Pensions Bulletin 2025/23

Pension Schemes Bill one week on 

Yes, we were right when in last week’s edition (see Pensions Bulletin 2025/22) we speculated that the Government was going to publish the Pension Schemes Bill on 5 June 2025. We provided an initial summary of this Bill on the same day that it was published, through our News Alert. Now, with the benefit of being a week on and having studied the Bill’s details, the following additional aspects are of note:

• DB surplus payments – although the new powers being introduced appear wide-sweeping it is not clear how they will interact with existing scheme rule provisions that explicitly prevent surplus payments to an employer from being made or where the scheme already has a rule allowing return of surplus on winding-up but not on an ongoing basis. 
• DB superfunds – it appears that the gateway tests for schemes to transfer to superfunds are being weakened compared to the current interim regime (and also in comparison to the proposals consulted on in 2023 (see Pensions Bulletin 2023/28), with the effect that more schemes will be able to consider using this route to deliver their members’ benefits than can do currently.
• PPF levy – it seems that if the PPF decides not to impose a levy in a particular financial year (as we are hoping will be the case for the 2025/26 year), it will have substantial scope to impose a levy in the next financial year, as the maximum in such a case will be 25% of the levy ceiling for the prior financial year. Where a levy was imposed in the previous levy year, the maximum will now be the sum of the previous financial year’s levy and 25 per cent of the previous financial year’s levy ceiling. 
• DC scale and asset allocation – the headline policy announcement remains that DC multi-employer schemes operating in the auto-enrolment market need to have £25bn in assets across their pension products by 2030 but there is also an easement whereby providers with over £10bn in assets and a credible plan for achieving scale will have until 2035 to do so. The so-called reserve power under which the Government can direct aspects of DC asset allocation appears to be largely baked into the proposed law relating to master trusts and certain group personal pensions having to build up their asset holdings in respect of their “main scale default arrangement”. 
• DC AVCs – it is not yet clear to what extent money purchase AVCs in otherwise DB schemes are to be subject to the many new DC requirements. 
• DC value for money – there is much more to this than measurement and reporting. For example, a “not delivering” rating starts a process that could result in the scheme or arrangement being transferred to a better scheme. An “intermediate” rating (of which regulations may specify more than one) also starts various requirements – including preparing an “improvement plan” and providing that to the Regulator, so it is not a “benign” rating. The Pensions Regulator is being given significant new discretions and intervention powers in this area, including challenging a rating assigned by trustees/ managers.

Much of the Bill is given over to setting out the primary legislation relating to the authorisation and supervision of DB superfunds (and the transfers to such superfunds), with it seems substantial regulations and a Code of Practice to follow. 

In addition to the Bill the Government has published a regulatory impact assessment of the measures it contains. Amongst other things, this suggests that only £8.4bn in surplus is expected to be extracted from DB schemes over ten years – a surprisingly low estimate. 

Additionally, a letter from the Pensions Minister to the Chair of the Work and Pensions Committee has also been published, in which Torsten Bell outlines the Bill’s measures. 

Separately, the Government Actuary’s Department has published an actuarial modelling report dated 30 May 2025 whose purpose was to help the DWP assess the effectiveness of the then possible options to regulate DB superfunds. 

Having had its First Reading in the Commons on 5 June 2025, the Bill proceeds to its Second Reading on a date that has yet to be scheduled. 

Virgin Media – Government announces that it will intervene 

On the same day as the Pension Schemes Bill was published the Government announced that it will introduce legislation to deal with issues arising from the Virgin Media v NTL Pension Trustees judgment.

This legislation will “give affected pension schemes the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards”.

Pensions Regulator modifies scheme in wind up so that surplus can be paid to employer 

In a Determination that has appeared on its website, the Pensions Regulator has exercised its little used power, under section 69 of the Pensions Act 1995, to modify the provisions of the Littlewoods Pensions Schemes, which is in the process of winding up, to enable a surplus to be distributed to the sponsoring employer. This surplus remained after the scheme’s liabilities had been fully discharged and would otherwise have been trapped in the scheme. The anticipated surplus was £10m-£12m after all the members’ benefits had been secured in full with some enhancements. 

