Article / 8 Oct 2025

Pensions Insight: October 2025

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Gateley Legal

September has been a busy month for pensions, marked by a range of significant developments across the sector.

It did not take long after Parliament returned from summer recess on 1 September for pensions to feature with multiple tabled amendments to the Pension Schemes Bill, including the proposed fix for Virgin Media issues. September has also seen an interesting case on the interpretation of state pension age in a scheme’s rules, the publication of an important Pensions Ombudsman decision on the scope of trustees’ due diligence duties on pension transfers and a raft of materials from TPR. Read on for more details.

Government publishes Virgin Media legislative fix

Read our in-depth insight on the legislative fix that the Government has introduced into the Pension Schemes Bill to address the issues arising from the Virgin Media case to find out how the solution will operate and what schemes will need to do to validate amendments made without the necessary section 37 confirmation. The newly introduced Pension Schemes Bill clauses were approved by the Public Bill Committee of the House of Commons alongside other tabled Pension Schemes Bill amendments during its scrutiny of the Bill which completed on 11 September 2025.

The Financial Reporting Council confirmed on 3 October 2025 that it will produce technical guidance to assist scheme actuaries when being asked to provide confirmation that historic rule alterations would not have prevented a scheme from meeting the reference scheme test standards.

Cases of note

Farley v Paymaster: Court of Appeal overturns High Court’s decision that disclosure of personal data is required for a breach of law

In Farley v Paymaster (1836) Ltd [2024], the High Court struck out the majority of 432 claims brought by police officers after pension benefit statements were sent to outdated addresses. The Court found that without evidence that the statements were opened and read by third parties, there was no actionable misuse of private information or breach of data protection laws. Only 14 of the 432 claims were allowed to proceed, as these claimants had a realistic chance of proving third-party access, though the Court noted challenges in proving actual misuse or damage.

The strike out order was appealed on the basis that it was wrong to decide that disclosure was an “essential ingredient of a viable data protection claim”. The Court of Appeal agreed, holding that: 

  • the appellants had a reasonable basis for alleging that data protection laws had been breached and actual disclosure of data is not required;
  • there is also no requirement to meet a seriousness threshold when considering compensation for a breach of data protection law – a case cannot be dismissed on the basis that such a test has not been met;
  • a fear of third-party misuse or dissemination by an unauthorised third party can qualify as ‘non-material damage’ for which compensation may be payable if the “alleged fear is objectively well-founded but not if the fear is (for instance) purely hypothetical or speculative” – the reasonableness test applies in relation to the facts that were or should have been known to the claimant at the time they experienced fear;
  • the police officers’ claims should be remitted to the High Court to be reviewed on a case-by-case basis; and 
  • the claims, as a whole, should not be dismissed as an abuse of process due to being “factually incredible, insufficient or untenable as a matter of law, or so trivial”…, although this did not necessarily mean that upon review an individual case might be found to be so.

Trustees as data controllers are responsible for a significant amount of personal data. This case confirms that liability under data protection law does not require actual disclosure of data or a need to meet a seriousness threshold. Furthermore, compensation might be payable if a breach causes objectively reasonable fear of dissemination or misuse of personal data by an unauthorised third party.

Spirit (Legacy) Pension Trustee Limited v Mrs Isabelle Fisher Alexis

The High Court has overturned a Pensions Ombudsman decision that a bridging pension provided to state pension age (SPA), where SPA was defined in the 2001 rules by reference to the Pensions Act 1995 (PA95) meaning, continued until age 66 rather than to age 65, the member’s SPA at the date the rules were executed. The High Court decided that instead of having the dynamic interpretation favoured by TPO, the correct interpretation of SPA in the rules was a ‘static’ one because: 

  • that the SPA reference was shorthand for reproducing the complex SPA tables in the PA95 was not surprising and did not suggest an “intention to refer to the legislation as it might apply from time to time” – it would be rare to use such shorthand intending that it would “vary unpredictably with the vagaries of future legislation”;
  • of greater significance was that there was explanatory wording in the rules that the purpose was “for equalisation of pensionable ages for men and women”, which supported a construction that the PA95 reference was not intended to include future increases to SPA;
  • the way in which the PA95 reference was used for bridging pensions was different to other legislative references in the 2001 rules which did have a “normative function”, such as compliance with contracting-out or preservation of benefits legislation (and the SPA reference under consideration was not used for a ‘normative function’ but to set eligibility conditions for a bridging pension under the rules – such eligibility was not contained in statute but in the rules); and
  • a static interpretation tied in with the statutory context – in 2001, SPA had most recently been reformed by the PA95 for equalisation reasons; there had been no change since then, and there was nothing that would indicate there would be future SPA increases.

