2025年7月07日

The Pensions Brief: July 2025

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Issues affecting all schemes

Pension Schemes Bill – publication

The Pension Schemes Bill has been laid before Parliament. Its provisions include:

  • Changes to the DB surplus regime.
  • A new value for money (VFM) framework for trust-based DC schemes.
  • A system for the automatic consolidation of small DC pots.
  • Creation of DC “megafunds”.
  • A requirement for DC schemes to offer a default retirement option.
  • An authorisation and supervision regime for DB superfunds.
  • Confirmation that the Pensions Ombudsman (TPO) can make enforceable determinations in pensions overpayment recoupment cases.
  • Removal of the restrictions that prevent the Pension Protection Fund (PPF) from reducing the PPF levy below £100 million.

The government has also published a roadmap setting out its overarching aims for its reforms to workplace pensions as well as indicative timing for implementation of the Bill. The roadmap indicates that the reforms will come into force as follows:

  • PPF levy changes and DB surplus reforms – 2027.
  • VFM framework, offering default DC retirement options, and authorisation and supervision regime for DB superfunds – 2028.
  • Automatic consolidation of small DC pots and creation of DC “megafunds” – 2030.

For more information, please see our legal update.

The Pensions Regulator (TPR) has published a blog post on the Bill and what it means for the industry.

Action      Employers and trustees should monitor the Bill’s progress through Parliament.

Data (Use and Access) Act 2025 – Royal Assent

The Data (Use and Access) Act 2025 has received Royal Assent. The Act makes a range of changes to UK data protection law including:

  • Introducing a new lawful basis for processing personal data – processing for “recognised legitimate interests”. This is different to the existing lawful basis of processing for legitimate interests as organisations processing under this basis will not be required to conduct a legitimate interest assessment. The “recognised legitimate interests” are set out in the Act and include safeguarding vulnerable individuals.
  • Clarifying what may constitute a legitimate interest for data processing.
  • Confirming that searches conducted in response to a subject access request need only be reasonable and proportionate. The Act also extends the 30 day deadline for responding to a subject access request in certain circumstances.
  • Relaxing the rules on when an organisation can consider a new use of personal data to be compatible with the original purpose for which the personal data was collected.
  • Narrowing the scope of the restrictions on automated decision-making.
  • Changing the rules on international data transfers to require organisations who are transferring in reliance on a safeguard such as standard contractual clauses to be satisfied that the standard of protection offered by the safeguard is “not materially lower” than that provided by UK data protection law. Organisations must act reasonably and proportionately when considering whether this test is met.
  • Restructuring the Information Commissioner’s Office (ICO) and renaming it the Information Commission.

The Act will generally be brought into force in stages on dates to be determined by the government. One exception is the requirement for searches in response to a subject access request to be reasonable and proportionate which came into force on 19 June 2025.

The ICO has published guidance for organisations about what the Act means for them.

For more information on the Act, please see our legal update.

Action      Employers and trustees should consider whether any changes are required to their data protection arrangements in light of the Act.

Pension sharing – Scottish law arrangements

TPO has decided that a scheme administrator did not owe a member’s former spouse a duty to inform her of the two month statutory time limit under Scottish law within which she had to provide the required information to activate her pension sharing provision. However, the scheme had failed to identify that the ex-spouse’s case related to divorce proceedings under Scottish law and had failed either to amend its template pension sharing documentation to reflect that fact or to identify that the two month time limit had elapsed. This amounted to maladministration. The administrator was a large organisation and should have had appropriate procedures and processes in place to deal with pension sharing on divorce, including cases falling under Scottish law. TPO ordered the administrator to pay the ex-spouse £500 for the significant distress and inconvenience caused.

Action      Trustees and administrators should ensure that their procedures and processes for dealing with pension sharing orders are equipped to deal with Scottish law arrangements.

