In the January edition of our Taylor Wessing Pensions Bulletin, we give a snapshot of some of the many recent pensions developments, which include:
The Pension Schemes Bill proceeds to the House of Lords with some further amendments
The Pension Schemes Bill and associated regulations look set to be the most significant pensions legislation of recent years. We have reported on aspects of the Bill previously. It is now being considered in the House of Lords. A number of amendments have been proposed, including:
- The Virgin Media remedy; his is the proposed remedy for the issues arising from the decision in Virgin Media. That case relates to the requirement for some DB schemes to have an actuarial confirmation in relation to certain amendments, which we have previously described here.
i) An amendment before Christmas proposes that the remedy provisions take effect from the date of Royal Assent of the Act, as opposed to two months after in the original draft.
ii) There are certain circumstances in which the remedy provisions will not be available. This is an area that has been subject to some discussion, Certain pre-Christmas amendments proposed a change to the schemes that will be unable to use the remedy because they are or have been subject to 'qualifying legal proceedings'. More recent amendments seek to remove the 'qualifying legal proceedings' exclusion altogether. We will monitor developments on this point and report in subsequent bulletins.
- Indexation; Amendments which provide for the indexation (in line with CPI capped at 2.5%) of PPF and FAS compensation for pre-1997 accruals, where the schemes rules provide for such indexation. This is to commence on and from 1 January 2027.
- Other miscellaneous provisions, such as that the cost of the The Pension Protection Fund Ombudsman will be met from The Pensions Regulator's (TPR) general levy (to be treated as having come into force from 1 April 2007 to reflect practice since then) and that the administration expenses of the PPF will be payable from those funds instead of through a separate administration levy (effective 1 April 2026).
Although the Act coming into force will be significant, it will generally only provide a legislative framework for the main reforms, which will need to be fleshed out in regulations. For areas that have immediate effect (such as is now proposed for the Virgin Media remedy) affected schemes will need to note the finalised wording in due course and be ready for how it might impact proposed actions.
FRC issues draft technical actuarial guidance in relation to the Virgin Media remedy
The Financial Reporting Council (FRC) has issued draft technical actuarial guidance to assist actuaries in carrying out their roles in the proposed remedy to the Virgin Media issues (see our previous bulletin on this here).
The guidance is in draft, recognising that the Pension Schemes Bill itself has not been finalised. So, it is subject to change as the Bill progresses through Parliament and is finalised. This is of course relevant for scheme actuaries but also trustees of affected schemes in understanding how scheme actuaries will be assisting in remedying any Virgin Media issues.
DWP consultation on the future of trusteeship
The much anticipated Department for Work and Pensions (DWP) consultation on the future of trusteeship was launched at the end of 2025 and covers the following main areas:
- Good governance. This section looks at the importance of good governance in a rapidly changing pensions environment. The Government believes that there should be a 'higher bar' that all trustees must meet with regard to technical knowledge and understanding requirements along with other skills such as those linked to effective leadership. The Government also wishes to explore what other requirements could help trustees deliver on their accountabilities and ensure that trustees are able to hold service providers to account. Further topics include:
i) in the move towards larger consolidated DC funds (Megafunds) whether there are possible conflict issues arising from the relationship between trustees and those who appoint them
ii) issues where there are multiple appointments for example where individual trustees who hold a large number of appointments may have less time to dedicate to their schemes or experience difficulty if unforeseen market activity requires urgent attention across a number of schemes (though it is also recognised that operating across multiple schemes may be beneficial eg for sharing good practice)
iii) provision of additional services by professional trustee firms and whether or not there should be additional requirements in relation to the selection and management of advisers and service providers by professional trustees
(iv) issues in relation to professional corporate sole trustees such as the risks of conflicts of interest in decision making and the possibility of a lack of checks and balances and diversity of thought.
- Appointment and removal of trustees. This looks at issues such as diversity, concerns about future supply and whether or not there is a role for a Public (Independent) Trustee in relation to TPR statutory appointments, and the development of a trustee directory.
- Skills and knowledge, examines what skills are required for trustees to operate in an effective and efficient board, whether or not there should be higher standards for professional trustees (the Government is proposing that there should be) and what additional support there can be for lay trustees.
- Member voice/representation asking how to ensure that member perspectives can be taken into account in trustee board decision making.
- Administration. Explores the question of mandatory minimum standards for administrators, regulatory oversight, data issues and questions around the possible negative impacts of the 'disorderly exit' of key pension administrators and what role TPR should play in reducing those impacts.
