerned. The key question before the court was whether the word “accrued” applied to the word “interests” as well as the word “rights”, meaning that the fetter in the amendment power only protected interests already accrued at the time of the amendment, or whether the word “accrued” only applied to the word “rights”. The latter interpretation would mean that the amendment power fetter potentially prevented amendments that would diminish benefit accrual in respect of future service. This was a key issue as a closure deed had been executed in 2010 which was understood at the time to have closed the scheme to future accrual. If the amendment power fetter prevented amendments that diminished interests in respect of future service, the closure deed was potentially invalid.
The judge held that the “natural meaning” of the words in the amendment power was that the word “accrued” qualified both the word “rights” and the word “interests”. The judge also commented that the term “accrued rights” would be redundant if “interests” were read as a standalone expression. The judge therefore concluded that the closure deed did not breach the terms of the power of amendment.
Our thoughts
This case came to court because the scheme was being wound up and the trustees were on the verge of distributing a substantial surplus to the scheme’s principal employer. The move to buying out benefits and winding up a scheme means that the validity of past scheme amendments comes under scrutiny, sometimes viewed through the lens of subsequent case law that did not exist at the time the original amendment was made.
Court approves settlement reached on “probabilistic” basis
In the case of Places for People Pension Trustee Limited v Places for People Group Limited, the court has approved a settlement on a “probabilistic” basis where the legal effect of a whole series of purported amendments was unclear. The scheme had been administered on the understanding that all purported amendments had been validly made. However, it was subsequently identified that there were a number of purported amendments where there was a question mark over the validity of the amendment. In some cases there were potential issues with the execution of the document (eg a failure to observe the legal formalities for a deed). In other cases the question over validity arose due to an apparent failure to obtain a “section 37 certificate” from the scheme actuary. For more detail, click here.
Court refuses to strike out bulk data protection complaints
A High Court judge has dismissed a pension scheme administrator’s application to have mass data protection claims against it struck out as an abuse of process. The claim involved a law firm bringing a claim on behalf of almost 4000 individuals in relation to a large scale cyber-security breach by the defendant. For more detail, click here.
Pension Protection Fund
PPF confirms zero levy for 2026/27
The PPF has announced that it won’t charge conventional defined benefit schemes a levy for the levy year 2026/27.
Abolition of PPF administration levy
The Government has tabled an amendment to the Pension Schemes Bill to insert a clause abolishing the PPF administration levy (not to be confused with the pension protection levy).
Pensions Regulator
Revised scheme administration guidance
In December 2025 the Pensions Regulator (TPR) published revised scheme administration guidance for trustees and administrators. The guidance replaces TPR’s “Administration of a DC Pension Scheme” guidance and applies to all scheme types. The guidance sets out the responsibilities of trustees in relation to scheme administration. It says that trustees should have a written administration policy (sometimes known as an administration strategy) which should cover:
- the objectives for administration, including long-term strategy;
- scope of administration function;
- roles and responsibilities of the administrators, trustees, employer and other service providers relevant to the administration function;
- information required by the scheme administration, who provides it, and the frequency and format of delivery;
- reporting requirements across the administration functions, ie who the administrator reports to, what information needs to be provided and the frequency of those reports;
- monitoring and review procedures for administration performance, including an escalation path for underperformance and a periodic full review of the adequacy of contractual arrangements between trustees and administrators;
- disaster recovery and business continuity plan. The guidance says this would usually be a separate document cross-referred to in the administration policy; and
- the procedure for reviewing the policy, including who is responsible and the triggers for review.
Stronger support package agreed for scheme following Regulator’s warning notice
The Pensions Regulator (TPR) has issued a regulatory intervention report detailing the stronger support package that it negotiated for the Northern Foods Pension Scheme after issuing a warning notice regarding possible exercise of its “moral hazard” powers. For more detail, click here.
Pensions Ombudsman
Member factsheet on pension overpayments
The Pensions Ombudsman has published a factsheet to provide members with information about pension overpayments. The factsheet explains the general principle that a member will normally be expected to repay an overpayment. It then outlines the main possible legal defences to an overpayment claim and gives examples of the types of evidence that a member is likely to need in order to successfully defend an overpayment claim.
Ombudsman upholds complaint where death benefit decision based on fraudulent statement
The Deputy Pensions Ombudsman (DPO) has upheld a complaint from a deceased member’s daughter where the pension provider paid the whole of a lump sum death benefit to the member’s son on the basis of the son’s fraudulent claim that he was the deceased’s only child (CAS-84909-V2W7). For more detail, click here.
Trustees entitled to recover winding-up lump sum paid after member’s death
The Pensions Ombudsman (TPO) has upheld the right of trustees to seek repayment of a winding-up lump sum from a member’s estate where the member had died before the winding-up lump sum was paid (CAS-89142-L1R8). For more detail, click here.
Complaint upheld for failure to comply with preservation requirements
The Deputy Pensions Ombudsman (DPO) has upheld a complaint against trustees for failing to apply the statutory preservation requirements in relation to a member who had an absolute right to take his pension before the scheme’s Normal Retirement Date (NRD) with no early retirement reduction. As the member did not take his unreduced pension at the earliest opportunity, the DPO held that the preservation requirement required an uplift to be applied to the pension to reflect its late payment (CAS-79089-Z5M8). For more detail, click here.