Sustainability reporting – planned reforms

The government is consulting on:

From a pension scheme perspective, these areas will be considered as part of a government review of the statutory climate-related governance and reporting requirements which it plans to undertake this year. In addition, the government has asked TPR to assess the practicalities of transition plans for pension schemes. TPR is convening an industry working group and will present its findings to the government later this year.

The government is also consulting on a proposed Audit, Reporting and Governance Authority which would have responsibility for creating a voluntary registration regime for entities that offer third-party assurance services for sustainability-related disclosures.

The consultations close on 17 September 2025.

Action      Trustees should monitor the outcome of the consultations and the progress of the government’s review of the statutory climate-related governance and reporting requirements.

Member support – "targeted support" proposals

The Financial Conduct Authority (FCA) is consulting on “targeted support”, a new regulated activity whereby authorised firms would be able to make specific recommendations in relation to pensions and retail investments designed for groups of consumers with common characteristics. The consultation notes that the Pension Schemes Bill will impose a duty on trustees of occupational pension schemes to provide “guided retirement”, i.e. one or more default retirement options, and that this requirement, together with the introduction of targeted support, will influence how trustees choose to support their members. The consultation therefore asks for views on:

  • Whether trustees would want to provide a form of support like targeted support to their members and the nature of that support.
  • More broadly, the type of support trustees want to offer their members and whether they feel unable to give such support because they are worried about undertaking a regulated activity or financial promotion.

The FCA will work closely with TPR and will consider the relevance of their joint guidance on providing support on financial matters without conducting a regulated activity. The FCA will also consider if further clarity to trustees should be provided. The consultation closes on 29 August 2025.

Action      Trustees should monitor the outcome of the consultation.

Pensions dashboards – guidance

The Pensions Dashboards Programme (PDP) has published guidance on:

  • How special characters are returned by the dashboards identity service for the address and name fields. This guidance is designed to help schemes, third party administrators and integrated service providers plan their matching processes.
  • How changes need to be reflected in the dashboards ecosystem when a member transfers their benefits or when a scheme changes its route to connection to ensure individuals can continue to find their pensions. There is separate guidance for transferring schemes/providers and receiving schemes/providers.

In addition, the PDP has published FAQs on the statutory standards that schemes must comply with in relation to pensions dashboards. The FAQs cover:

  • What the standards are.
  • What it means for the standards to have received ministerial approval.
  • Which versions of the standards providers and schemes should be using.
  • Whether the standards will be updated in future, and what the process for this will be.

Action      No action required, but trustees and administrators of schemes that are subject to the dashboards requirements may find the guidance helpful.

Trusteeship – new TPR strategy

TPR has announced that it will launch a new strategy to drive up trusteeship standards. The strategy will aim to bring pension trusteeship into line with other professions and corporate governance standards and will be based on the following desired trustee traits:

  • Focused on member outcomes.
  • Capable of constructive challenge to avoid “group think”.
  • Highly skilled and diligent.
  • Collaborative but accountable.
  • Data-led.

TPR will work closely with the government on the consultation on trusteeship and governance that the government plans to launch later this year. In addition, to support trustees, TPR is actively considering how it can reduce unnecessary regulatory burdens.

Action      No action required.

TPO – operating model review update

TPO has provided an update on the progress of its operating model review improvement programme. This notes that, as the programme moves into its second year, schemes can expect the following:

  • A greater expectation for schemes to complete a good quality and well signposted end to end complaint process.
  • An increased usage by TPO of expedited and short form determinations.
  • Schemes may be asked for formal responses earlier in TPO’s process and deadlines will be tightened up.
  • TPO will provide more customer guidance on key topics that can be shared with members.

Action      No action required.

UK Stewardship Code – updated version

An updated version of the UK Stewardship Code has been published. The updates include:

  • A revised and enhanced definition of stewardship that emphasises the need to create long-term sustainable value for clients and beneficiaries as a key outcome of good stewardship.
  • A streamlined reporting process separating policy and activity disclosures, and fewer principles and shorter “how to report” prompts, to reduce reporting burdens.
  • Targeted principles for different types of signatories and service providers, including proxy advisers and investment consultants.
  • New optional guidance to support effective implementation and help signatories with the transition to the new reporting arrangements.

