This month’s insight provides an overview of another active month in the pensions sector, albeit characterised by ongoing activity rather than significant new developments.
Our insight begins with an outline of TPR’s 26 March guidance for trustees on how they should approach the Virgin Media legislative remedy, following which we brief readers on the Chancellor’s Spring Statement which was, as expected, a non-event for pensions. We go on to report on two interesting TPO decisions – the first that an employer was liable for not completing a transfer form in a reasonable timeframe and the second on the voluntary assumption of responsibility to carry out additional due diligence on a pre-November 2021 transfer.
The House of Lords was active reviewing the Pension Schemes Bill and the Finance Bill which brings in the inheritance tax changes and received Royal Assent. The Pensions Regulator (TPR) had lots to say about defined contribution (DC), including on the new guided retirement duty and a statement on DC megafunds as well as publication of its defined benefit (DB) scheme research, revealing that most schemes could buyout in the next 10 years. Finally, we report on the Pension Protection Fund’s (PPF) levy policy statement and final rules for 2026/27 which confirm that the PPF conventional levy will remain zero.
1. TPR publishes guidance for trustees on Virgin Media legislative fix
On 26 March 2026, TPR published guidance for trustees on how they should approach the legislative remedy in the Pension Schemes Bill which addresses the issues arising from the Court of Appeal’s ruling in the July 2024 Virgin Media Ltd v NTL Pension Trustees II Ltd case. The guidance sets out the Regulator’s expectations around trustee decision making, governance and engagement with advisers when considering whether to rely on the remedy to retrospectively validate ‘potentially remediable alterations’ in a DB contracted-out pension scheme.
Trustees are expected to consider whether their scheme is impacted by the case and, if so, whether to use the legislative remedy. TPR acknowledges that this will typically require legal and actuarial advice, administrative support and, in some cases, additional trustee training. Employer liaison will also be required.
Where trustees decide to pursue the remedy, TPR expects clear and proportionate instructions to be given to the scheme actuary. This includes defining the scope of the actuarial work (for example, whether amendments are assessed individually or together) and agreeing a practical and realistic timetable. Although the legislation does not set a specific deadline for applying the remedy, TPR expects trustees to approach the exercise in an organised and timely manner. Trustees must keep a suitable record of the exercise.
TPR makes clear that it does not expect extensive searches for historic records prior to instructing the actuary, but notes that the actuary may well require additional information and this may cause evidential challenges. Additional information may come from different sources such as trustee minutes and member data advice. The first step will be to see what is easily obtainable.
There may be cases where the actuary cannot provide retrospective confirmation and reasons will be provided; for example, further information may be required. If the trustees cannot find this information, they will need legal advice to work out what the next steps are.
TPR confirms that it has no statutory role in the operation of the remedy and that trustees are not required to report on action taken to TPR – cases of historic failure to obtain section 37 confirmation which can now be remedied are very unlikely to be materially significant to TPR from a regulatory perspective.
2. Spring Statement – non-event for pensions
The Spring Statement, delivered by the Chancellor on 3 March, provided an update on where things stand from an economic perspective based on the Office for Budget Responsibility’s forecast. The statement was set against the backdrop of continued geopolitical tensions in Iran and the Middle East and broader global economic uncertainty which is referred to by the Office for Budget Responsibility’s (OBR) Economic and fiscal outlook March 2026 as a key risk to the economy forecast. As anticipated, the statement did not introduce any pension reforms, reflecting the Chancellor’s intention to reserve substantial tax and spending announcements to once a year at the Autumn Budget.
3. The Pensions Ombudsman (TPO)
TPO finds public sector employer liable for loss caused by failure to complete a transfer form that prevented employee from transferring on favourable terms
TPO has upheld a complaint against a public sector employer after delays in completing a simple transfer form caused an employee (Mr K) to miss the 12 month deadline for an advantageous “Club Transfer” from his former employer’s public sector scheme to his new one. TPO held that the employer had breached both:
- an implied term in the employment contract, based on reasoning from the 1992 case of Scally v Southern Health and Social Services Board, to take reasonable and timely steps to enable the employee to exercise their time limited transfer right under the contract; and
- a common law duty of care to carry out its assumed responsibility for completing a straightforward transfer form with reasonable care and skill. The transfer could not go ahead without this form.
Although the administrator for both schemes also contributed to overall delays, TPO found the employer’s breach was the decisive cause of the loss. To be liable for a loss (both in contract and common law), the breach must have caused the loss. This is known as the ‘but for’ test.
The employer was directed to support an application for a late Club Transfer and, if this was not allowed by the scheme administrators under their discretionary power to do so, to pay 80% of the resulting financial loss (a 20% reduction to put Mr K in an equivalent net tax position), as well as £500 for distress and inconvenience.
