Issues affecting all schemes
Scheme administration – Pensions Regulator report
The Pensions Regulator (TPR) has published a market oversight report following its year-long engagement with 15 pension administrators. The engagement found encouraging signs of progress, with many administrators becoming more strategic and resilient. However, challenges remain, in particular around changes to regulatory requirements, technology, staffing, data and cyber security. To support the industry, TPR is:
- Developing a new administration strategy.
- Continuing direct engagement with administrators.
- Updating its administration guidance to set clearer expectations for trustees.
- Promoting collaboration and transparency between trustees and administrators.
- Collaborating with the industry and looking at actively participating in industry working groups.
- Advising the government on future legislation.
TPR expects administrators and trustees to work together to identify ways to improve administrative practices to better serve members. Trustees should also periodically review their contract with administrators to ensure it remains suitable.
Action
Trustees and administrators should review the report and factor its recommendations into their scheme administration and governance arrangements.
Impersonation fraud – TPR recommended actions
TPR has published a blog post on what the pensions industry must do to protect members from impersonation fraud. Key points include:
- While investment fraud remains prevalent, there is an increase in reports of impersonation fraud. Those aged between 50 and 69 are most at risk.
- Fraudsters are hacking members’ email accounts and accessing their correspondence with their pension scheme. They then use the stolen data to impersonate the member and attempt to change the details of the account into which their benefits are paid or to transfer their benefits. Trustees and administrators must act now to strengthen their scheme defences – and to ensure their members secure their accounts.
- Fraudsters are also impersonating brands, including trusted organisations members may rely on for help, to target individuals by sending fake communications which often direct members to cloned websites where scammers will attempt to obtain their personal data. Trustees and administrators should ensure their members are aware of these scam risks and encourage protective habits. TPR is also using AI to detect and remove fraudulent websites.
- To keep the industry aware of emerging threats, TPR is now issuing warning alerts in collaboration with the City of London Police. Action Fraud has also launched a new pension fraud campaign warning members to stay alert.
The post also sets out various steps that schemes should take to protect their members.
Action
Trustees and administrators should review the blog post and factor its recommendations into their scheme administration arrangements.
Abolition of the lifetime allowance – further changes
HMRC has announced that further minor technical amendments to the legislation abolishing the lifetime allowance and introducing the new lump sum taxation regime will be made to clarify certain provisions, correct minor drafting inconsistencies and support smoother implementation. The changes are not expected to affect most members. HMRC will consult on draft regulations later this year, with the final version being made in early 2026. Once introduced, the regulations will have retrospective effect from 6 April 2024.
Action
Administrators should monitor publication of the draft regulations.
TPR enforcement – new strategy
TPR is consulting on a new enforcement strategy. The strategy is intended to make a deliberate move towards smarter, collaborative and risk-based interventions that deliver real-world results. It is designed to ensure that TPR:
- Puts member outcomes first.
- Sets clear enforcement priorities.
- Pursues targeted enforcement.
- Acts earlier to prevent harm.
- Works collaboratively to solve problems.
- Builds flexible and skilled teams.
- Uses data to make smarter decisions.
- Is open about what it does.
The consultation closes on 11 November 2025.
Action
No action required.
Statutory transfers – trustee obligations
The Pensions Ombudsman (TPO) has rejected a complaint regarding a transfer from an occupational pension scheme to a small self-administered scheme in 2014. The member complained that, although the transfer was in accordance with his wishes at the time, the transferring trustee had failed to carry out sufficient due diligence to check for scam warning signs and then to communicate the presence of those warning signs to him.
TPO decided that when a member is exercising a statutory transfer right in respect of an occupational pension scheme, there is no legislative or regulatory obligation on the transferring trustee to undertake due diligence, beyond that required to meet the legislative criteria for a transfer, either generally or more specifically as set out in TPR’s 2013 Action Pack or in TPR’s Scorpion Leaflet. TPO also concluded that that there was no general common law or equitable duty of care that required the trustee to conduct the due diligence suggested by the member.
Action
No action required.
Data encryption – updated guidance
The Information Commissioner's Office has updated its guidance for organisations on encrypting data. The updated guidance provides greater detail on how encryption can support compliance with UK data protection law, as well as practical advice on good practice.
Action
No action required, but administrators may find the guidance helpful.
Pensions dashboards – new guidance
The Pensions Administration Standards Association has published guidance for schemes on applying consistent approaches to warnings and unavailable codes across pensions dashboards. These codes are used in situations where accurate value data cannot be displayed immediately.
In addition, the Pensions Dashboards Programme has published guidance on the obligation for organisations who are directly connected to the dashboards ecosystem to keep their IT health check or penetration test up to date.
Action
No action required, but administrators may find the guidance helpful.
