Our latest insight provides our usual round-up of key pensions developments including the Chancellor’s Spring Statement, the latest on the Virgin Media case, the Government’s reducing regulatory burden initiative and TPR’s response, removal of the pension fund clearing exemption time limit, the results from TPR’s occupational pension scheme survey and WASPI’s judicial review application.
Pensions largely omitted from the Chancellor’s Spring Statement
Pensions only received a minor mention in Rachel Reeve’s Spring Statement, with the Chancellor seeing positive growth in the UK economy being correlated with reforms to our pension system. In the same breath, Reeves further alluded to tearing down regulatory barriers in all sectors, but it remains to be seen what this will look like and whether this includes the pensions industry.
Whilst no change was introduced, we expect more information to be released in anticipation of phase two of the upcoming Pension Investment Review and this summer’s Pension Schemes Bill.
Virgin Media update
LGPS letter to Minister for Pensions asking for clarification on public sector schemes
The Local Government Pension Scheme Advisory Board wrote to the Minister for Pensions on 7 March 2025 welcoming him to the role and making three recommendations, one of which relates to the Virgin Media case. The Board notes its understanding that a full set of section 37 certificates for ‘significant variations’ to public sector schemes cannot be located and, although HM Treasury does not believe that the case is directly applicable where benefit alterations were made by legislation, not everybody agrees with this viewpoint. The Board recommends that the Department for Work and Pensions (DWP) provide clarification on the position for public sector schemes.
Minister of Pensions confirms the Government is actively considering Virgin Media
Shortly after his 21 February 2025 Parliamentary written answer, Torsten Bell confirmed again in a 20 March Parliamentary written answer that the Government is actively considering the next steps in response to the uncertainty and impact of the Virgin Media v NTL Pension Trustees Ltd.
HM Treasury updates
Policy paper on regulation includes pledges from TPR
The Pensions Regulator (TPR) has made four pledges as part of HM Treasury’s 17 March 2025 policy paper on an action plan to reform the UK’s regulatory system so that it “supports growth … is targeted and proportionate … is transparent and predictable [and] adapts to keep pace with innovation.” The pledges form part of sixty pledges by key regulators including the Financial Conduct Authority, the Prudential Regulation Authority and the Information Commissioner’s Office.
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Pledge 1
Review the amount of capital reserving Master Trusts must hold “with a view to safely freeing up millions of pounds for schemes...”
Timescale: By end of 2025/26
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Pledge 2
Set up an innovation framework and hub and trial innovation ideas.
Timescale: By autumn 2025.
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Pledge 3
Look at reducing unneeded regulatory burden and improving data and data-sharing with new interventions being connected to better saver outcomes and delivery efficiencies.
Timescale: During 2025/26.
Review scheme return and supervisory return data collection to see where ‘unnecessary burdens’ can be removed.
Timescale: By end of March 2026.
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Pledge 4
Work towards consolidation and productive investment asset consideration both through the upcoming value for money framework and before then through a focus on saver outcomes and the voluntary disclosure of asset allocation data.
Timescale: No timescale set.
The pledges were discussed further by TPR in its letter to the Government setting out five ‘measurable commitments’ for the next year.
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Commitment 1: increase value of pension funds
DC schemes: TPR will work on improving value for money (VfM) for Defined Contribution (DC) schemes including the new VfM framework and support of consolidation. TPR will review open standards for data and introduce active review of investment performance data.
DB schemes: TPR will provide support for the Government on new endgame solutions including superfunds and surplus distribution.
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Commitment 2: enabling productive investment
TPR will liaise with the pensions industry to find out which productive investment assets best align with pension fund investments and work on initiatives ensuring trustees have the necessary capabilities around investment diversification.
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Commitment 3: removing regulatory burden
TPR will review master trust capital reserve requirements and other regulatory interventions through a value lens.
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Commitment 4: data and digital enablement
Duplication will be removed. TPR will also liaise with the Government on data legislation harmonisation and is going to set up an industry data and digital working group.
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Commitment 5: supporting market innovation
TPR’s last commitment is setting up an innovation hub for new products and a testing programme for products that can benefit savers and the economy.
As well as outlining its commitments, TPR has asked the Government to review TPR legislative duties which have now become outdated and hinder regulatory burden reduction. These include the mandatory penalty for failing to meet DC chair’s statement duties. TPR also asks the Government to consider setting up a government-led working group on investment and growth.
Draft regulations laid before Parliament removing pension fund clearing exemption time limit
Draft regulations were laid before Parliament on 17 March 2025 to remove the time limits to the exemption for pension funds having to clear certain derivative contracts through a central counterparty. At present, the temporary exemption applies until 18 June 2025 when it would have expired. The regulations apply the exemption on an indefinite footing. They follow HM Treasury’s response to its November 2023 call for evidence confirming that legislation would be introduced to remove the time limit. The draft explanatory memorandum provides a useful explanation of the history behind the regulations.
TPR releases 2024 survey on occupational pension schemes
Questions and topics covered included long-term planning for defined benefit (DB) schemes, investment in UK assets, awareness of TPR’s General Code of Practice and planning for the introduction of the pensions dashboard.
- DB Scheme findings:
- 92% had a long-term objective (2/3rds intended to buyout; 27% aimed to run-on; 7% planned to run on and generate surplus; 1% enter a commercial consolidator vehicle).
- In terms of investments: 38% had UK investments in one or more of private equity, infrastructure, renewables or venture capital. Only 8% of schemes intended to increase these UK investment allocations over the next 12 months. (This was reflected by the DC schemes).
- Over ¾ of medium DB and DC schemes had discussed pensions dashboards with their administrator, of which:
- 44% of DB schemes had considered how they would connect to dashboards
- In comparison with 70% of DC schemes.
- 7/10 DC schemes had a cyber security incident response plan (54% relied on third parties rather than a scheme specific plan).
WASPI launches application for judicial review of government’s decision not to set up compensation scheme
Recent press reports have noted that the Women Against State Pension Inequality (WASPI) campaign group has applied for a judicial review of the Government’s decision that it would not set up a financial compensation scheme for those women born between 6 April 1950 and 5 April 1960 inclusive. This decision was made in response to the Parliamentary and Health Service Ombudsman’s findings that the DWP had failed in its communications with this cohort about the forthcoming state pension age increases. Responding to concerns raised by MPs about its decision during a Parliamentary debate held on 17 March 2025, the Government reiterated its decision and the reasoning for this.