Pensions Insight: January 2026

December proved to be just as eventful for pensions as earlier months in 2025, with a flurry of developments right before the Christmas break. We provide a full round-up of key developments and no less than three in-depth pieces to provide readers with a good head start going into 2026.

Cases: High Court decides that amendment power fetter protecting accrued rights or interests did not prevent future service amendments

On 21 November 2025, the High Court handed down its judgment in the case of 3i PLC v Decesare [2025] that an amendment power fetter which prevented modifications which would “diminish any pension already being paid under the Plan or the accrued rights or interests of any Member or other person in respect of benefits already provided…” (the Fetter) did not prevent an amendment to terminate or reduce the rate of future accrual of scheme benefits.

The issue had arisen because the scheme trustees had placed the payment of surplus to the employer as part of the winding up on hold. This was following the Court of Appeal’s 2024 decision that an amendment power proviso stipulating that alterations affecting active members’ interests could not take effect unless, certain requirements were met, protected both past and future service benefits. If the Fetter protected benefits in the same way, then a 2010 deed closing the scheme to future accrual would be invalid. (It was accepted by all parties that the Fetter required a link to future salary in respect of accrual prior to the date on which the scheme was closed to future accrual.)

The judge considered the findings in the Court of Appeal 2024 case that ‘interests’ in that scheme’s amendment power proviso was “untethered to any composite phrase”, whereas in the Fetter’s case it was, by reference to the word ‘rights’ and qualified by “already provided under the Plan”. There was nothing indicating that interests related to future service accrual, rather the focus was on what had ‘already occurred’. Amendment powers turn on their own interpretation even if they have certain ‘family resemblances’ with others.

Applying the principles of construction applicable to pension scheme deeds:

• establish the parties’ intention by identifying the meaning of the relevant words by reference to their natural and ordinary meaning;
• the document’s overall purposes; 
• other provisions;
• facts known at the time; and
• common sense but disregard subjective evidence of the parties’ intentions;

the judge confirmed that the Fetter did not prevent amendments being made to the future accrual of scheme benefits.

The “start and end point of the analysis” was the natural meaning of the Fetter seen in its context. The Fetter’s language was ‘unambiguous’ – it related to preventing alterations which would “diminish past service” and permitted amendments to terminate or reduce the rate of future accrual of benefits. 

The judgment confirms how courts will approach the meaning of amendment power provisos – what would a reasonable person with the background knowledge reasonably available to the parties at the time have understood the meaning to be, beginning with the language used by reference to permissible context. It highlights that the word ‘interests’ in an amendment power proviso can have a different meaning depending upon how it is used and the wording of the relevant provision. Alteration provisos protecting members’ interests will not always encompass future service rights – each case turns on its own interpretation. 

The Pensions Ombudsman (TPO) 

New member overpayments factsheet

On 16 December 2025, TPO issued a new factsheet for members on overpayments to help them understand the core issues on overpayments including what one is, whether the member has to pay the overpayment back to the scheme, possible ‘legal’ defences, what evidence might be needed to evidence a defence and TPO’s role in resolving a dispute.

Action: TPO asks that schemes provide this information to members when notifying them of an overpayment or when they query or challenge recovery. 

DPO dismisses complaint that trustees had not carried out adequate due diligence on non-statutory pre-2021 transfer

Summary

On 25 November 2025, the Deputy Pensions Ombudsman (DPO) released the third decision in a series of important recent cases concerning trustees’ transfer responsibilities during the period from February 2013 to 30 November 2021, when new red/ amber flag transfer procedures were introduced to help protect members from pension scams. In all three cases, the complaints made by the members were dismissed.

The latest decision covers a pre-2021 non-statutory transfer, confirming that the trustee owed no duty to the member to undertake ‘additional’ due diligence on the receiving scheme either under the scheme rules which permitted non-statutory transfers, legislation, general law or through voluntarily assuming responsibility. Read on for more details.

