Pensions Insight: 11 December 2023 to 2 January 2024

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Gateley Legal

In our first insight of 2024 we provide a round-up of the key pensions developments from the last few weeks of 2023. Notable developments include the Pensions Ombudsman’s response and factsheet relating to the Court of Appeal’s recent decision in the CMG case and his first related determination, progress of the lifetime allowance abolition legislation and HMRC’s LTA newsletter, and updated cybersecurity guidance from the Pensions Regulator.

Ombudsman round-up

TPO response and factsheet on CMG competent court case and first determination following the case 

TPO response

On 20 December 2023, the Pensions Ombudsman (TPO) responded to the CMG Court of Appeal judgment that TPO is not a ‘competent court’ for the purposes of section 91(6), Pensions Act 1995 in the context of recouping overpaid pension benefits. 

(Trustees are permitted to recoup mistaken overpayments from a member or beneficiary (even where the error was due to carelessness) where it is equitable for them to do so, and provided they comply with section 91(6) which requires that an enforceable court order is obtained in the event of a dispute over the amount.)

TPO is ‘disappointed’ with the CMG ruling and notes that the Department for Work and Pensions (DWP) is ‘supporting’ introducing changes to legislation to allow TPO to determine overpayment cases without the trustee having to enforce the determination in the County Court. 


TPO has produced a factsheet providing guidance on recovery in overpayment cases including the process in the County Court for enforcing a TPO determination (which is administrative in nature and does not involve the court considering merits). TPO’s determinations will include a schedule of the amount and rate of recoupment and a certified copy of the determination will be provided (to assist with the enforcement process).

First determination following CMG

TPO has also issued his first overpayments determination following the CMG case in which TPO partly upheld a member’s complaint against a trustee because, although TPO found that the trustee was entitled to recover the overpayment, it had started to recoup the overpaid without a competent court order. 

TPO confirmed that equitable recoupment of overpaid benefits is covered by section 91(6) (set-off)

The trustee (based on legal advice received) had argued that equitable recoupment did not fall under section 91(6) as a form of set-off (meaning a competent court order would not be required before recouping overpayments in the event of a dispute). The legal adviser said that this was because section 91 was intended to cover a member’s pension being impacted by matters outside the pension scheme and not where, as in this case, recoupment was being used as an ‘internal tool’ to pay the correct level of pension. 

However, TPO concluded that section 91 does apply in recoupment cases on the basis that: (1) the courts in the 2018 Burgess v BIC case and the CMG cases accepted that equitable recoupment was covered by section 91(6); and (2) previous TPO determinations had also taken this view; and TPO agreed that recoupment was covered.

Dispute as to whether whole or part of overpayment recoverable falls under section 91(6)

The trustee’s legal adviser also raised a further argument that the member was disputing his pension rights and entitlement to a particular benefit level rather than the amount to be recouped. As such, the member’s dispute was not in scope of section 91(6) which refers to ‘amount’. However, TPO did not agree. He confirmed that a dispute as to whether all or any part of an alleged overpayment is recoverable is a dispute under section 91(6) because the “amount of any set-off would be linked to the level of overpayment, which would be determined by reference to the individual’s correct entitlement…”. 

Trustee in this case had breached law but actions were not maladministration

TPO determined that the trustee was entitled to recover the overpayment. However, it had acted both in breach of section 91 and in breach of trust (by acting outside the scheme rules which were overridden by section 91 to the extent of any conflict) by recovering the disputed overpaid amount without an order of a competent court. 

TPO made no finding of maladministration against the trustee because it had acted in accordance with legal advice when recouping the overpayments. The position as regards the relevant administrator may have been different. However, TPO did not make any finding in this respect because, as he noted, the administrator was not a party to the complaint. Nevertheless, TPO noted that, generally following CMG, recouping overpayments without a court order should the amount or period of recovery be disputed will likely be both a breach of law and maladministration.

The trustee was directed to repay the amount deducted up to the date of the determination and to increase the member’s pension to the level it would have been had the overpaid benefits not been recouped in breach of section 91. However, the breach did not prevent the trustee from recouping the incorrectly recouped amounts from future pension payments provided that the approach taken is not ‘inequitable’ and complies with relevant legislation, namely section 91.

TPO also found that the administrator’s offer of £1,000 in recognition of any distress and inconvenience that the member may have suffered was adequate in the circumstances. 

Key point to note

TPO’s decision means that, post CMG, it is likely to be a breach of law and maladministration for a trustee to recoup overpaid benefits where a member disputes the amount (all or any part of the overpayment), or rate of recoupment before obtaining an order from the County Court confirming that the trustee is entitled to recoup. This covers dispute cases where recoupment started both before and after the CMG case. Having obtained legal advice that a trustee may recoup could protect against a maladministration finding. 