The case was brought because the trustee was expressly precluded from amending the scheme’s rules to introduce a power to return surplus assets to the Principal Employer or any other Scheme employer.  

Pensions Regulator to launch new trusteeship strategy 

In a speech, delivered at the Pensions Management Institute’s Annual Conference and announced by way of press release by the Pensions Regulator, Nausicaa Delfas, the Regulator’s Chief Executive Officer, said that the Regulator is to launch a new trusteeship strategy to drive up standards and bring trusteeship into line with other professions and corporate governance standards. 

She said that “Trustees lie at the heart of the pensions system. The decisions they take have enormous impact on the financial wellbeing of millions of savers. And as the system grows and evolves, so must the nature of trusteeship. What worked in the past, may not work for the future”. 

She went on to say that the Regulator will look to other financial services regimes and corporate reporting standards to make sure that trustees have the time and independence to challenge group think. 

The new strategy will be based on the following trustee traits – saver-outcome focused, capable of constructively challenging to avoid group think, highly skilled and diligent, agile and responsive, collaborative but accountable, and data-led. 

On a separate matter she said that the Regulator is “actively looking at how it can reduce unnecessary regulatory load”, saying that over the coming year there will be a broad review of the Regulator’s scheme return and supervisory returns “to rationalise and remove asks… which aren’t directly related to good saver outcomes”. 

ONS points out an error in April 2025 inflation figures 

The Office for National Statistics has announced by way of a new section 1 to its latest inflation report that an error has been identified in some of the data used to produce the April 2025 inflation statistics which has had the effect of overstating the published figures by 0.1%. And so it seems that had it not been for this error the Consumer Prices Index including owner occupiers’ housing costs (CPIH), the Consumer Prices Index (CPI), and Retail Prices Index (RPI) would have been 4.0%, 3.4% and 4.4% respectively, rather than the published figures of 4.1%, 3.5% and 4.5%. 

In line with their correction policy, there are no plans for the ONS to publish revised figures and so those currently published for April 2025 remain “correct”, albeit that they are not. The May 2025 onwards figures will use data that has been corrected for this error. 

Pensions Ombudsman does more but stands still

Pensions Ombudsman Chief Operating Officer Robert Loughlin has blogged on the success of the first year of the Ombudsman’s operating model review programme and gone on to examine priorities for the year ahead.

He said that 2024/25 was an unprecedented year with the number of new complaints also growing by much more than expected. As a result, they were only able to maintain the status quo around waiting times despite the gains that the programme brought.

Insofar as the year ahead is concerned the priorities are improving awareness of the new operating model, bringing in pensions expertise at the earliest stages, expanding expedited Determinations, streamlining jurisdiction decisions and focussing on complex cases.

The Ombudsman’s office intends to continue to increase its operational efficiency, work with the sector to reduce demand wherever possible and work with DWP and wider stakeholders to find a long-term solution to the funding gap that they face.

State Pension Age – WASPI campaign group go to the High Court over Government decision  

In December 2024 the Government decided not to introduce a financial compensation scheme for 1950s-born women affected by the delay in sending individual letters informing them about the changes in state pension age (see Pensions Bulletin 2024/49). 

The Women Against State Pension Inequality (WASPI) campaign group then went to the High Court seeking a judicial review of this decision. The campaign group has now reported that the High Court has granted them permission for their case to proceed to a full hearing. 

Winter fuel payments substantially restored in major Government climbdown

In a well-publicised U-turn the Government has announced that from this winter everyone over State Pension Age in England and Wales with an income of, or below, £35,000 pa will benefit from the winter fuel payment. This substantially restores what until last winter has been a universal benefit, available to everyone over state pension age regardless of their means.

All pensioners will automatically receive the payment this winter unless they wish to opt out (details of which will be provided later). Those who don’t opt out and are above the £35,000 pa threshold will have the full amount of the payment received taken back via PAYE, or their Self-Assessment tax return.

The Government says that around 9 million pensioners will now benefit from the payment with around 2 million pensioners not benefiting given that they have taxable incomes above £35,000 pa. It also says that the measure will save the Government around £450m (subject to certification by the OBR) compared to the system of universal winter fuel payments.