Recap of first two transfer determinations

In the first determination, TPO concluded that there was no legal or regulatory requirement in the case of a statutory transfer for a transferring trustee of an occupational pension scheme to follow the due diligence checklist or other requests contained in TPR’s Action Pack or send members a copy of the Scorpion leaflet, both of which were initially produced by TPR in February 2013. However, the position would have been different if the trustee had voluntarily assumed responsibility to carry out due diligence, the member reasonably relied upon this undertaking, and it was reasonably foreseeable that they would do so when deciding whether to transfer. 

In the second case, the DPO decided that a transferring member did not have to be an earner to have a statutory transfer right. Declining to follow the ‘assumed interpretation’ in the Hughes v Royal London [2016] High Court case that a transferring member must be earning income at the time of a transfer, the DPO preferred an alternative interpretation that the statutory requirement for a member to acquire ‘transfer credits’ being rights allowed to an earner in the receiving scheme described the nature of the rights being acquired under the receiving scheme, rather than requiring the transferring member to be an earner. 

Facts of third complaint

In 2014, Mr S was provided with a cash equivalent transfer value quotation but did not accept this within the three-month guarantee period. Mr S’ benefits amounting to c.£119k were eventually transferred in April 2015. At the time of the transfer request and subsequent transfer, Mr S was unemployed and receiving employment support allowance.
After Mr S was told that his receiving scheme assets had been ‘severely impacted’ and that the scheme could not provide benefits, Mr S received £50,000 from the Financial Services Compensation Scheme in 2019. He submitted a complaint to the trustee in 2020 and escalated this to TPO alleging that the trustee of the transferring scheme had not carried out sufficient due diligence before allowing his transfer.

DPO decision – analysis of Hughes – no requirement for Mr S to be an earner but must have been provided with transfer credits

In keeping with her earlier analysis of the Hughes case, the DPO confirmed that it was not necessary for Mr S to have been an ‘earner’ receiving income at the time of the transfer for either a statutory transfer under the Pension Schemes Act 1993 transfer provisions or a non-statutory transfer to comply with the 1993 Act preservation provisions. The transfer and preservation legislation simply required that the transfer provide Mr S with ‘transfer credits’ in the receiving scheme, being rights of the type that could be provided to an earner under the rules of the receiving scheme. Mr S had been provided with such rights. 

DPO decision – the transfer was a discretionary non-statutory transfer

Mr S had not returned his transfer form within the statutory three-month guarantee period. Although this would not “necessarily invalidate the transfer as a statutory transfer” because the trustee could waive its right to refuse the transfer outside this period, the DPO preferred to treat the transfer as a non-statutory one. Following analysis of the specific rule that gave the trustee a discretion to allow non-statutory transfers, the DPO concluded that the transfer had been validly made under a scheme provision giving the trustee a discretion to allow a member who did not have a statutory transfer right to transfer their benefits in any event in the same manner as a statutory transfer.

There was interesting analysis of how a trustee’s discretion to permit a non-statutory transfer operates. The trustee had to act fairly, hold the balance between Mr S’ interests and general scheme interests, not unreasonably refuse the request and make sure the transfer was correctly calculated and paid. Mr S had no grounds for complaint because the trustee had exercised its discretion in his favour. The trustee did not have to check the transfer would be in Mr S’ interests or exercise its discretion in his best interests. Neither did it have to consider each transfer individually or take action such as notifying Mr S that it had exercised its discretion. It was acceptable for the trustee to adopt a ‘standing practice’ and not take a ‘conscious decision’ to authorise a request. 

DPO decision – due diligence on non-statutory basis required confirmation in accordance with rules and applicable legislation but no additional due diligence required

The last topic considered was due diligence, including further thoughts on voluntarily assuming a due diligence duty. 

The DPO agreed with TPO that trustees were only required to check that the statutory requirements of section 95 of the 1993 Act were met and were not required to carry out the due diligence set out in TPR’s Action Pack from 2013 or send a copy of the Scorpion leaflet to the member. She confirmed that this conclusion extended to the updated 2014 Action Pack which covered scams in addition to pension liberation. 