Recouping overpayments in breach of section 91 does not mean that these amounts can never be recovered – the trustee may be able to recoup these from benefits payable after any court order has been made enforcing its entitlement to recoup.


In most dispute cases, the member will submit a complaint to TPO and, if TPO finds that the trustee is entitled to recoup the overpayment, TPO’s determination will be enforced as an administrative matter by the County Court. Cases where a member raises a dispute but does not proceed with a TPO complaint will be a little trickier in terms of approach – the trustee will need to consider whether they can regard the dispute as having been resolved and, if not, potential recovery through alternative means such as a court application.

Annual report and accounts reveal complaints increased by 17%

TPO’s annual report and accounts 2022/23 reveal that: 

  • the number of complaints submitted increased by 17% from 6,216 in 2021/22 to 7,280 in 2022/23;
  • there was a 49% increase from 2022/23 in the number of complaints that were closed;
  • the three most common topics for closed pension complaints were: contributions, administration and pension transfers. The other topics in the top ten were retirement benefits, misquotes/ misinformation, auto-enrolment, pension liberation, membership, SIPP/ SSAS administration, and death benefits;
  • TPO acknowledges that waiting times are too long and that reducing these will be a ‘key focus’ for 2023/24 – additional funding will help with this;
  • of the 326 complaints determined by TPO, 51.2% were upheld or partly upheld.

Comment: Aside from complaints on new or developing areas, the main topics for complaints tend to remain very similar (or the same). Knowing the key subject areas means that schemes can identify the main causes for such complaints and implement policies and procedures to assist in avoiding a dispute arising in the first place.

Legislation round-up

Finance Bill 2024 has second reading in House of Commons (and HMRC newsletter on LTA removal)

The Finance Bill 2023-24 (which will implement the removal of the lifetime allowance (LTA) from 6 April 2024) had its second reading in the House of Commons on 13 December 2023. The Bill was not modified during this stage. The next stage of the Bill, the Committee stage, will take place in January 2024 – this is when the Bill will be considered in detail. 

On 20 December 2023, HMRC published a LTA newsletter providing guidance on the removal of the LTA. Our insight on the Bill covers most of what is contained in the newsletter – in addition, we note the following:

  • Amount of pension commencement lump sums (PCLS): HMRC confirms that pension commencement lump sums will continue to be treated in much the same way as they are currently – under the new regime a PCLS will be capped at the lower of 25% of the benefit amount crystallising, or the amount remaining of the lump sum allowance or lump sum death benefit allowance. 
  • Taxable lump sums and PAYE for employer payroll reporting and repayments of overpaid tax: the newsletter covers how to report and pay the tax that will fall due on relevant authorised lump sums which exceed the new allowances and the process for repaying overpaid tax to members.
  • Enhancement factors: HMRC explains how LTA enhancement factors will work under the new system and availability. 
  • LTA protections and enhancements: the deadline to apply for fixed protection 2016, individual protection 2016, international enhancements and pension credit enhancements is 5 April 2025.
  • Personal representatives and death benefits: personal representatives (rather than the scheme as initially proposed) will continue to be responsible for reporting chargeable amounts due following payment of a defined benefits lump sum death benefit or uncrystallised funds lump sum death benefit to HMRC.

First set of retained EU law commencement regulations

The first set of commencement regulations bringing into effect several provisions of the Retained EU Law (Revocation and Reform) Act 2023 (the REUL Act) were made on 12 December 2023.

  • Schedule 1 to the REUL Act which revokes a specified list of retained EU law at the end of 2023 came into force immediately before the end of 2023 (no pensions law is included in the list). 
  • Certain other provisions of the REUL Act came into force on 1 January 2024 including:
    • amendments to the European Union (Withdrawal) Act 2018 (the 2018 Act) which:
      • abolish the principle of the supremacy of EU law after the end of 2023 and establish a new priority rule whereby domestic legislation takes priority over retained direct EU legislation where there is a conflict between the two; and
      • remove from UK law general principles of EU law after the end of 2023;
    • provisions which alter references to retained EU law to assimilated law; and
    • an obligation for courts and tribunals to make an incompatibility order where there is a conflict between retained direct EU legislation and domestic law arising due to the abolition of supremacy.

A further set of commencement regulations should be published in due course – these are expected to bring into effect certain parts of the REUL Act which amend the 2018 Act as regards how UK courts and tribunals will interpret retained EU law. 

