It’s been a whirlwind week in pensions.

Just a couple of weeks ago my colleague, Liam Young, commented in his blog that pension trustees frequently have to navigate their way through an increasingly challenging regulatory environment. This is certainly proving to be the case just now.

Over the past week, the pensions industry has experienced a deluge of governmental and regulatory publications. This has included the government’s consultation response on Options for Defined Benefit (DB) schemes, and the Pensions Investment Review. From the Pensions Regulator (TPR) we have had the final response on the Statement of Strategy for DB schemes, guidance on DB scheme endgame models and options, and an announcement on strategy on trusteeship. But perhaps the most publicised has been the Pension Schemes Bill with accompanying implementation roadmap.

The Bill is expected to receive Royal Assent in 2026, with the aim that all changes will come into force by 2030. Secondary legislation will be required for most aspects of the Bill, and guidance from the DWP/ TPR is expected. While trustees and employers do not need to take action at this stage, it can be useful to consider what is to come and the issues trustees and employers may need to deal with once the Bill is in force.

What are the key provisions of the Bill?

Here is a quick read of some of the key provisions of the Bill to give a flavour:

Return of surplus (DB)

Trustees will be able to pass a resolution to amend an ongoing scheme to confer a power to return surplus to the employer, subject to certain conditions (such as actuarial certification, notification to members, and the basis for valuing a scheme’s assets and liabilities for this purpose). Interestingly, TPR has set out in recent guidance factors that trustees may want to take into account in relation to return of surplus in advance of the new proposals being enacted.

Superfunds

The Bill sets out the regulatory framework for superfunds and allows for authorisation of superfunds by TPR.

The Bill also contains a number of proposals for defined contribution (DC) schemes:

Value for Money 

Trust based DC schemes will be required to publish Value for Money performance assessment reports and notify these to TPR along with a Value for Money rating. Regulations are expected to make provision about the consequences of the different ratings.

Consolidation of small dormant pension pots 

The Bill enables regulations to be made for small (£1,000 or less), dormant pension pots to be transferred to a consolidator scheme (an authorised Master Trust, or FCA regulated scheme), unless the member opts out.

Scale and asset allocation

Certain DC providers and master trusts will be required to have £25bn in assets under management in at least one default arrangement by 2030. There is also a reserve power for the government to set baseline asset allocation targets for the default funds of authorised DC master trusts and GPPs that are qualifying for auto-enrolment, as a percentage of total assets. The government has stated that it  does not intend to use this power, unless it considers that the industry has not delivered the changes on its own following the Mansion House commitments.

Contractual override for FCA regulated schemes

The Bill contains provisions which will allow transfers from (and certain unilateral changes by) FCA regulated pension schemes without member consent where it is in the best interests of members, subject to certain conditions.

Default pension benefit solutions

Occupational DC schemes will be required to make one or more default retirement pension benefit solutions available to members, although the Bill sets out alternative requirements where it would not be practicable for trustees to do this.

The Pensions Ombudsman – competent court

The Bill contains provisions  in relation to the enforcement by the Pensions Ombudsman of determinations where the amount of recoupment in an overpayment case is disputed.

What is of most interest to trustees and employers?

It is positive that the government is pushing forward with its pension initiatives, but it does mean a lot of reading for trustees and employers.

We expect that of most interest to trustees and employers will be return of surplus. Employers will be keen for surplus to be maximised and to understand the trustees’ possible approach to its return. However, there is plenty of time for scheme funding to change between now and the end of 2027 when this aspect of the Bill is anticipated to come into force. Will schemes still be in surplus then? Even if they are, will trustees be able to justify impacting the security of members’ benefits by returning surplus, expect in very limited circumstances?

Trustees may want to consider some of the alternative ‘endgame’ options for their scheme as set out in TPR’s recent guidance.

This year trustees may also be reviewing the make-up of their trustee boards and considering having a professional trustee in place, following TPR’s recent trusteeship strategy and in light of the government consultation on governance and trusteeship expected later this year.

Our pensions team and independent trustee company is well placed to help pension trustees and employers navigate the plethora of changes afoot and are always happy to discuss how we can assist.

Virgin Media judgment - some good news

Following the Court of Appeal judgment last year in Virgin Media Ltd v NTL Pension Trustees II Ltd & Ors, the   government has announced that it will introduce legislation to give affected pension schemes the ability to obtain retrospectively written actuarial confirmation that historic benefit changes met the required standards. The detail is to follow but this should provide reassurance for impacted schemes in the meantime.  

So…

A mountain of pensions reading in a week? Yes.  A list of actions for trustees and employers? Not yet. A busy time ahead? Definitely. 

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