The consultation recognises the changing pensions environment (eg the shift from DB to DC and the DC market itself changing with more mature structures and bigger schemes). It sets out the Government's vision for a pensions market where a smaller number of 'bigger and better pension schemes' are overseen by 'highly skilled trustees operating independently, applying good governance, and focussed on delivering best outcomes for savers without risk of conflicts of interest.' Whilst the consultation is information gathering in nature, there are hints at the direction of travel (eg themes around higher requirements for professional trustees). It will be important to monitor the outcomes of the consultation and what they mean for trusteeship and administration.
The consultation also refers to the Government announcing its commitment to produce guidance to trust-based private pension schemes aimed at clarifying how they can interpret and apply their fiduciary duties when considering wider factors including systemic risks (such as climate risk) and members' standards of living in investment decisions – this will clearly be another area to watch given the complexities of the subject.
TPR consults on its new look multi-employer CDC code
The Pensions Regulator (TPR) is consulting on its 'new-look' CDC code for non-associated multi-employer CDC schemes ahead of the regulations facilitating these coming into effect from the end of July 2026 (with the revised code coming into force on the same day). The revised code sets out the criteria for authorisation, TPR's expectations of multi-employer CDC schemes and how it will use its powers to support this new innovation in the market, with TPR saying 'it's important that new models provide security and value and [we] welcome views on the consultation to make sure that balance is right.' TPR also urges trustees and corporates considering multi-employer CDCs to speak with its innovations service as soon as they can to be well placed to apply to TPR for authorisation this summer. TPR also says it anticipates being able to take applications from the beginning of August 2026 and that schemes could be operating in early 2027.
TPO issues new information to members about overpayment claims
The Pensions Ombudsman (TPO) has issued new information for members (and other beneficiaries) to help them understand the key issues arising when a pension has been overpaid. The guidance is designed to be factual and neutral, to help any disputes to be resolved as quickly as possible. TPO says it would like schemes to share this information with members, ideally when informing them that an overpayment has been made or when a member challenges any attempt to reclaim any overpayment, so that members can better understand this complex area. It is hoped that the guide will help members and schemes to work together to come to a solution to overpayment situations without the need to involve TPO or for those complaints to be more straightforward to resolve by TPO.
High Court upholds the validity of a scheme closure deed
The High Court recently considered (in case of 3i v Decesare) a part 8 claim brought by an employer in relation to a fetter in its scheme's amendment power. The issue was whether or not the fetter prevented the scheme from being closed to future accrual as provided for in a closure deed. At the relevant time, the fetter prohibited changes which (amongst other things) 'diminish any pension already being paid under the Plan or the accrued rights or interests of any Member or any other person in respect of benefits already provided under the Plan.' It was common ground that this fetter protected rights that had already accrued with a final salary link (which was provided for in the closure deed) but the question was whether or not this covered future service benefits also.
The point arose because in a previous case involving the BBC pension scheme the word 'interests' in the amendment power was found to include the terms upon which active members accrued ongoing benefits in the future. That case was distinguished here because the word 'interests' in the BBC case 'was untethered to any composite phrase'. In contrast, the wording in the present case was 'carefully circumscribed'.
To elaborate, the Judge said that in the fetter wording being considered in this case, far from being 'untethered' the word 'interests' does feature in a composite phrase – it features in conjunction with the word 'rights' with both expressions being qualified by the same expression 'already provided under the Plan' (which echoes the 'pension already being paid' wording in the fetter). He further said that there was nothing in that composite phrase to suggest that the relevant 'interests' are concerned with future service accrual and that the contrary is reinforced by the word 'accrued' before 'rights or interests', showing that the focus was very much on what had already occurred.
Further, the Judge favoured the 'conventional understanding' approach explained in Cantor Fitzgerald & Co v YES Bank Ltd. He determined that the word 'accrued' in the expression 'accrued rights or interests' qualified both the words 'rights' and 'interests', saying that understanding reflects the ordinary and natural meaning of the language of the fetter. He was reinforced in that view by the term 'accrued rights' being redundant if 'interests' was to be read as a standalone expression encompassing future benefit accrual.
Given the final salary link maintained by the closure deed, the Judge had 'no hesitation' in concluding that the fetter permitted amendments to terminate or reduce the rate of future accrual of scheme benefits, and that the closure deed amendments were a permitted exercise of the scheme's power of amendment.
The case is a useful reminder that amendment power wording can have a pivotal effect on the validity of amendments but must be considered on its own terms. Indeed, the judge said, as the BBC case itself made clear, that the meaning of a particular clause ultimately turns on its own interpretation, even if it might enjoy certain 'family resemblances' with others of the same type used elsewhere. These sorts of issues should be borne in mind when considering any changes to scheme benefits and indeed, in any review of scheme changes which, for example, may be part of a benefit review exercise prior to a buy-out, because of the potential impacts.
