The Pensions Brief: June 2025

Issues affecting all schemes

Market volatility – Pensions Regulator report

The Pensions Regulator (TPR) has published a market oversight report on market volatility and what trustees should do, which sets out how schemes are responding to the current market environment and highlights risks that trustees need to watch for and respond to.

The report identifies five key areas where trustees of DB schemes should focus:

• Scheme liquidity and cashflow management.
• Investment strategy and risk management.
• Governance and operational resilience.
• Covenant and employer considerations.
• Opportunities and funding level changes.

For trustees of DC schemes, the report identifies three key areas of focus:

• Member communications to help members make informed decisions.
• Investment and risk management.
• Strategic oversight.

Action     
Trustees should review the report and factor its recommendations into their risk management processes.

Pensions Investment Review – final report

The government has published the final report of its Pensions Investment Review (phase 1 of its review of the UK pensions landscape). The report confirms that the government will proceed with its plans to introduce “megafunds”. However, while the forthcoming Pension Schemes Bill will include a power enabling the government to mandate a minimum level of investment by schemes in certain UK asset classes, in light of the Mansion House Accord, the government does not currently intend to exercise that power. The government does not anticipate exercising the power unless it considers that the industry has not delivered the required change on its own and would only exercise it following a thorough assessment of the potential impacts on members and economic growth. The power will include safeguards to protect members’ interests, and any requirements imposed would be consistent with the principles of fiduciary duty.

Phase 2 of the pensions review will look at retirement adequacy and will be launched “in the coming months”.

For more information, please see our legal update.

Action     
No action required.

Pensions dashboards – split administration

The Pensions Administration Standards Association (PASA) has published guidance for schemes on connecting to the dashboards ecosystem where they have more than one administrator. Under the dashboards legislation, the duties apply to all benefits from the date a scheme first connects to the ecosystem. Where a scheme has more than one administrator, including AVCs being connected directly by the AVC provider, it will be necessary for all the administrators to connect on the same date for the scheme to comply with the legislation. However, there may be instances where this is not achievable, and the guidance sets out TPR’s approach to such situations as well as a suggested approach for schemes with multiple administrators to take.

In addition, the Pensions Dashboards Programme has published:

• Guidance on the dashboards reporting standards. This is designed to explain the standards that providers and schemes must adhere to when generating, recording, and reporting information.
• Its data protection impact assessment in relation to the processing of personal data by the Money and Pensions Service in connection with building and running the central digital architecture of the dashboards ecosystem and related services, and connecting schemes and dashboards to the ecosystem.

Action     
No action required, but trustees of schemes with more than one administrator may find the PASA guidance helpful.

Identity protection – guidance

PASA has published guidance for administrators on identity management and assurance. The guidance sets out best practices to mitigate identity-related fraud, bolster member protection, and future-proof processes in an increasingly digital landscape.

Action     
No action required, but administrators may find the guidance helpful.

Salary sacrifice – HMRC research

HMRC has published research on employer attitudes and behaviours towards salary sacrifice for pension contributions. The research indicates that salary sacrifice was generally seen as beneficial for both employers and employees. Most employers said they did not use the National Insurance (NI) savings from the salary sacrifice arrangement to directly fund their workplace pension.

The research also explores the potential impact of three hypothetical changes to the tax treatment of salary sacrifice for pension contributions:

1. Removal of the NI exemption so the sacrificed salary would be subject to both employer and employee NI contributions.
2. Removal of the NI and income tax exemptions so the sacrificed salary would be subject to employer and employee NI contributions and employee income tax.
3. Removal of the NI exemption, but only on salary sacrificed over a £2,000 annual threshold.

All three scenarios were viewed negatively, with scenario 2 being the most unpopular. HMRC has not indicated that it plans to change the tax treatment of salary sacrifice for pensions contributions.

Action     
No action required.

Innovation – new TPR service

TPR has launched a new service to help support innovation in members’ interests and potentially boost economic growth. The service aims to reduce unnecessary regulatory barriers to pensions innovation by enabling early transparent discussions between TPR and innovators. TPR will focus on two areas of innovation in particular:

• Administration and member experience, particularly in the decumulation phase.
• Investment and new scheme models.

Action     
No action required.

Issues affecting DB schemes

DB funding – submission of valuation documents

TPR has published the final response to its consultation on the form of the written statement of the funding and investment strategy that schemes must submit to TPR. The response confirms the launch of TPR’s new digital service for submission of funding documents, including the statement of strategy. The service will use a dynamic spreadsheet to collect data which is designed to limit the burden on trustees by reducing the amount of data to be provided by some schemes such as low-risk schemes and small schemes.

Action     
Trustees of DB schemes whose valuation has an effective date of 22 September 2024 or later should ensure that they use the new digital service to submit their valuation documents. Trustees of schemes whose valuation has an effective date before 22 September 2024 should continue to submit their valuation documents using TPR’s Exchange service.

DB surplus – relaxation of release rules

The government has responded to its 2024 consultation on options in the DB context to provide better outcomes for members, drive a more consolidated market, and enable pension schemes to invest in a diverse portfolio. The response confirms that the government will amend the DB surplus extraction regime by:

• Introducing a statutory power for trustees to amend their scheme rules by resolution to allow a surplus payment while the scheme is ongoing where the scheme rules do not currently allow this. The requirement for trustees to have passed a resolution by 5 April 2016 preserving their power to make a surplus payment will be repealed.
• Reducing the funding threshold which must be met for a surplus payment to be made from full funding on the buy-out basis to full funding on the low dependency funding basis.
• Amending the statutory requirement for the surplus payment to be in members’ interests to make it clear that trustees must act in accordance with their overarching fiduciary duties to scheme beneficiaries, which will remain unchanged.