Trustees entitled to require legal opinions before making transfer to QROPS
The Deputy Pensions Ombudsman (DPO) has held that scheme trustees were entitled to require a member to provide two legal opinions, one covering English law and one covering the law of the jurisdiction in which the receiving scheme was based, before making a transfer to a “qualifying recognised overseas pension scheme” (QROPS) (CAS-83019-G2S0). For more detail, click here.
DC developments
Value for money consultation response and further consultation published
In January the FCA and Pensions Regulator published a response to their consultation on the Value for Money (VfM) Framework together with a further consultation on proposed changes and a discussion paper. The idea behind the VfM Framework is to provide a consistent framework for assessing the performance of workplace DC arrangements, and to require pension providers to take action where an arrangement fails the VfM test. For more detail on the consultation response and further consultation proposals, click here.
It is intended that the VfM framework will also apply to occupational DC schemes. It is intended that a consultation on the regulations applicable to occupational pension schemes will take place this year once the Pension Schemes Bill has received Royal Assent. The Government’s intention is that schemes will first be required to submit their VfM metrics in early 2028, with assessments later that year. This means that trustees need to be in a position to report on metrics based on the January to December 2027 period. The Pensions Regulator has published an overview for trustees of occupational schemes on the VfM framework, including the consultation response and further consultation proposals.
Miscellaneous
Consultation on improving the standards of pension scheme trusteeship, governance and administration
The Government’s consultation on trustees and governance is seeking views on some significant changes, including mandatory accreditation for professional trustees, limits to the length of trustee appointments, the creation of a directory of all trustees, and the introduction of a requirement for scheme administrators to be registered with the Pensions Regulator (TPR), with the TPR having the power to deregister administrators. It does not specify a timescale for implementation of the changes. The consultation runs until 6 March 2026.
Mandatory tax adviser registration: exemption where HMRC interactions required by legislation
In its Newsletter 176 HMRC has flagged that the new tax adviser registration requirements contained in the Finance (No.2) Bill are subject to an exemption where an adviser interacts with HMRC in order to comply with an obligation under an enactment. This means that pension scheme administrators will not be under an obligation to register with HMRC as tax advisers solely by reason of providing information to HMRC in order to comply with their statutory duties. The broad definition of “tax adviser” under the legislation had previously raised concerns that this could be the case.
HMRC guidance on checking whether member has tax protections
In January 2026 HMRC published updated guidance for scheme administrators on how to check whether a scheme member has tax protections such as enhanced protection.
Pensions UK publishes Stewardship and Voting Guidelines
In December 2025 Pensions UK published its Stewardship and Voting Guidelines 2026. The guidelines contain a new section on key emerging trends in the 2025 voting season. These included rising governance scrutiny; ESG becoming more contested, particularly in the US; momentum stalling on climate stewardship; a de-prioritisation of diversity and inclusion, particularly in the US; executive pay continuing to rise, but facing a degree of dissent; and an increased focus on AI, cybersecurity and virtual meetings, with concern growing over shareholder participation rights in virtual-only meetings. The guidelines also contain a new section on “pass-through” voting, ie the use of mechanisms to enable the owners of units in pooled or index funds to direct votes on the underlying shareholdings, often through technology platforms provided by large index fund managers.
PASA guidance on Data (Use and Access) Act 2025
The Pensions Administration Standards Association (PASA) has published an “industry paper” on the Data (Use and Access) Act 2025 in which it identifies the key elements of the Act which it considers significant for pension schemes. These are:
- the removal of many of the previous restrictions on significant automated decision-making, which could pave the way for improved automation in scheme administration;
- the elevation of digital verification services to a statutory footing, creating an audited route for schemes to source identity checks which meet required standards in relation to security and data minimisation;
- a new “recognised legitimate interests” lawful basis for processing personal data which includes “safeguarding vulnerable individuals”;
- confirmation that a data controller is only required to conduct a “reasonable and proportionate” search in response to a data subject access request (DSAR), and 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; and
- a new requirement for data controllers to have a complaints procedure. (For more detail on the complaints procedure requirements, see the item “New requirement for data protection complaints procedure” above.)
PASA guidance on delivering digital transformation
In January PASA (the Pensions Administration Standards Association) published Part 2 of its Digital Administration Guidance: “Planning the Digital Transformation Journey”. The guidance suggests a framework for schemes to use in relation to digital transformation projects, starting with an assessment of the scheme’s current digital capability, defining the desired outcomes of the project, and using practical examples and scenarios to clarify how benefits are expected to be achieved.
PASA guidance on buy-in and superfund transactions
PASA (the Pensions Administration Standards Association) has published a guide to navigating buy-in and superfund transactions. The guidance highlights areas that require particular focus, for example whether to “lock in” discretionary benefits, the actuarial factors that will be used by the insurer for commutation, and benefits which may not be insurable such as GMP underpins. It also suggests “high-impact” data fields which should be prioritised on a data cleanse, eg member existence checks and core benefit data.