TPR round-up

Updated cyber security guidance includes new reporting request 

On 11 December 2023, the Pensions Regulator (TPR) issued updated cyber security guidance that provides practical assistance for trustees as to how they can satisfy TPR’s expectations on cyber security which will be codified for the first time in its new general code of practice (expected to be in force from April 2024). 

The updated guidance includes a new request that trustees, advisers and scheme providers voluntarily report significant cyber incidents to TPR as soon as reasonably practicable. ‘Significant’ likely covers an incident that involves:

  • a significant loss of member data
  • major disruption to member services
  • a negative impact on a number of other pension schemes or pension service providers.

As well as reporting to TPR, organisations may also be required to report a personal data breach to the Information Commissioner’s Office, report breaches of law likely to be of material significance to TPR, significant incidents to the National Cyber Security Centre and relevant events to Action Fraud, the national fraud and cybercrime reporting centre for the UK (Scottish organisations to Police Scotland).

Action: Schemes and service providers should note the TPR reporting request and, generally, ensure that their cyber security arrangements are fit for purpose, adequately protect against cyber risk and meet TPR’s expectations. 

Scheme return 2024 to include questions on fiduciary managers and investment consultants

TPR has confirmed that the 2024 scheme return will include questions on fiduciary managers and investment consultants following it taking over compliance monitoring from the Competition and Markets Authority in October 2022 (see our insight). The information that schemes will need to provide will include contact details of the providers, date(s) of appointment, whether appointed fiduciary managers(s) were done so through a competitive tender and details regarding investment consultants’ strategic objectives. 

Action: The scheme return notices will be issued from the end of January 2024 and completed returns must be submitted by 31 March 2024.

PPF final levy rules for 2024/25 – levy to reduce to £100m

The Pension Protection Fund (the PPF) has published its policy statement and final levy rules for 2024/25 following its September 2023 consultation. As proposed (and as strongly supported by the respondents) the levy will reduce from £200m (2023/24) to £100m for 2024/25. The levy scaling factor and scheme-based levy multiplier will be adjusted slightly to accommodate the levy reduction to 0.40 and 0.000015 respectively. The risk-based levy will be capped at 0.25% of scheme liabilities. 

As a result of the levy reduction, nearly all schemes’ levy will reduce – any further reductions of the levy will require a change to the legislation governing the levy. The PPF is ‘actively engaging with the DWP’ on amendments that would permit the levy to be reduced or removed without adversely impacting the PPF being able to obtain future funds – most respondents believed that this change should be implemented.

PASA’s jargon buster is updated

PASA (The Pensions Administration Standards Association) has published an updated jargon buster which explains central technology terms and how they are relevant to pensions. Since the update was produced in September 2021, technology has advanced including through the introduction of ChatGPT, a form of artificial intelligence large language model. The update focuses on generative artificial intelligence and large language models.

Action: It is thought that AI has the potential to materially impact how we use technology in the future. Schemes should keep up-to-date with developments in this area and how they might benefit from advances (and the necessary safeguards that will also need to be put in place).

COP 28 Climate Change Conference decisions

The latest UN Climate Change Conference of the Parties (COP 28) which was held in Dubai, United Arab Emirates, ended on 13 December 2023. Perhaps most notable of the various outcomes were:

  • The UAE Consensus – this agreement marked the completion of the first global stocktake, an account carried out every five years of all the parts that were negotiated upon and that will be used in relation to nationally determined contributions (a country’s objectives as regards reducing greenhouse gas emissions). It marks the beginning of a new five-year cycle on climate action under the Paris Agreement.
  • The global stocktake outcome noted that parties are “not yet collectively on track towards achieving the purpose of the Paris Agreement and its long-term goals” (to limit the temperature increase to 1.5˚C above pre-industrial levels) and “expresses serious concern that 2023 is set to be the warmest year on record and that impacts from climate change are rapidly accelerating,…”. 
  • The UAE Consensus contained the much-discussed decision on fossil fuels – an acceleration of efforts towards the phase-down (not phase-out) of unabated coal power and a transition away (rather than a phase-out as many had called for) from fossil fuels and an acceleration of action this decade.
  • To reach 1.5˚C, global GHG emissions must hit the highest point before 2025 – emissions should then reduce by 43% by 2030, 60% by 2035 and net zero by 2050.
  • The loss and damage fund which will set up funding for developing countries having to deal with loss and damage caused by climate change was activated and agreement was reached on its structures.

Action: Trustees should ensure that they keep up-to-date with climate change developments and note the expectations of the Regulator in this area which, as currently outlined in the draft new general code of practice, include trustees “talk[ing] to their advisers and asset managers about how short and long-term climate change risks and opportunities are built into their recommendations” and “understand[ing] what measures are being taken to reflect climate change risk within investment portfolios”.

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