The case turns very much on its facts and the specific wording used in the rules when referring to the statutory meaning of SPA. Nevertheless, it does provide useful explanation of when a court might prefer a static interpretation of a statutory provision rather than a dynamic one.

The Pensions Ombudsman (TPO)

TPO lead determination on due diligence statutory transfer requirements before November 2021

TPO has published an important determination that sets out its approach on trustee due diligence obligations regarding statutory transfer requests from an occupational pension scheme between February 2013 and 30 November 2021 when transfer regulations introduced a new red/amber flag transfer procedure. 

The case concerned a member’s 2014 statutory transfer to a small, self-administered scheme that the member later alleged was a ‘scam’ involving investment in a share of an overseas resort hotel room. The member complained that the trustee had not carried out adequate due diligence checks for scam warning signs and had not notified him about such signs. 

The complaint was not upheld. TPO determined that there was no legal or regulatory requirement 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. The Action Pack said that if any of the warning signs listed applied, trustees could use the checklist to obtain further information about the receiving scheme and the transfer request. TPO also found that there was no duty of care in either tort or equity to carry out such steps. 

However, TPO noted that the position would have been different if the trustee had voluntarily assumed responsibility to carry out due diligence. The trustee in this case had not done so, nor had it made a promise or representation to carry out due diligence over and above that required under statute upon which the member might have reasonably relied. However, if it had, this would have imposed a duty to take reasonable steps when undertaking due diligence. 

TPO noted that the position in respect of non-statutory and personal pension scheme transfers differs – determinations on both these will be published in due course. 

Legislation

Multiple proposed amendments to the Pension Schemes Bill 

On 1 September 2025, the Government tabled multiple amendments to the Pension Schemes Bill covering nearly all areas of the Bill, although most were technical/minor in nature – most, aside from a few minor ones, have been accepted during the Public Bill Committee’s scrutiny of the Bill which completed on 11 September 2025. 

In addition to the proposed section 37/Virgin Media solution provisions, key amendments to note include the following.

  • Power to pay surplus to employer from ongoing scheme: Clarification that the new provisions only apply to ongoing schemes and not to those winding up. An amendment has also been added allowing for the surplus legislation to be modified in certain cases, e.g. for sectionalised schemes. Non-government amendments to require the application of pre-97 increases to pensions and payments in line with CPI inflation before surplus could be paid out were rejected.
  • Defined benefit (DB) superfunds: The onboarding conditions have been amended including a softening of the capital adequacy and technical provisions thresholds that must be met, moving to it being “reasonable to expect” they will be met rather than having to be met (capital adequacy) or a high likelihood that it will be so (technical provisions).
  • Defined contribution (DC) scale and asset allocation: TPR will be given the power to issue a risk notice to a master trust or group personal pension provider where there are concerns and the scheme will or is likely to stop meeting the scale and asset allocation approval conditions. TPR will also be able to issue a penalty for up to £100,000 for failing to meet the approval conditions but accepting auto-enrolment pension contributions. The asset allocation requirements are also amended to apply to default funds only and to allow a minimum asset allocation percentage to be applied to either all of a scheme’s default assets or to just specific subsets of the default fund. The DC scale and asset allocation amendments have been agreed by the Public Bill Committee. The Government’s reserve power to mandate that a certain percentage of assets must be a specific type or held in a certain location has not been dropped despite much parliamentary debate about this provision and a proposed amendment to delete this power.
  • DC default arrangement: A new chapter on non-scale default arrangements (i.e., not an approved main scale default arrangement) has been added to the Bill. This will allow regulations to be introduced that can restrict a pension provider from setting up a non-scale default arrangement, consolidate such arrangements into a main scale one, and require a government review of default arrangements.
  • Non-government amendments: There were several tabled amendments from non-government sources, including clauses requiring the indexation of PPF and Financial Assistance Scheme compensation for pre-1997 service which is not presently provided – these have not made their way into the Bill. An amendment abolishing the PPF administration levy has been withdrawn following government confirmation that it will introduce this change later. 

