December 08, 2025

The Pensions Brief: December 2025

Authors:

Autumn Budget 2025 – Pensions Aspects

The Autumn Budget contained the following key pensions-related announcements:

From April 2029, the National Insurance contributions (NICs) relief on employee contributions made via a salary sacrifice arrangement will be limited to the first £2,000 of contributions each year. The NICs treatment of employer pension contributions and other employee benefits provided via salary sacrifice will be unchanged. The government has published guidance on these changes.
From April 2027, personal representatives will be given power to direct scheme administrators to withhold 50% of any death benefits that are potentially subject to inheritance tax (IHT) for up to 15 months, and to pay any IHT due in certain circumstances. HMRC has published a policy paper on this announcement.
From April 2027, the government will give ongoing DB schemes that are fully funded on the low dependency funding basis power to make surplus payments directly to members aged over normal minimum pension age where the scheme rules and the trustees permit this. Payments will be treated as authorised payments and taxed at the individual’s marginal rate.
From January 2027, Pension Protection Fund (PPF) and Financial Assistance Scheme compensation deriving from pre-1997 benefits that were subject to indexation in the member’s original scheme will receive CPI-based indexation.

We discussed the Budget announcements further in our Legal Update. In addition, HMRC has published further information on the Budget announcements.

Action
While the salary sacrifice changes will not come into force until 2029, employers who operate salary sacrifice arrangements for employee pension contributions may wish to start considering the impact of the changes on those arrangements. Trustees should monitor any further developments in relation to the IHT changes. Trustees and employers may also wish to monitor publication of further details about the DB surplus proposals.

Data Quality – Pensions Regulator Report and Guidance

The Pensions Regulator (TPR) has published a market oversight report on data quality. Key findings include that:

Significant progress has been made by schemes on data quality, but some trustees place too much reliance on their administrators.
Most schemes have made progress on cleansing personal data for dashboards, but value data (which is used to calculate benefits) is often overlooked. Improvement plans are frequently informal or fragmented.
Whilst data issues are being addressed by some schemes, an historical underinvestment in data management by others means the industry faces a “data debt.”
Trustees should build on the momentum created by dashboards and treat member data as a strategic asset. Where schemes are unable to demonstrate how they meet TPR's expectations, TPR may intervene.

TPR has also published revised guidance on member data that consolidates all its data-related guidance into one place, sets out clearer expectations and provides best-practice examples to help schemes achieve better data management capability. The guidance expects trustees to:

Ensure regular data assessments, review reports, and submit accurate data scores in their scheme return.
Have a clear data management strategy, allocate resources for improvements, and challenge service providers where standards are not met.
Be ready to demonstrate how they are maintaining data in line with legal requirements and TPR's expectations.

In addition, the Pensions Administration Standards Association (PASA) has published guidance on data quality and a template data improvement plan (available in PDF and Excel formats). The guidance covers TPR’s six core data dimensions (accuracy, completeness, consistency, timeliness, uniqueness and validity) and provides practical detail on how schemes can assess and improve the quality of member data across these areas. The template data improvement plan gives schemes a structured framework for planning, documenting and delivering data improvement activity.

Action
Trustees and administrators should review TPR's report and guidance and consider whether any changes to their data governance arrangements are required. They may find the PASA guidance and template data improvement plan helpful in this respect.

Lump-sum Death Benefits – Identification of Beneficiaries

The Pensions Ombudsman (TPO) has upheld a complaint regarding distribution of a lump-sum death benefit. The member died intestate, leaving four children. The scheme contacted the individual named as the informant on the member’s death certificate, who was his son, and asked him to complete a questionnaire. In completing the questionnaire, the son fraudulently indicated that he was the member’s sole beneficiary. The scheme paid the death benefit to him. TPO concluded that:

It is not unreasonable for a scheme to adopt a proportionate approach when distributing lump-sum death benefits, and to carry out a more limited investigation where the lump-sum death benefit is of a low value. It is also not unreasonable to make use of documents such as a questionnaire.
However, a scheme should only do so once it has identified the main potential beneficiaries and gathered sufficient information to allow the decision-maker to properly consider its discretion.
In cases where unverified information is provided by a person who claims to be the sole beneficiary, it may be prudent to consider the possibility of fraud and the need to take extra steps to ensure that proper information is obtained.
While it may be that the son committed a fraud on the scheme in obtaining payment of the lump-sum death benefit by deception, that did not discharge the scheme from its obligation to consider the other potential beneficiaries and to consider its discretion properly.

TPO decided that the scheme had failed to identify and properly consider all potential beneficiaries and had reached its decision on distribution of the lump-sum death benefit without establishing all relevant facts by making further enquiries where necessary. TPO directed the scheme to carry out appropriate enquiries to ascertain the existence of other potential beneficiaries, including their circumstances and relationship to the member, and other matters relevant to its exercise of discretion before retaking its decision.