As regards a non-statutory transfer, the same applied – the trustee had to confirm that the transfer was made in accordance with the rules (and applicable legislation) which it had. There was no duty in legislation, tort or equity for the trustee to carry out any further due diligence.

It was noted that exercising a discretion to pay a transfer does not equate to voluntarily assuming responsibility to undertake due diligence. To assume such a duty would require the member to have been informed (directly or indirectly) that the trustee would be carrying out additional due diligence and for it to have been reasonably foreseeable that the member would rely on these checks. 

The DPO noted that being aware that the member has an IFA might point to it being reasonable for the trustee to expect the member to be relying on the adviser and issuing the Scorpion leaflet/ requesting confirmation that the member has read it would “also tend to negate any assumption of duty” regarding the Scorpion leaflet checks. In this case, the checks carried out were not enough to establish a voluntary assumption of a due diligence duty. Mr S had received IFA advice and confirmed that he had read the Scorpion leaflet. 

DPO overall conclusions

Although the DPO sympathised with Mr S’ position, she did not uphold his complaint. The trustee had no duty to carry out due diligence checks on the receiving scheme under the scheme rules, the statutory transfer provisions, general law or under a voluntary assumption of responsibility. The transfer was validly made under the scheme rules, and the trustee had no duty to consider whether the transfer was in the member’s best interests.

This series of determinations provides helpful clarification of the scope of a trustee’s duty to carry out due diligence for scam/ fraud on pension transfers in the pre-2021 period and should assist trustees when considering similar complaints.

Legislation

Pension Schemes Bill is amended during final stages of House of Commons consideration including provision of pre-97 PPF and FAS increases and Virgin Media remedy changes

After completing its final House of Commons stages, the Pension Schemes Bill had its 1st and 2nd reading in the House of Lords on 5 and 18 December 2025 respectively. Several significant amendments were introduced during the Bill’s final Commons stages including the following.

Pre-97 increases to PPF and FAS compensation

The Bill now provides for Pension Protection Fund (PPF) and Financial Assistance Scheme (FAS) compensation relating to pre-6 April 1997 pensionable service to be increased. 

Pre-1997 indexation of PPF compensation will be provided in two circumstances: (1) where the member’s scheme required all or part of pre-97 benefits to be increased, and (2) where the scheme only provided for increases on the post-1988 GMP. The increase differs according to whether scenario (1) or (2) applies. Similar provisions have been inserted in relation to FAS payments.

Pre-97 increases will apply going forward from the implementation date (expected January 2027) but will not be retrospective with arrears. 

Virgin Media legislative remedy

There are various amendments to the Virgin Media remedy including: 

• Refining the exclusion of the remedy for alterations where “positive action” has been taken by trustees where they consider an amendment to be void – this covers notifying members that either the scheme will be administered on the basis that an amendment is void, or that the trustees will be taking (or have taken) any other administrative step in connection with altering member payments;
• Clarifying that the legal proceedings exclusion covers proceedings before courts (not tribunals or Ombudsmen) and that the proceedings must relate to a dispute about the scheme’s rules; and
• Bringing forward the commencement date for the remedy to the date of Royal Assent, rather than two months after. 

PPF administration levy

Abolition of the PPF administration levy with administrative expenses being paid for by the PPF and the Fraud Compensation Fund. 

PPF Ombudsman funding provided from general levy rather than separate levy

Technical amendments to the Pension Schemes Bill 1993 are made providing that the expenditure of the Ombudsman for the Board of the PPF can be paid from the general levy paid by pension schemes with effect from 1 April 2007 to mirror how it has been paid since that date.

Asset and scale – DC

The test to determine whether relevant master trusts and group personal pension plans have the requisite £25bn+ of ‘main scale default’ assets as from 2030 now covers connected arrangements. The meaning of ‘connected’ will be set out in regulations. 

Government to develop statutory guidance for trustees on investment duties

The Government rejected various amendments regarding how trustees should take account of factors such as climate risk and members’ living standards when making investment decisions. However, in due course, it will introduce statutory guidance for trust-based pension scheme trustees regarding these factors.

