We are pleased to introduce a refreshed approach to our pensions insight publication. Moving away from weekly/ fortnightly updates, we will now deliver a monthly publication focusing on key takeaways designed to provide accessible summaries of the pivotal issues shaping the pensions landscape.
The key takeaways in our July 2025 edition are in-depth articles on the Pension Schemes Bill and The Pensions Regulator’s (TPR) new guidance on defined benefit (DB) models and options including run-on and surplus. We also summarise other developments of note including the welcome news that the Government will legislate to address the adverse implications of the Virgin Media case.
Pensions Scheme Bill 2025
The Pension Schemes Bill 2025 has landed, receiving its first reading in the House of Commons on 5 June 2025. The headline changes are:
- statutory flexibility to pay surplus in an ongoing DB scheme to an employer;
- confirmation that a TPO determination is sufficient to enforce a disputed charge, lien or set-off against member benefits as is a County Court order and resolution of the dispute;
- the legislative framework for superfunds;
- flexibility for the PPF to reduce the levy potentially down to zero;
- a requirement (with exemptions) for multi-employer DC auto-enrolment schemes to have at least one ‘main scale default arrangement’ with £25bn/+ of qualifying assets by 2030 and a reserve mandatory investment power for the Government to stipulate % asset levels;
- a contractual override for contract-based schemes to transfer members without consent;
- a new DC Value for Members Framework from 2028;
- a new DC trustee Guided Retirement duty to either offer a decumulation solution or transfer members to a scheme that does;
- a consolidator scheme for small, dormant pension pots; and
- asset pooling, governance and investment changes for the Local Government Pension Scheme.
See our in-depth insight for further details
TPR guidance on endgame new DB and hybrid scheme models and options
On 3 June 2025 TPR published new guidance on the wide range of models and options now available to DB and hybrid pension schemes. Trustees will need to refer to the guidance when considering endgames and other governance, financial and insurance options for their DB scheme.
The guidance covers traditional options such as buy-in and buy-out, the newer models such as superfunds and possible run on with surplus release that has seen a potential comeback after many years in the doldrums. The guidance does not cover particularly new ground but does helpfully summarise the core features of each arrangement and the issues that TPR expects to be considered. TPR is clear that trustees and employers should consider carefully the available options, take professional advice where appropriate and keep matters under review. When doing so, they will need to take into account this guidance.
See our in-depth insight for a detailed summary of the guidance.
Virgin Media – Government to address issues through legislation
Received with huge sighs of relief from contracted-out DB schemes, the Government announced on 5 June that it would address the issues arising from the Virgin Media case through legislation allowing the retrospective actuarial confirmation of historic benefit changes that would otherwise be void because a formerly contracted-out salary related pension scheme did not obtain written actuarial confirmation of the change under section 37 of the Pension Schemes Act 1993 – see our Breaking news alert for further details.
Other developments of note
HMRC revises policy on employer recovery of input VAT on investment costs
HMRC’s 18 June Revenue and Customs Brief explains that, from 18 June 2025, employers can claim all the input VAT incurred on investment costs relating to the management of assets held in occupational pension funds. This means that HMRC’s 2014 to June 2025 view that investment costs incurred by the employer could be recovered if they were subject to dual use by an employer and trustees and that a ‘fair and reasonable’ basis apportionment had to be used no longer applies. Under the new policy, all input VAT incurred on investment costs is viewed as the employer’s and deductible subject to normal deduction rules.
Furthermore, VAT-registered trustees that supply pension fund management services to the employer and charge for them, can also deduct input tax, subject to normal deduction rules. Claims for additional input tax can be backdated, subject to the usual 4-year limit.
Climate-related transition plan consultation
The Department for Energy Security and Net Zero’s 25 June transition plan consultation request feedback on how the Government should implement its commitment to “mandating UK-regulated financial institutions (including banks, asset managers, pension funds and insurers) and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement”.
The consultation confirms that the Department for Work and Pensions (DWP) is going to review The Occupational Pension Schemes (Climate Change, Governance and Reporting) Regulations 2021 that require larger pension schemes to comply with certain climate-related governance, reporting and disclosure duties, using TPR evidence in support of the review. The DWP has also asked TPR to consider the ‘practicalities of transition plans for pension schemes’ – TPR will set up an industry working in this regard.
The consultation also includes a series of questions for responders including for pension funds on transition planning. It closes on 17 September 2025.
TPR
TPR blogs
TPR has published two blogs: a 12 June one on the significance of the Pension Schemes Bill and the need for the pensions industry to consider how they can make the changes a success, and a second on 17 June providing an update on the Innovation Support Service that has just been launched and which had its first get-together on 4 June.
On 18 June, TPR also issued a press release and speech transcript outlining the steps DC trustees need to take in preparation for the Pension Schemes Bill, based on four key themes that run through the Bill.
TPR plans for trustee sector
As outlined in its The changing nature of trusteeship speech on 5 June, TPR will soon launch a new strategy setting out its priorities on trustee standards. This will centre on five ‘key traits’ of ‘good trusteeship’: (1) being saver outcome focused (compliance with fiduciary duties); (2) being able to constructively challenge matters such as length of tenure and possible conflicts between responsibilities to members and employers; (3) being highly skilled and diligent; (4) collaboration with effective accountability; and (5) being data-led.
The new strategy will include higher accreditation standards and an assurance framework that will review trustee board effectiveness every two or three years. TPR is going to “bring trusteeship into line with other professions and corporate governance standards”.
TPR will also liaise with the Government on its trusteeship and governance consultation expected later this year.
The Pensions Ombudsman (TPO) round-up
TPO blog on Operating Model Review
TPO’s 9 June 2025 Operating Model Review blog provides an update on the improvement programme which is now in its second year. Despite new complaints being at a much higher level than expected, TPO notes that a “record volume of complaints concluded during the year”.
The target for 2025/26 is to increase closures by another 4% and this will be done through a combination of initiatives including increase use of expedited and short form Determinations, a focus on its complex cases portfolio and streamlining its jurisdiction including earlier formal responses and stricter deadlines.
TPO PDU to be wound down
TPO has confirmed that the Pensions Dishonesty Unit that was set up in November 2021 to investigate allegations of serious breaches of trust, misappropriation of funds and dishonest/fraudulent behaviour, is being wound down following the end of its pilot period.
Going forwards, on an exceptions basis, TPO will consider whether to investigate a PDU category of case – for example, where there is no alternative redress route.