Action
No action required, but the case is a reminder of the importance of trustees conducting proper enquiries when identifying the potential recipient(s) of a lump-sum death benefit.

Information Commissioner's Office – Investigations and Enforcement

The Information Commissioner's Office (ICO) is consulting on guidance setting out how it approaches investigations and takes enforcement action. Among other things, the guidance explains:

How the ICO decides whether to open an investigation and the other ways it may seek to resolve any concerns;
What to expect from the ICO during an investigation;
How the ICO will use its information-gathering powers, including its new powers under the Data (Use and Access) Act 2025;
How the ICO decides on the outcome of an investigation and use of its enforcement powers; and
When the ICO considers settlement with a reduced fine is appropriate, and the process involved.

Once finalised, the new guidance will sit alongside the ICO’s guidance on data protection fines. The consultation ends on 23 January 2026.

Action
No action required.

Trustee Directors – Enforcement of Identity Verification Requirements

Companies House has published guidance on its approach to non-compliance with the requirements that came into force on 18 November 2025 for directors and persons with significant control of UK companies to verify their identity. There are three main routes for enforcement action:

Prosecution through the courts;
Referral to the Insolvency Service; and
Financial penalties.

Companies House will take a range of factors into account in selecting the most suitable enforcement approach, including the nature of the non-compliance, the seriousness of the case, any aggravating factors, and previous patterns of non-compliance.

Action
No action required, but directors of trustee companies should ensure that they comply with the identity verification requirements.

Digital Transformation – Industry Guidance

PASA has published the first in a three-part series of guidance on delivering effective digital transformation. The guidance outlines how schemes can establish the right frameworks, technologies and cultural mindset to ensure successful and sustainable digital change and sets out key actions for schemes at varying stages of digital maturity. It also highlights core areas including data quality, automation, cybersecurity and collaboration across the pensions ecosystem.

Action
No action required, but trustees and administrators of schemes may find the guidance helpful.

Pensions Dashboards – FAQs on Connection

The Pensions Dashboards Programme has published FAQs on connection to the dashboards ecosystem. The FAQs cover:

How many schemes have already connected;
Who must connect;
Schemes’ dashboards duties;
When schemes must connect;
How to connect;
What schemes should do, if they are connecting via a third party and are unable to connect in line with their ‘connect by’ date;
Changing a scheme’s connection date;
The final step in the connection process;
Voluntary connection; and
Available support and guidance.

Action
No action required.

Issues affecting DB Schemes

PPF – 2026/27 Levy

The PPF is consulting on the rules for the 2026/27 levy. Key points include:

No levy will be charged for conventional schemes, but the PPF will maintain a risk-based levy for "alternative covenant schemes" such as DB superfunds.
The proposal to charge no levy for conventional schemes goes further than the PPF’s decision on invoicing in 2025/26. Despite recalculating the 2025/26 levy to zero, the levy estimate for that year remains £45 million, meaning the PPF has retained the ability to set a levy in the future. The proposed 2026/27 rules would set a zero levy estimate for conventional schemes which would prevent the PPF from charging a levy for conventional schemes in future unless the changes in the Pension Schemes Bill to the legislation governing the levy become law.
Therefore, before setting the proposed 2026/27 rules, the PPF will require a very high level of confidence that the changes in the Pension Schemes Bill will become law. If this level of confidence cannot be reached ahead of 31 March 2026, the PPF intends to re-use the 2025/26 levy rules and data as a fallback for conventional schemes, maintaining the levy estimate at £45 million. These rules would include the provision used to recalculate the 2025/26 levy to zero for conventional schemes, meaning the 2026/27 levy for those schemes could also be recalculated to zero.

The consultation ends on 5 January 2026.

Action
Trustees and employers should monitor the outcome of the consultation.

2026 Scheme Return – New Questions

TPR has published guidance on the 2026 DB/hybrid scheme return. The return will include new questions on:

Contingency planning for leveraged liability-driven investment arrangements, and
Asset breakdown for schemes with £1.5 billion+ of liabilities (calculated on the PPF levy basis) at their last valuation.

Scheme returns will be issued in early 2026 and must be submitted by 31 March 2026.

Action
No action required, but trustees should ensure that they submit their scheme return by 31 March.

Mayer Brown News

Recent Work

Andrew Block, Henry Corrigan and Joel Silverstein advised Sun European Partners on the pensions aspects of its separate acquisitions of the Turners Accident Repair group and Hilton Coachworks. Sun European Partners is a global private equity firm focused on partnering with outstanding management teams to accelerate value creation. Since 1995, Sun Capital has invested in more than 500 companies worldwide with revenues in excess of $50 billion across a broad range of industries and transaction structures.
Andrew Block advised CBPE Capital, Isfield, and other shareholders on the pensions aspects of the release of their investment in The Key Group, a market-leading education software provider, to Permira.

Events

Mayer Brown hosted the PMI’s Pensions Investment Forum on 27 November 2025. Henry Corrigan presented a session on fiduciary duty and the future of pensions investment.