The government will not mandate how surplus payments must be used. The Pension Schemes Bill will contain the broad framework for the new regime, with further detail being set out in regulations, on which the government will consult. TPR will also publish guidance on DB surplus extraction.

However, the government will not proceed with introduction of an option to pay a higher Pensions Protection Fund (PPF) levy for 100% PPF compensation. The government will continue to consider the possible role for, and design of, a government consolidator.

For more information, please see our legal update.

Action     
No action required.

Issues affecting DC schemes

DC “megafunds” – plans confirmed

The government has responded to its consultation on proposals to encourage DC multi-employer trust-based schemes and contract-based workplace pension schemes to consolidate into “megafunds”. The response confirms that the Pension Schemes Bill will contain provisions to:

• Require schemes to have at least one default arrangement with £25 billion in assets by 2030.
• Require schemes to demonstrate that they have an investment capability commensurate with their scale.
• Prevent new default arrangements from being created and operated, except in certain circumstances. However, the government has decided not to set a limit on the number of default arrangements or funds for any given scheme.

The requirements will apply to contract-based workplace pension schemes and multi-employer DC trust-based pension schemes that are being used for automatic enrolment. Although the response refers to DC multi-employer trust-based schemes, the inclusion of multiple references to master trusts suggests that the requirements will only apply to DC master trusts and that other types of DC multi-employer schemes will not be within scope. In addition, the requirements will not apply to CDC schemes, hybrid schemes which are only available to a closed group of employers related through their industry or profession, or to default arrangements that serve protected characteristics, such as religion.

The government will also proceed with creation of a contractual override for transfers from contract-based schemes without member consent (but with member protections). However, it will not proceed with its proposals to introduce new employer duties designed to support a shift in focus from cost to value.

For more information, please see our legal update.

Action     
Trustees of DC master trusts should consider how the plans will affect them.

Decumulation – support for members

In a recent speech, TPR’s Interim Director of Policy and Public Affairs outlined the need for the industry to develop a “sat-nav for retirement” – a dynamic system that guides members in choosing their decumulation options, adjusting for people and where they want to go to. To help the industry develop a suite of products and services which are suitable for different kinds of members, TPR is launching its innovation design services to facilitate and test a range of services with the market. While TPR does not think there is a one-sized-fits-all approach to product design, it believes there are five principles which must be considered:

1. All members should receive value for money throughout their pension journey.
2. Members should be helped with their decision making, with a clear system and prompts along the way, and a robust default safety net for those who do not make a decision.
3. Products should be designed with members’ best interests at their heart.
4. There should be genuine choice for people to make the right decision for them based on their personal circumstances.
5. Support should be personalised i.e. tailored to those that need it most and who are at greater risk of experiencing poorer later life outcomes.

The speech follows publication of a research report sponsored by TPR which indicates that DC members need more help and guidance to make sure they access the right user-friendly retirement products for their personal circumstances.

Action     
No action required.

Private market investment – Mansion House Accord

17 of the UK’s largest workplace pension providers have signed the Mansion House Accord, a voluntary initiative with the aim of securing better financial outcomes for DC members through the higher potential net returns available in private markets, as well as boosting investment in the UK. The Accord builds on, rather than replaces, the Mansion House Compact. Signatories commit, subject to their fiduciary duties and the Financial Conduct Authority’s Consumer Duty, to the ambition of:

• Allocating at least 10% of their DC default funds to private markets by 2030.
• Within that, at least 5% of the total going to UK private markets, assuming a sufficient supply of suitable investible assets for providers.

Action     
No action required.

Mayer Brown news

Recent Mayer Brown work

• Beverly Cox, Andrew Block, Tom MacAulay and Joel Silverstein advised the trustees of the AQA Pension Scheme on a £120 million full buy-in of the Scheme’s liabilities. The transaction was completed in January and secures the liabilities of all 869 members of the Scheme, including 471 pensioners and 398 deferred members.
• Andrew Block, Henry Corrigan and Lucy Moore advised private equity firm Vitruvian Partners on the pensions aspects of its acquisition of rail specialist tour operator Great Rail Journeys from Duke Street Capital.
• Andrew Block, Henry Corrigan, Liam Kellett and Joel Silverstein advised European funeral services and infrastructure provider Funecap Group on the pensions aspects of its acquisition of a pet crematoria business from UK-listed veterinary group CVS.

Pro bono and CSR

• Andrew Block, Jay Doraisamy, Beverly Cox, Henry Corrigan, Lucy Moore and Joel Silverstein are among 96 Mayer Brown lawyers named on the 2025 Pro Bono Recognition List for England and Wales. The list, which was established by the Attorney General’s Pro Bono Committee, recognises barristers and solicitors who have given 25+ hours of pro bono legal assistance in the previous calendar year.

Mayer Brown updates

• Mayer Brown has been shortlisted in the Regulatory, Governance and Compliance Technology category at the European Legal Innovation & Technology Awards 2025 for its General Code Compliance Tracker. The category recognises law firms that have implemented technology that helps internal users or clients discover, track, and understand new and existing regulations, support and streamline their compliance processes, or support an information governance programme. The Tracker is an online tool which enables clients to assess and monitor their compliance with TPR’s General Code. It includes both an initial compliance gap analysis tool and an ongoing compliance tracker tool. For more information, please contact Katherine Carter.

Mayer Brown Insights

• DB Pension Surpluses – Relaxation of Extraction Rules | Insights | Mayer Brown
• Pension Megafunds and Mandated Asset Allocation – The Government Confirms its Plans | Insights | Mayer Brown

All our Insights are available here.