Consultations, statutory reviews and enquiries

FCA: charge cap, new targeted support regime to go ahead, changing markets 

The FCA intends to consult on potential changes to the 0.75% charge cap in Q2 2026 “so consumers are not disincentivised from investments due to higher performance fees”.

HM Treasury’s 11 December 2025 consultation response confirms that the Government and the Financial Conduct Authority (FCA) will be bringing in a new targeted support regime via regulations when Parliamentary time allows. The new regime is expected to come in from early April 2026. Targeted support will permit FCA-authorised firms to make ready-made suggestions appropriate for pre-defined consumer groups or cohorts with similar characteristics and circumstances.

On the same day, the FCA published a consultation response on adapting its pensions requirements for a changing market including its proposals for a new interactive digital pension planning tool framework and a non-advice support process for consumers on transferring/ consolidating DC pensions.

The Pensions Regulator (TPR)

Regulatory intervention report on the Northern Foods Pension Scheme – 4 December 2025

TPR has published its regulatory intervention report on the Northern Foods Pension Scheme regarding a funding package agreed following a July 2024 warning notice from TPR for financial support from the sponsoring employer corporate group. The scheme’s estimated section 75 deficit was £1bn in March 2019 but had reduced significantly to an estimated £372.1m in March 2025. The scheme has more than 13,000 members.

TPR set up an avoidance case following restructuring activity by Boparan Holdings Limited (BHL), which owned Northern Foods Limited (NFL), a food manufacturing business and the principal employer of the scheme. TPR concluded that the scheme’s covenant had deteriorated and that it had not been treated fairly compared to other stakeholders. This was because it had not received an equitable share of the proceeds from various transactions between 2018 to 2020 whereby various NFL businesses were sold to help with the refinancing of BHL’s bond obligations which were initially set up when BHL acquired NFL. The scheme was only provided with a small amount of the £400m proceeds and a partial guarantee from BHL, both of which TPR regarded as inadequate.

The support package agreed following TPR’s intervention includes around £300m in contributions by 2034, expected to enable the scheme to reach full funding on a low dependency basis, a replacement principal employer (the main trading organisation), an extension of BHL’s guarantee and new guarantees from significant subsidiaries, and an agreement that the scheme will receive proceeds from various sales if they take place. 

Initiative looking at barriers to private market and infrastructure investment – 8 December 2025

TPR has confirmed that it is carrying out an initiative considering how DC and DB schemes invest in private markets and infrastructure and the limitations of and barriers to such investment. Its industry engagement should have been completed in 2025, and the market oversight report should be available in 2026. 

The press release notes that “We expect trustees to acquire the skills, capabilities and access to professional advice to consider investing in diversified portfolios. Where schemes fall short, we will be asking trustees to consider whether it would be in savers’ interests to consolidate into larger vehicles with greater investment capabilities.”

Revised administration guidance – 9 December 2025

On 9 December 2025, TPR published revised administration guidance with an accompanying message that “strong administration” is “fundamental to good governance” and “the role of administrators has never been more important”. Notably, the guidance replaces the former DC scheme administration guidance and is applicable for all scheme categories. 

Amongst other things, the guidance:

• clarifies core administration activities and considerations and how to maintain the quality of service; and 
• includes new material on the importance of having an administration planning policy and effective oversight, IT systems, and making sure performance measurement covers quality and accuracy as well as time-related metrics. 

Trustees should review the guidance and liaise with the scheme’s administrators as necessary to ensure that scheme administration meets TPR expectations. As well as setting out TPR expectations on key administration activities, considerations and service quality, the guidance notes the requirement for trustees to:

• have sufficient knowledge and understanding;
• regularly consider and monitor administration;
• have written policies on administration, data management, data security; and
• ensure that the scheme and administrator have effective IT systems and an adequate disaster recovery and business continuity plan.