(In Scally, the House of Lords held that an employer was under an implied contractual duty to inform doctors that they could purchase additional pension benefits under the terms of a collective agreement. The right to do so was time restricted and the doctors were not informed of this option, so missed being able to enhance their pension benefits. The Scally case has subsequently been interpreted on a narrow basis. Although Scally related to a duty to inform, TPO found the reasoning applicable by analogy to Mr K’s case. Mr K had already been informed by the employer about the statutory transfer right which TPO found had been incorporated into his employment contract, but the employer had breached the implied term to perform its role in the transfer properly).
This determination is noteworthy: (1) as it confirms that an employer’s role in public sector club transfers is not purely administrative and can give rise to legal duties to complete what was in this case a straightforward administrative task in a reasonable and timely manner, failing which the employer may be found financially liable for consequential loss; and (2) because of the application of the Scally case in a wider setting than a duty to inform.
DPO finds no voluntary assumption of responsibility to carry out additional due diligence checks on a pre-2021 transfer
The Deputy Pensions Ombudsman (the DPO) has dismissed a public sector member’s (Mr N) complaint that the administrator had failed to carry out adequate due diligence when he transferred his public sector benefits to a SSAS. Following the July 2014 transfer, Mr N lost his pension benefits and subsequently complained.
The determination applies the DPO’s analysis from the 2025 Mr D determination in which the DPO decided that a trustee did not have a statutory or common law duty to carry out due diligence over and above that required by the Pension Schemes Act 1993 (the 1993 Act) on a statutory transfer before November 2021 when the red/amber flag statutory transfer requirements were introduced.
Applying the Mr D findings, the DPO determined that the administrator in Mr N’s case only had a duty to carry out the due diligence required to comply with the statutory requirements in the 1993 Act, not a duty of care in either statute or common law to carry out the further due diligence outlined in the TPR issued 2013 Action Pack designed to help trustees and administrators identify potential pension scams and educate members (the Additional Due Diligence).
This case is interesting because it considers whether, despite not having a general duty to carry out Additional Due Diligence, the administrator nevertheless chose to do so and voluntarily assumed a responsibility to the member for which they were liable.
Voluntarily assuming such a responsibility does not necessarily create a legal liability. For legal liability to arise, the member would need to have been aware that the administrator was undertaking Additional Due Diligence and reasonably relied on the administrator carrying out such checks. It must also have been reasonably foreseeable to the administrator that the member would be relying on it to conduct the Additional Due Diligence to a reasonable standard.
In summary, the DPO found from an internal administrator email that the administrator did carry out some further due diligence (over and above what it had to under the 1993 Act). However, it had not told Mr N that it would be conducting these checks (or that they would inform him of the outcome). This meant that Mr N could not be said to have relied on the administrator “doing something that he had not been told that it would do”.
Furthermore, Mr N had signed a declaration as part of the transfer pack accepting both responsibility for the transfer’s suitability and that neither the administrator nor the employer was responsible for this. He had also told the administrator that he had researched the transfer himself and, therefore, could not be said to have reasonably relied on the administrator to ‘protect his interest’.
The DPO’s final point was that, because of the declaration and the member telling the administrator that he had done his own research, it was not reasonably foreseeable to the administrator that he would rely on it to carry out further checks and warn him of any identified red flags.
4. Legislation
Finance Act 2026: government amendments to inheritance (IHT) provisions including death in service lump sums
Prior to receiving Royal Assent on 18 March 2026, the Government made various amendments to the IHT provisions in the Finance Act 2026, including, in particular, an amendment removing the requirement for a deceased member to have been an active member in order for any death-in-service benefit to be caught by the IHT exclusion. This addresses concerns regarding the difficulties an active member requirement would have had for those members provided with death in service benefits who were working but not actively accruing benefits such as life assurance only members. The other amendments are technical in nature principally to ensure that the new regime works as intended and including provisions as regards the impact on other taxes such as income tax and the lump sum and death benefit allowance.
The Government’s response to the House of Lords Committee’s IHT report mainly focuses on improving the practicalities of IHT reporting and payment, supported by updated guidance that should be available ahead of April 2027. Key takeaways include planned HMRC template communications for personal representatives (PRs) when seeking information from pension scheme administrators, alongside forthcoming information sharing regulations (expected Spring 2026) and guidance on PR identity verification. The response also indicates that PRs may be able to use estimated valuations where a formal valuation is not available in time (with the formal valuation to follow), and that Spring 2026 HMRC newsletters should clarify what constitutes “every effort” to identify pension funds. The Government does not currently intend to extend the six month IHT payment deadline from the date of death, and it plans further communications in the run up to April 2027 (including materials about the changes that can be sent to members).
Pension Schemes Bill update
The Pension Schemes Bill continued its progression through the House of Lords in March with the Lords agreeing several amendments covering various aspects of the Bill. Among these amendments, the most significant was the removal of the DC mandated investment power under which the Government could specify how schemes allocate their assets. This provision may well be reinstated by the House of Commons when it considers the Lords’ amendments.
