Pensions Bulletin 2022/16

Our viewpoint

Annual funding statement for DB schemes issued

On 27 April 2022 the Pensions Regulator issued its statement designed to assist DB schemes carrying out valuations at the current time, as well as schemes undergoing significant changes that require a review of their funding and risk strategies.

This important development is covered in our News Alert that was published on the same day.


This year’s statement is set firmly in the context of the current economic and political environment with new uncertainties coming to the fore as old ones start to fade.  But the overall message to trustees remains the same – set a funding and investment strategy having regard to which of the Regulator’s ”groups”  the scheme finds itself in and operate this strategy within a firm IRM framework.  As to the new funding and investment regime, being brought in through the Pension Schemes Act 2021, there is little news.  But we should have a firm idea of what it will look like before the year is out.

Back to the top

Successful prosecution by the Regulator sends pension fraudsters to jail

Two fraudsters have been sent to jail following a prosecution brought by the Pensions Regulator.  The Court heard that Alan Barratt and Susan Dalton were part of a criminal enterprise which persuaded 245 people to transfer their pension savings, totalling £13.7m, into scam pension schemes between 2012 and 2014.

Barratt, who was extradited from Spain as part of the proceedings, received a sentence of five years and seven months and Dalton was sentenced to four years and eight months.  Both were also banned from acting as company directors for eight years.  A third individual, David Austin, who was apparently the “mastermind” behind the scam and received the majority of the money from it, died in 2019.


The substantial sentences handed down to these criminals show that the Pensions Regulator and the Court can achieve results, although arguably even the length of these sentences does not reflect the life-changing devastation that the crimes have inflicted on their victims who have lost substantial, if not all, their pension savings with many now reportedly suffering financial and mental health issues.  And even if justice has been served, it has still taken eight years to achieve and there seems little prospect of any money being recovered from the defendants.

This is the second successful conclusion of a prosecution by the Regulator this month (see Pensions Bulletin 2022/13 for details of the sentencing in the Norton Motorcycles case).   It seems that the Regulator is building up a track record as a successful prosecutor – which is arguably a change from how it was historically perceived.

Back to the top

MPs quiz Trustee about return of surplus to employer

In an unusual move, Stephen Timms MP, Chair of Parliament’s Work and Pensions Select Committee, has written to the Trustee of the Water Companies Pension Scheme raising a number of questions relating to the Trustee allowing the return of surplus to the employer on wind up of a section of the Scheme.

The questions include whether the Trustee considered augmenting scheme benefits, whether it went through a proper process before reaching its decision and how it consulted with members.

He justifies this intervention by saying that he is considering asking the Committee to discuss whether the legislative protections available to members of pension schemes regarding rights over surpluses and their ability to elect trustees are effective and sufficient.


As Stephen Timms himself notes, it is unusual for MPs to take an interest in a specific pension scheme in this way and the fact that the exercising of a trustee discretion is being queried makes it even more noteworthy.  Employers with pension schemes who may be eligible for a winding-up surplus will be watching with interest to see what, if any, further action the Committee takes.

Back to the top

Stronger nudge applies to DC AVCs in DB schemes too

The “stronger nudge” requirement, that applies where those with “flexible” (ie mainly money purchase) benefits are proposing to access or transfer such benefits, comes into force on 1 June 2022.  Because the new rules apply at the benefit rather than scheme level, those occupational pension schemes that are mainly defined benefit (DB) in nature but have a defined contribution (DC) AVC facility, are also impacted.

The commencement of the stronger nudge policy follows the DWP settling regulations that impact trustees of occupational pension schemes (see Pensions Bulletin 2022/02) and the Financial Conduct Authority settling its rules for contract-based schemes (see Pensions Bulletin 2021/51).

Under these new rules those running pension schemes need to ensure that before they do what the individual is requesting, they refer them to ‘appropriate pensions guidance’ (delivered by Pension Wise) and establish that the individual has either received or opted out of receiving such guidance.  The DWP’s regulations and FCA rules set out exactly what needs to be done.  And for occupational schemes the Pensions Regulator has updated pre-existing ‘at retirement communications’ guidance (see Pensions Bulletin 2022/09).


Any scheme that provides DC benefits, whether occupational or contract-based, whether mainly DB or mainly DC, should be finalising the necessary adjustments to its administration processes in order that the stronger nudge can operate for requests received from 1 June 2022.

Back to the top