Consultation on ‘new-look’ CDC code of practice 

Just a few days before the Christmas break, TPR published a ​​​​​consultation on its revised CDC code of practice which uses the current single employer CDC code to incorporate its expectations for multi-employer CDC schemes. The consultation closes on 13 February 2026.

The single employer CDC regime is being expanded by provisions in the Pension Schemes Bill and The Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025 the draft of which was debated by the House of Lords on 8 December and made on 15 December 2025. The regulations and the updated code should come into force on 31 July 2026, applications open from August 2026 and schemes operating from early 2027. 

Our in-depth insight provides background about CDC schemes and their development to this point.

The code uses the modular structure of its general code of practice, the future intention being to incorporate the CDC and master trust codes into the general code. At present, certain areas in the code are not ‘fully explored’ because certain parts of legislation are not yet fully formed. Nevertheless, TPR understands that there is enough in the code to enable entrants to apply and remain authorised. 

Reflecting the differing nature of single and multi-employer CDC arrangements, there are some differences between the two regimes including the following:

• Scheme proprietor: multi-employer schemes must have one scheme proprietor, a combination of a scheme funder and scheme strategist. It will make business decisions, financially support the scheme (set-up, authorising and running) and be involved in promotion and marketing. It cannot be a trustee and must prepare and submit a business plan to TPR. 
• Fitness and propriety: there are new roles that will be subject to TPR fitness and propriety checks, including the scheme proprietor, chief investment officer and chief financial officer.
• Promotion and marketing: because multi-employer CDC schemes are more likely to be commercial entities, they will be subject to new requirements in respect of promotion and marketing.

The draft code explains how authorisation applications will be made, what TPR will consider as part of the application process, how it will supervise and its expectations for the ‘conduct and practice’ of those who operate CDC schemes. 

There are specific requirements and expectations in respect of systems and processes (IT, administration, governance and communications) and the fitness and propriety tests for various roles in a scheme including the trustees, the person who can appoint/ remove trustees, the person who can amend the trust deed, the scheme proprietor, promoters/ marketers, chief financial officer, and chief investment officer (if applicable). 

Also covered in the code is financial sustainability (a requirement to have access to sufficient financial resources for set up and running costs and sufficient financial reserves to cover the costs of a triggering event), as well as what is expected of schemes as regards their continuity strategy to protect members in response to triggering events. Such events include a scheme proprietor entering insolvency or becoming unlikely to continue as a going concern, withdrawal of TPR authorisation, and a decision to wind-up or close a scheme. There are three possible continuity options: (1) discharge liabilities and wind-up; (2) resolve the triggering event; and (3) closing the scheme.

The code goes on to cover TPR’s expectations as regards the requirement for a scheme to have a sound scheme design, an explanation of which must be set out in a trustee viability report together with a viability certificate and modelling and testing. 

The final modules relate to the promotion and marketing of multi-employer CDC schemes. 

Once authorised, CDC schemes are/ will be subject to ongoing supervision by TPR. Oversight includes the reporting and monitoring of significant events such as material changes to/ failures of the key authorisation elements, continued compliance with authorisation requirements and implementation of continuity options if a triggering event occurs.

We are in a potentially transformative period for pensions with the upcoming launch of multi-employer CDC and the likely extension of CDC to retirement-only arrangements, along with new measures in the Pension Schemes Bill. It appears that 2026 will be just as eventful, if not more so, than 2025.

PDP update on dashboards progress

The Pensions Dashboards Programme’s 9 December 2025 progress update report confirms that 700 providers and schemes have now connected to the dashboards ecosystem covering in excess of 60m pension records (75% of those in scope). The state pension has also connected. The report also provides updates from the DWP, TPR and the FCA. 

Auto-enrolment thresholds to remain the same for 2026/27

On 18 December 2025, the Pensions Minister confirmed that all auto-enrolment thresholds for 2026/27 will remain the same as the 2025/26 ones which means that:

• the auto-enrolment earnings trigger will be £10,000;
• the lower earnings limit of the qualifying earnings band will stay at £6,240; and
• the upper earnings limit of the qualifying earnings band will remain at £50,270.