In the September edition of our Taylor Wessing Pensions Bulletin, we give a snapshot of some of the many recent pensions developments, which include:
Pension Schemes Bill - further developments and Virgin Media remedies
The Pension Schemes Bill , currently proceeding through Parliament, has some recent tabled amendments which include provisions to address the issues arising from the Virgin Media case (see our previous bulletin on this here) relating to amendments to certain defined benefit pension schemes.
The proposals provide for affected amendments to be 'potentially remediable alterations' if certain conditions are met. 'Potentially remedial alterations' will then be deemed to have met the regulatory requirements under regulation 42 if, broadly:
- the trustees have requested the scheme actuary in writing to consider whether or not the alteration to the rules would have prevented the scheme from continuing to satisfy the reference scheme test
- the scheme actuary has confirmed, in writing, that, in their opinion, it is reasonable to conclude that the amendment would not have prevented the scheme from continuing to satisfy the reference scheme test.
The provisions state that the scheme actuary may take any professional approach that is open to them in all the circumstances of the case and may act on the basis of information available to them as long as they consider it to be sufficient for the purposes of forming an opinion on the matter.
Helpfully, the potentially remedial alterations of schemes which have been wound up or are now part of the Financial Assistance Scheme or Pension Protection Fund will always be deemed to be valid for the purposes of the regulation 42 requirements.
There are certain instances which will fall out of scope, for example where trustees have already taken some 'positive action' on the basis that they consider the scheme amendment in question to be void for non-compliance with the legal requirements. 'Positive action' will mean:
- notifying members in writing that the trustees consider the amendment to be void as a consequence of not complying with regulation 42 requirements and that the scheme will be administered as if the amendment has no legal effect or
- taking any other step in relation to the administration of the scheme (in consequence of considering the amendment to be void) that has or will have the effect of altering benefit payments from the scheme.
Other alterations which will fall out of scope include where the validity of a rule amendment (in so far as compliance with regulation 42 is concerned) has already been determined by a court in proceedings to which trustees were a party, or were the subject of legal proceedings started on or before 5 June 2025 (the date of the ministerial statement) and were either settled or remain in issue when the legislation comes into force.
The proposed amendments are set to come into force two months after the Bill receives Royal Assent which is expected to be early 2026 and as ever, the final detail will need to be examined closely. Nevertheless, trustees of affected schemes may wish to start to consider how this might impact their schemes and consult with their advisers accordingly.
ECCTA 23: identity verification requirements for directors and persons of significant control in force from 18 November 25
The Economic Crime and Corporate Transparency Act 2023 (the Act) includes a number of key requirements for companies, which will also affect corporate trustees of pension schemes, some of the key requirements are outlined in this update here (prepared by our corporate-law specialist colleagues) (note also the other updates referred to in that insight).
The key identity verification requirements under the Act (which apply to directors and persons with significant control (PSCs), and which have, until now been voluntary, will become compulsory from 18 November 2025. That means, from that date:
- any new director will need to verify their identity to incorporate a company or be appointed to an existing company
- any new PSC will need to confirm their identity has been verified within 14 days of being added to the Companies House register
- existing directors will have to confirm they have verified their identity when they return their next annual confirmation statement
- existing PSCs, will need to consider the identity verification deadline that applies to them as this will depend on whether they are both a director and a PSC of the same company or a PSC only
- directors and PSCs will be able to check their verification due dates for all their roles as these will be visible on the Companies House register.
Identity verification requirements for limited partnerships, corporate directors of companies, corporate members of limited liability partnerships (LLPs), and officers of corporate PSCs (otherwise known as a 'relevant legal entity') will commence later.
Another key provision (not yet in force but should be borne in mind) is that companies will only be able to have directors that are corporates if the directors of those corporates are all natural persons whose identity has been verified. This could have implications for professional trustees acting as trustees through the appointment of their own professional trustee company to a trustee board that is itself a corporate trustee. In this case, the professional trustee will need to ensure all the directors of the company through which it is being appointed are all natural persons who have had their identity verified.
We are happy to assist you with understanding how and when these requirements may apply to you and how to comply with them. So, please do get in touch with your usual pensions contact if you wish to discuss.
The Pensions Regulator publishes market insight on administration relationships
In September 2024, The Pensions Regulator (TPR) launched a phase of its voluntary engagement initiative involving administrators, to understand risks and challenges and to find ways to better support improved outcomes for savers. The project involved 15 administrators from a variety of backgrounds and of different sizes. It had four key themes - financial sustainability, technology and innovation, risk and change management and cyber resilience.