The updated Code will come into force on 1 January 2026.

Action      No action required.


Issues affecting DB schemes

Virgin Media – government intervention

The government has announced that it will pass legislation to give schemes affected by the Virgin Media ruling the power to obtain retrospective actuarial confirmation that historic changes to contracted-out benefits met the necessary statutory requirements. The timeline for, and detail of, the proposed legislation remains to be confirmed. For more information, please see our legal update.

Action      Trustees and employers of DB schemes affected by the Virgin Media ruling should monitor publication of the legislation.

Employer recovery of VAT on DB investment costs – new policy

HMRC has announced that, from 18 June 2025, where either of the following scenarios apply, it will no longer require the scheme’s investment costs to be apportioned between the employer and the trustees:

  1. The trustees have contracted with the employer to provide a service to the employer of running the pension scheme.
  2. The scheme has a corporate trustee which has entered into a VAT group with the employer.

Instead, the entirety of the investment costs will be treated as the employer’s, meaning that the employer will be able to recover the associated VAT in full (subject to normal VAT recovery rules). HMRC will publish further guidance explaining the policy change in autumn 2025.

For more information, please see our legal update.

Action      Employers and trustees of DB schemes may wish to revisit their contractual and invoicing arrangements for their scheme’s investment services in light of the policy change. However, they should ensure that they take tax and legal advice before making any changes as there may be regulatory and corporation tax implications. In addition, in some circumstances, the trustees may have a better VAT recovery rate than the employer. The most appropriate arrangement will therefore depend on the specific circumstances of the employer and the scheme.

Endgame options – TPR guidance

TPR has published guidance for trustees on new models and options for DB and hybrid pension schemes. While some of these are endgame options, the guidance also covers options for improving financial outcomes, scheme governance and security for members while the scheme is ongoing. The guidance explains the key characteristics of each option and sets out issues for trustees to consider when assessing their suitability, including potential benefits and risks. The guidance covers the following options:

  • Scheme run-on.
  • Fiduciary management.
  • Appointment of an accredited professional trustee.
  • Appointment of an accredited sole trustee.
  • DB master trusts and DB multi-trusts.
  • Capital-backed journey plans.
  • Superfunds.
  • Longevity swaps.
  • Buy-ins.
  • Buy-outs.

For more information, please see our legal update.

Action      Trustees of DB schemes should review the guidance when considering endgame solutions and other DB models and options.

PPF – 2025/26 levy

The PPF has announced that it will closely monitor the parliamentary progress of the PPF levy-related provisions in the Pension Schemes Bill and will take a final decision on calculation of the 2025/26 levy in line with the new provisions in due course. The PPF does not plan to proceed with levy invoicing until it has concluded its decision-making. It will keep schemes informed of progress and expects to provide a further update by the end of July.

Action      No action required.


Issues affecting DC schemes

Pensions reform – TPR call for action

TPR has called on trustees of DC schemes to take practical steps now to prepare for the changes that will be introduced by the Pension Schemes Bill, including:

  • Being member outcome-focused – trustees should consider their investment strategy and challenge advisers to provide suitable insights and commentary on performance.
  • Building scale – trustees should consider their value proposition and work through the practical steps they might need to take to consolidate if needed in the interests of members. If their scheme has scale, they should consider new investment opportunities now available.
  • Being data-led and accountable – trustees should consider investment in digital infrastructure to ensure high data quality and administration standards in the run-up to pensions dashboards and engage with administrators to understand what they can offer with different price points.
  • Innovating at retirement – trustees should start discussions around decumulation products and services and come to TPR’s innovation support service to discuss early ideas.

Action      Trustees of DC schemes should review the call for action.


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