Pensions Bulletin 2025/35

Government tables multiple amendments to the Pension Schemes Bill 

On 1 September 2025 numerous mainly Government-backed amendments to the Pension Schemes Bill  were published, running to nearly 90 pages. Available via this amendment paper, they range over almost the entirety of the topics covered in the Bill. However, many are minor changes which would appear to reflect errors and omissions in the June 2025-published Bill. This article looks at those Government amendments of note. 

Virgin Media 

The promised Government legislative intervention (see Pensions Bulletin 2025/23) has now been published and this is discussed in the article immediately below. 

New powers to pay DB surplus to employers

The Bill’s new powers to enable DB schemes to pay surplus are intended to apply just to continuing schemes and given this, an amendment clarifies that any power to distribute assets to the employer on a scheme’s winding up falls outside the scope of the new powers. A further amendment allows for the new surplus powers to be modified in particular cases (for example, in the case of sectionalised schemes).

DC scale and reserve asset allocation power 

There are numerous amendments relating to main scale default arrangements and of the reserve asset allocation powers for affected DC schemes. Of particular significance are:

• Adjustment of the asset allocation provisions so that they apply to just the default fund, rather than all the funds in the scheme, and also so that different minimum asset allocation percentages can be applied to different parts of the default fund.
• The ability of the Pensions Regulator to issue risk notices to the trustees or managers of a relevant master trust or the provider of a group personal pension scheme if there is an issue in relation to the scheme relating to what is an expanded auto-enrolment quality requirement by virtue of the scale and asset allocation requirements.
• Allowing regulations to make provision for the imposition of penalties where a relevant master trust or a group personal pension scheme fails to meet the scale or asset allocation requirements but accepts contributions from an employer in relation to a jobholder on the basis that it is an automatic enrolment scheme in relation to that jobholder.
• Allowing monitoring and enforcement functions to be conferred on the Financial Conduct Authority in relation to the compliance of FCA-regulated persons with provisions of or under the auto-enrolment legislation, including the new provisions on scale and asset allocation.

Numerous minor and consequential amendments also appear under this heading.

DB superfunds

A number of adjustments are made to the “onboarding conditions” that need to be met in order that DB schemes can transfer to a superfund. These include weakening two tests relating to the conditions that the superfund must meet as follows:

• capital adequacy – instead of this threshold having to be met it now has to be “reasonable to expect” that it will be met;
• technical provisions – instead of this threshold having to be met with a very high likelihood it now has to be “reasonable to expect” that it will be met.

The onboarding conditions that the ceding scheme trustees must meet (known as the “gateway tests” under the interim regime) are unchanged from those set out in the Bill.

DC default arrangements 

A new Chapter about DC default arrangements is to be added to the Bill whose purpose is to limit the ability of new and non-scale default arrangements from being created by pension schemes and providers. The clauses allow for regulations to restrict the creation of new default arrangements, allow for regulations to be made about consolidation of default arrangements, including requiring consolidation to take place, and require the carrying out of a review into default arrangements. 

Auto-enrolment 

A new clause confers a power on the Secretary of State, under the auto-enrolment legislation, to make regulations requiring employers to provide information about jobholders and workers who are active members of pension schemes to those schemes and provides for the enforcement of such a requirement. 

Other topics 

Other topics covered include new provisions relating to the Local Government Pension Schemes, consolidation of small dormant pension pots, default pension benefit solutions and the contractual override for FCA-regulated pension schemes. 

Non-Government amendments 

The amendment paper is notable for the number of proposed amendments from outside Government, some of which appeared for the first time in a 2 September version of the paper. The non-Government amendments include the following: 

• A clause that would have the effect of requiring indexation of compensation provided through the Pension Protection Fund to be applicable to pre-1997 service. Currently, there is no indexation of such compensation. 
• A clause that would make indexation of compensation provided through the Financial Assistance Scheme applicable to pre-1997 service and reimburse members for the annual increases in payments they should have received in light of this change. 
• A clause that abolishes the PPF administration levy and provides for the expenses of running the Pension Protection Fund and the Fraud Compensation Fund to be met out of their respective general funds. 

It is not clear at this stage whether any of the above will be accepted by the Government, but the Committee debate may elicit further information as to where the Government stands on these issues. 

Virgin Media – Government intervenes via amendments to the Pension Schemes Bill 

The Government’s promised intervention (see Pensions Bulletin 2025/23) in relation to the issues that have arisen as a result of the Virgin Media judgments has now taken place, via Government-backed amendments to the Pension Schemes Bill published on 1 September 2025. Comprising four new sections for GB schemes (with another four relating to NI schemes) and intended to form a new Chapter 1 in Part 4 of the Bill, these sections will be discussed by the House of Commons in its Committee stage deliberations on the Bill and will likely be accepted into the Bill after such discussion. 

After setting out some definitions, the first section explains which rule alterations are brought into scope of the intervention through being treated as a “potentially remediable alteration”. As expected, they are those rule alterations for which an actuarial confirmation was needed, but there are some exclusions – essentially relating to where some “positive action” has been taken on the basis that the rule alteration was void, or where certain legal challenges involving the trustees have either been determined by a court (such as in the Virgin Media case) or were in issue on or before 5 June 2025 (when the Government announced its intention to intervene). 

The second section sets out the new actuarial confirmation test which is a “reasonable to conclude” opinion and is intended not to be as demanding as the original actuarial confirmation test. Although many rule alterations will be subject to this new test, there will be some cases, such as schemes that are already wound up, where it would not now be practicable to obtain the new actuarial opinion. The third section lists these cases and provides that for these the alteration is deemed to be valid – ie without any further investigation. 

The final section takes some powers to enable the Government to adjust aspects of the above, by regulations, if the need arises. 

The intention is that this package of clauses will come into force two months after Royal Assent. 

Pensions Ombudsman rules on due diligence required for pre-2021 transfers 

In a Determination of potentially wide, albeit retrospective, application, the Pensions Ombudsman has set out its position on trustees’ obligations when considering a member’s request to exercise a pre-2021 statutory transfer right from an occupational pension scheme. 

The case concerned an individual who transferred from the British Steel Pension Scheme in 2014. The individual complained, some years later, that although the transfer was in accordance with his wishes at the time, the British Steel trustee failed to carry out sufficient due diligence to check for scam warning signs and then communicate the presence of those warning signs to him. As a result, he claimed he had lost valuable retirement benefits. It appeared that he had fallen victim to a pensions scam, with the bulk of his transfer being invested in a fractional share of an overseas resort hotel room through an HMRC-registered small self-administered pension scheme.  

The Ombudsman did not uphold his complaint, finding that when a member was exercising a statutory transfer right in respect of an occupational scheme in the period in question there was no legislative or regulatory obligation on the scheme trustees to undertake due diligence, beyond that required to meet the legislative criteria for a transfer, which at the time was not particularly demanding. This meant, amongst other things, that there was no requirement to follow the Pensions Regulator’s 2013 Action Pack “Pensions liberation fraud: The predators stalking pension transfers.” or to have regards to the ‘Scorpion Leaflet’ aimed at members. There was also no common law or equitable duty of care to follow these documents. 

The Pensions Ombudsman further observed that the trustee in question had not voluntarily assumed a responsibility to investigate the receiving scheme (for example, as set out in the Action Pack) and had not made any promise or implied representation to the member that it was conducting due diligence which he could argue that he then relied upon to his detriment.  
 
The Ombudsman says that this Determination provides an important, legal assessment of a trustee’s duty of care when considering a statutory transfer request from an occupational pension scheme, for the period from February 2013 until the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 came into force on 30 November 2021.