TPR has now produced an insight into that project, which highlights several areas that need to be addressed to keep improving. These include the need for investment in the future of administration services, improving data and building in risk and change management into everyday operations. Key for trustees is that the insight says that trustees must take responsibility for driving up accountability and administration standards. It also says "while trustee boards are becoming more professional, a lack of understanding of administration appears to persist among some trustee boards. Such knowledge gaps could lead to undervaluing the service and poor oversight – ultimately putting member outcomes at risk. Trustees should treat their administrator like any key adviser, involving them in regular meetings and including them as part of operational and strategic decisions".
It further says that:
"We expect administrators and trustees to reflect on these findings and to work together to identify ways to improve administrative practices to better serve savers. Trustees should also periodically review their contract with administrators to ensure it remains suitable."
The insight also highlights the various ways in which TPR will be promoting higher standards. These include, developing a new administration strategy, continuing direct engagement with a variety of administrators and supporting better collaboration between trustees and administrators to tackle challenges; it will share details of this strategy in due course.
As administration sits at the heart of good scheme governance, trustees should monitor their relationships with their administrators and maintain appropriate agreements with them to seek to ensure high standards and proper risk management.
The Pensions Regulator consults on deliberate and targeted enforcement strategy
The Pensions Regulator (TPR) has published a detailed consultation on a new approach to enforcement. It says that this new strategy reflects an important shift in how it regulates and introduces a more 'focused, agile, and outcomes-driven model' which is aligned to its statutory objectives, corporate priorities and a shift towards a more prudential style of regulation. That includes deliberately moving towards a smarter, collaborative and risk-based approach, aiming to act earlier and to deal more effectively with serious risks.
The consultation is aiming to ensure the new enforcement strategy is clear and accessible, proportionate and transparent in how TPR uses its enforcement powers, effective in delivering good outcomes for savers and visible and free from regulatory gaps. It outlines a number of ways that this new approach is different, which includes putting saver outcomes first, setting clear enforcement priorities, targeted enforcement and using data to make smart decisions.
TPR expects that the new strategy will also require it to revisit its wider suite of enforcement policies to ensure that they are all aligned. So, further consultation on those may emerge in due course.
The consultation runs until midnight on 11 November 2025. Responses are invited from all stakeholders, but TPR has highlighted trustees and scheme managers of defined benefit and defined contribution schemes and employers subject to automatic enrolment duties amongst the groups that it is particularly interested in receiving feedback from.
Trustees, employers and any other potentially affected parties should note developments in this regard and how it might affect any enforcement related interactions with TPR.
PPF confirms zero conventional levy for 25/26
The Pension Protection Fund (PPF) has announced that all conventional levies for defined benefit occupational pension schemes for the 25/26 year will be zero.
The PPF board had included provision for this to apply in its 25/26 rules if there was a clear commitment to amend the legislation to remove the barriers to this. The latest announcement is based on there being relevant legislative proposals in the Pension Schemes Bill which is now proceeding through Parliament and there being broad support among policy makers and stakeholders for this change. It is said that the move will save relevant DB schemes £45 million and so is very welcome.
The Pensions Ombudsman (TPO) delivers a notable determination in relation to transfers
A recent Pensions Ombudsman case has set out a detailed examination of the position around trustees' duties when dealing with pre-2021 statutory transfers in certain circumstances.
A complaint was made by a member of the British Steel Pension Scheme through a claims management company. The member alleged that the scheme trustee failed to carry out due diligence in relation to a scheme he transferred his benefits to (which turned out to be, apparently, a scam arrangement). That was despite him having signed a leaflet (to acknowledge he had read it) which had been issued by the Pensions Regulator at the time (the 'Scorpion leaflet') warning against pension scams. The transfer was completed on 1 September 2014.
In this decision, the Ombudsman set out a detailed analysis of the law and the Ombudsman's approach in such cases, including the trustee's duty of care under the Pension Schemes Act 1993 and whether the trustee was required to comply with the due diligence checklist set out in the Pensions Regulator’s 2013 action pack, ‘Pensions liberation fraud: The predators stalking pension transfers’ or the Scorpion leaflet which was aimed at members.
After examining these in detail the Ombudsman determined that "there was no general, common law or equitable duty of care that required the trustee to conduct the due diligence suggested by Mr D [the complainant] and his representative." Further, he noted that the trustee had not voluntarily assumed responsibility to investigate the receiving scheme and had not made any promise or implied representation to Mr D that it was conducting due diligence which he could argue that he then relied upon to his detriment.
The case provides clarity over the important aspects of trustees' duties of care when dealing with statutory transfers from occupational pension schemes between the period from February 2013 to 30 November 2021 (the latter being when regulations dealing with new requirements around statutory transfers came into force). The Ombudsman has also said 'although each case turns on its own facts, it is likely to inform TPO’s approach to similar cases'.