Issues affecting DB schemes
Liability-driven investment – TPR report
TPR has published a market oversight report on how well pension schemes are prepared for liability-driven investment (LDI) risk. The report concludes that the size and duration of LDI exposures have reduced materially since the end of 2021 and the LDI sector has made significant steps to improve resilience following the gilt crisis in 2022. Regulatory intervention, strengthened governance and enhanced risk management practices have strengthened the sector’s ability to withstand market shocks. Key areas of improvement include:
- Compliance with interest rate buffers.
- Improved recapitalisation processes.
- Increased focus on liquidity.
However, greater focus is needed by trustees in future on areas including:
- Diversification of collateral assets.
- Resilience testing to ensure robust risk management in adverse market scenarios.
Action
Trustees of schemes that use LDI should review the report and factor its recommendations in their investment governance arrangements.
Pension Protection Fund – 2025/26 levy update
The Pension Protection Fund (PPF) has announced that, in light of the PPF levy changes in the Pension Schemes Bill, it will be setting the 2025/26 levy at zero.
In addition, the Pensions Minister has announced that the government intends to lay amendments to the Pension Schemes Bill to abolish the PPF administration levy.
Action
No action required.
The future of DB schemes – TPR views
In a recent speech, TPR’s Director of Trusteeship, Administration and DB Supervision set out TPR’s expectations for DB schemes in the current environment. Key points include:
- The funding reality for DB schemes has changed with over 75% in surplus on a low dependency funding basis. This opens new strategic options for trustees. Trustees must weigh risks against potential benefits and ensure any approach is backed by robust governance and clear timescales.
- Trustees should develop a surplus policy with the employer that is inclusive of member views and informed by legal and covenant advice. Trustees must remain independent and not be pressured by employers.
- Productive finance offers real potential to deliver sustainable returns and broader economic value. However, it must be underpinned by governance that is rigorous, professional and fit for purpose.
- Trustees must not be swayed by momentum or political narrative alone. Each investment must be assessed on its own merits, including its expected return, associated risks, income generation potential and liquidity profile. Every investment decision must also be made in the context of a scheme’s funding position, journey plan and risk capacity.
- In today’s changing landscape, trustees must go beyond compliance and be leaders. That means engaging with emerging frameworks like the Taskforce on Nature-related Financial Disclosures, supporting credible transition plans and embedding sustainability into the core of investment strategy.
- Some DB schemes are delaying dashboards preparation due to plans to derisk or wind up. This is risky as, unless buy-out is completed by 31 October 2026, dashboard duties will apply and trustees may face regulatory action.
Action
No action required, but trustees may wish to factor TPR's views into their investment arrangements.
Interpretation of scheme rules – statutory references
The High Court has allowed an appeal against a TPO determination on interpretation of a statutory reference in the definition of “state pension age” in a scheme’s bridging pension rule. The rule defined state pension age for these purposes by reference to “the rules in paragraph 1 of Part I of Schedule 4 to the Pensions Act 1995 (rules for equalisation of pensionable ages for men and women)”. TPO held that the reference was “dynamic” and incorporated subsequent changes to the legislation so that it referred to the member’s actual state pension age (66) rather than state pension age when the legislation was enacted (65).
However, the court concluded that the reference was “static” and meant state pension age when the legislation was enacted. The judge noted that, based on previous case law, where a deed incorporates a legislative provision, there is no presumption either way as to whether the reference is to the law for the time being in force. Instead, this is a question of the proper construction of the words in the context in which they are used. The judge considered that several factors indicated that in this case there had not been an intention to incorporate subsequent changes to the legislation, including:
- The inclusion of “for equalisation of pensionable ages for men and women” as a description of the purposes of the legislation. The judge considered that limiting the description by reference to equalisation indicated that the reference to the legislation was not intended to encompass future changes on account of increases to state pension age more generally.
- Nothing in the statutory context in 2001 suggested that increases to state pension age more generally were anticipated.
Action
No action required
Mayer Brown news
Recent work
- Tom MacAulay, Andrew Block and Henry Corrigan advised The Royal London Mutual Insurance Society Limited on the successful completion of a multi-million-pound bulk purchase annuity transaction with the Trustee of the Stora Enso UK Group Pension Scheme.
- Andrew Block advised Inspirit Capital on the pensions aspects of its sale of Inspiro Learning Limited, one of the UK's leading providers of apprenticeship and commercial training, to Beech Tree Private Equity.
- Duncan Watson advised BlackRock, Inc. on the UK aspects of a new $80 billion mandate with Citi Wealth in connection with a new portfolio offering for its clients.
Events
Mayer Brown is hosting the PMI’s Pensions Investment Forum on 27 November 2025. Henry Corrigan will be presenting a session on fiduciary duty and the future of pensions investment. Further information on the Forum is available here.
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