The Lords rejected the Government’s insertion of a provision requiring statutory trustee investment guidance to be produced within 12 months of the provision coming into force. The Lords thought that the guidance risks “politicising what should remain independent fiduciary judgments.” The Government is now considering how to take the guidance forward given the Lords’ rejection.
5. DWP guidance and TPR statement on megafund scale and consolidation requirements of Pension Schemes Bill
On 9 March 2026, the DWP published guidance confirming its direction of travel on the proposed £25bn+ ‘main scale default arrangement’ (MSDA) requirement for DC multi employer schemes used for automatic enrolment from 2030. Schemes operated by the same provider and using a common investment strategy may combine assets for MSDA purposes, but otherwise must meet the scale requirements individually.
The accompanying TPR statement urges master trust trustees to begin preparations early, setting out expectations on evidencing growth, assessing scale projections and ensuring operational readiness. TPR also cautions employers and advisers to take a proportionate, balanced approach when considering scheme selection and to avoid making assumptions about which master trusts may fail to meet future scale thresholds.
There will be two alternative routes for schemes that cannot reach £25bn by 2030. Existing DC schemes may use a transition pathway if they hold at least £10bn by 2030 and can demonstrate a credible plan to reach £25bn by 2035 (with analysis indicating that some £5bn schemes could reach the threshold within this timeframe). Alternatively, a new entrant pathway is available for genuinely innovative schemes with no existing members able to evidence strong growth potential.
6. The Pensions Regulator (TPR)
DC round-up: guided retirement duty blog and press release and landscape report
TPR’s 2 March blog discusses the Pension Schemes Bill guided retirement duty for DC schemes to implement a default retirement solution and the opportunity for schemes to reflect common, predictable and economically significant contribution patterns such as career breaks and absence due to caring responsibilities. Although individual solutions might not be needed, schemes can make use of existing data to see if there are any cohorts where ‘modest’ changes could significantly alter outcomes – the blog’s author believes that “contribution patterns are just as economically significant as age”.
TPR’s 5 March press release uses its analysis of decumulation in the occupational DC market to drive home a slightly different message on the guided retirement duty – that over two fifths of DC schemes do not currently offer decumulation whilst 86% of the largest schemes offer at least one retirement income option, highlighting the need for trustees to begin considering and designing decumulation products or consolidate into a scheme that can if they cannot provide this form of support.
TPR’s 17 March 2025 DC landscape report shows a predictable rise in consolidation and increase in asset size. “DC scheme numbers fell by 15% to 790 in 2025. Assets increased by 22%, rising from £205 billion to £249 billion.”
TPR evolution of occupational defined benefit (DB) schemes 2025 research
TPR’s 10-year forward look at the evolution of occupational DB schemes highlights a “paradigm shift”, with most of the largely maturing 4,700 DB schemes which hold £1.1 trillion of assets for 9m savers now in a low dependency and buy-out surplus, marking a fundamental change in their risk profile and strategic options with most schemes now positioned for potential buy-out or alternative endgames.
TPR’s research indicates that, as of 31 March 2025, 52% of DB schemes are in surplus on a buy-out basis, a dramatic increase from just 2% in 2016. Projections suggest that around 75% (3,400) of schemes could achieve buy-out within the next decade without the need for additional employer contributions. The insurance market is expected to accommodate these transactions, although short-term capacity constraints may arise. TPR sees over half of schemes moving to buy-out but because these will typically be smaller (assets under management under £100 million) a substantial DB market worth £0.6–£0.7 trillion in 2035 will remain.
TPR also predicts notable shifts in scheme investment strategies, including a continued reduction in gilt holdings as schemes pay out benefits, distribute surplus and transition to insurers, which typically hold fewer gilts than pension funds. The issue of surplus distribution is expected to become increasingly central, with an estimated £120 billion of buy-out surplus potentially available for members and employers over the next decade. TPR’s key message is one of strategic planning: “now is the time for trustees to understand all available options and plan for their scheme’s future”.
TPR warns of rise in impersonation fraud especially in overseas jurisdictions and urges schemes to take action
TPR has urged schemes to take action to guard against a rise in impersonation fraud, noting a particular increase during 2025 in cases impacting UK members living in Africa. Schemes should review identity and verification check procedures and data security for communications and encourage members to use two-step verification and strong passwords.
7. The Pension Protection Fund (PPF) Levy Policy Statement and final rules for 2026/27 published
On 18 March 2026, the PPF published its levy policy statement and 2026/27 final rules together with FAQs regarding there not being a 2026/27 conventional scheme PPF levy (albeit an Alternative Covenant Schemes (superfunds) levy will be retained). The PPF has confirmed that schemes no longer need to provide voluntary information that was previously provided via Exchange to obtain a levy saving including, deficit reduction contribution and contingent asset certifications, and other data previously provided such as ABC certificates and contingent asset documents.