In the February edition of our Taylor Wessing Pensions Bulletin, we give a snapshot of some of the many recent pensions developments, which include:
The Pensions Regulator encourages trustees to engage with DC value for money consultation
The Pension Schemes Bill sets out a legal framework for value for money (VFM) requirements in relation to certain DC trust-based pension schemes but much of this is to be fleshed out in regulations. The FCA is covering the implementation aspects for contract-based schemes. Both The Pensions Regulator (TPR) and the FCA published a joint discussion paper and consultation in January on how the value for money requirements should apply across both types of arrangements.
In broad terms, it is proposed that the initial focus will be on certain 'default' and 'quasi default' arrangements and so all master trusts and most single employer DC arrangements irrespective of size will be in scope for the VFM framework (though it will not apply to executive pension plans or small self-administered schemes and the precise scope is to be finalised in regulations). Trustees will need to use three categories (investment metrics, costs and charges information and quality of service information) to determine their scheme's performance which will involve a three-step process to measure VFM against certain commercial comparators. If the scheme is found to not be providing VFM through this process, then the trustees will need to take certain steps which may include notifying the employer and submitting improvement plans to TPR.
In January TPR also published an overview of the joint proposed VFM framework and has also published a recent blog urging trustees to respond to the consultation. TPR has been working with the FCA on the proposals for some time and in the blog TPR highlights some key updates
- A new colour coded rating system. The VFM assessment outcomes will be shown in a colour rating, as part of a four-point rating system which will be dark green for strong performance, light green for good value, amber for improvement, and red for poor value.
- Forward looking investment metrics. Forward-looking metrics, alongside existing backward-looking metrics, will be introduced as part of the VFM assessment, to reflect what an investment strategy aims to deliver over time.
- A centralised data solution. TPR is seeking feedback on its proposed single route for submitting and analysing VFM data. It is proposing that Trustees will be required to submit their VFM metrics to a newly established database by the end of March each year and to publish their assessment report by the end of October each year.
TPR is keen for trustees to provide their input to this area to, as it says, 'help us get it right'. The blog reiterates TPR's view that 'where a scheme is not delivering value, trustees or providers would be expected to improve performance or consolidate out of the market, so that savers get the value they deserve'. The consultation closes on 8 March. In terms of timelines, TPR's summary suggests following Royal Assent of the Pension Schemes Bill 2025, the next steps will include
- a consultation on the regulations (anticipated during 2026, depending on Parliamentary timetabling)
- under the government’s timetable, the intention that schemes will first be required to submit their VFM metrics in early 2028, with assessments later that year, and after that, annually. This means that trustees need to be in a position to report on metrics based on the January to December 2027 period.
We will provide updates on these developments.
Trustee fiduciary duties guidance – an update
In the last Pensions Bulletin we referred to the Pensions Minister mentioning the government's plans to introduce guidance for trustees on exercising their fiduciary duties. The Minister has now given an update on that saying that the government is committed to ensuring that 'private pension trustees' have a 'clear, range of guidance', to support the consideration of wider factors within their existing legal obligations. This will include clarification and practical support on trustees' ability to take account of system level risks, such as those that are climate related, and the impacts of investments where these affect members’ long-term outcomes, including their standard of living.
It is understood that the guidance will also explore how trustees may consider members’ views, provided that this remains consistent with investing in members’ best interests, and will 'reaffirm that trustees should take account of all financially material matters, where appropriate, in their investment decision making'.
The Minister has also said that the government's objective is for the guidance to be delivered in partnership with the pensions sector and other interested parties (with industry roundtables to gather views and technical expertise to 'ensure the guidance meets the identified need').
It is not clear whether or not the enabling legislation to facilitate this guidance will be introduced as part of the Pension Schemes Bill or separately but we will be monitoring developments in this important area for trustees.
Transfer value legislation – possible developments
In answer to Parliamentary questions around the threats posed by pension scams, the Pensions Minister has said, 'as well as describing possible actions to ensure enforcement action is taken against those who target pension savers, that the government will 'publicly consult on its work to strengthen the transfer process with enhanced protections in the coming months'.
Possibly reinforcing this is the government's response to a recent petition to 'mandate the offer of electronic transfers and higher standards'. In that response the government says that it has been working with the pensions industry to consider changes that 'provide a smoother transfer process' and 'proactively respond to any developing risks' and that it is planning to consult on the outcome of this work in the coming months.
Clearly any proposals will need to be monitored especially the extent to which it might affect the transfer process, scheme administration and any trustee statutory obligations as regards the implementation of transfer rights.
Pensions Administration Standards Association introduces guidance on superfund and buy-in transactions
The De-risking Journey Management Working Group of the Pensions Administration Standards Association (PASA) has produced new practical guidance for trustees, administrators and advisers in relation to the 'realities' of buy-in and superfund transactions. In its press release PASA says that it addresses the misconception that scheme administration 'stops' when a buy-in has been completed and instead highlights the key role administration plays before, during and after transition in ensuring 'smooth delivery', 'regulatory compliance' and 'positive member outcomes'. Throughout the guidance administrators are encouraged to adopt a single defining principle: 'automate, validate, communicate.'
The guidance focusses on areas regarded as being where schemes most often encounter friction which include data integrity, rule alignment, member communications, deferred member complexity, risk management and resourcing. The guidance draws on real- world experiences and provides practical actions to help schemes plan early, avoid delays and maintain confidence throughout the de-risking journey.
Key data protection changes come into force
The Data (Use and Access) Act 2025 received Royal Assent last year and makes some important changes to the UK data protection regime. Regulations brought a substantial part of the Act into force on 5 February 2026 which includes the following provisions which may be particularly relevant to pensions:
- Changes to the way in which subject access requests are processed. For example now, when responding to a data subject access request, searches need only be carried out that are 'reasonable and proportionate' (which would appear to reflect ICO guidance on the point).
- Introducing a simpler test for transferring personal data to third countries and international organisations; that test involves assessing whether the standard of protection for the processing of personal data in a non-UK country or international organisation is "not materially lower" than that of the UK GDPR and DPA 2018.
- Enhanced powers for the Information Commissioner which include being able to require individuals to attend interviews during regulatory investigations, and to require third-party reports at the expense of the organisation being investigated.
The regulations also bring into force, from 19 June 2026, the provisions dealing with the requirement for data controllers to put in place procedures for handling complaints. The ICO has produced helpful guidance on the changes which can be found here and our data protection colleagues have produced a series of articles on this area which can be found here. Please do not hesitate to get in touch with your usual pensions contact if you wish to discuss these issues further.