The Bill as amended in Public Bill Committee can be accessed here.

The Pensions Regulator (TPR)

Warning on impersonation fraud risks

On 10 September 2025, TPR published an industry alert and blog on an increased use of impersonation fraud tactics in the pensions sphere. TPR warns of fraudsters trying to obtain unauthorised access to members’ pension accounts by: 

  • hacking email accounts and then impersonating members; 
  • accessing account information to set up fake accounts that can be used to transfer over stolen money; 
  • accessing accounts because of weak security; and 
  • accessing pension funds of deceased members. 

Fraudsters are also impersonating brands and contacting pension scam victims to take action to obtain compensation but then stealing data and money.

TPR asks trustees and administrators to ensure that they:

  • educate members on ensuring their pension details are fully secure (e.g. strong passwords and two-step verification) and signposting members to City of London Police Identity fraud guidance and to the Stop! Think Fraud website.
  • review identity fraud prevention systems and controls including member verification and account access; and
  • report fraud and cybercrime (including suspicions) to Action Fraud. 

Market oversight report on administrators

TPR’s 11 September administrator market oversight report on its recent engagement with 15 scheme administrators highlights a positive change in how administration is valued, improved investment in technology including AI and staff, and strong risk and change management. TPR’s engagement did, however, reveal some challenges including difficulty in staff recruitment and retention, outdated systems, historic underinvestment, poor-quality data and sporadic gaps in AI governance. Areas for future improvement include:

  • prioritising investment in administration services;
  • improving data, key to the success of dashboards and planning for the impact that dashboards will have on administration services;
  • trustees having sufficient knowledge and understanding of administration and playing a bigger role in improving standards;
  • building risk and change management into day-to-day operations;
  • ensuring that cyber security procedures are sufficiently robust given the gaps identified; and
  • trustees periodically reviewing their administration contracts including ensuring that service level agreements prioritise accuracy and member experience as well as timings.

Consultation on new enforcement strategy and approach

On 16 September 2025, TPR published a new approach to enforcement consultation (closes on 11 November 2025) that reflects its recent move towards a “more prudential style of regulation” and “toward smarter, collaborative, and risk-based interventions that deliver real-world results”.

To achieve this, TPR is making a number of changes to enforcement including: moving from outputs to delivering ‘real-world outcomes’ such as preventing harm; focusing on issues that present the greatest risk and saver harm with the greatest impact; concentrating resources on the most egregious behaviours; internal teams working more closely together to act earlier; continue working with external bodies such as on scams and serious economic crime; deploying staff more flexibly and effectively; using data and digital tools to assist; and publishing information about enforcement and expectations to set precedents and change behaviour. 

TPR speech on the changing nature of DB pensions outlines trustee governance expectations

TPR’s 17 September 2025 speech on the changing nature of DB pensions provides a useful oversight of TPR’s current thinking on trusteeship and governance.

Funding: 75% of schemes are in surplus on a low dependency basis with half having buy-out surplus. This means trustees have new options including surplus returns. 80% of schemes should meet Fast Track valuation requirements.

Options – return of surplus: TPR refers to its emerging models guidance and recommendation that trustees produce a surplus policy “with employers, inclusive of member views, and informed by legal and covenant advice”.

Trustee standards: As strategic investment decision-makers, trustees must be able to assess productive finance. TPR is ‘raising the bar’ on investments including there being improved strategic thinking and leadership and ‘rigorous, professional and fit for purpose’ investment governance including on ESG and generally on Equity, Diversity, and Inclusion (EDI) matters and ‘contemporary needs’ such as data and dashboards.

Engagement with professional trustees: Reference is made to TPR’s current focus on professional trustee firms including how they govern schemes and manage conflicts. It will be producing guidance, setting out its expectations and publishing a new trusteeship strategy and best practice insights.

TPR LDI market oversight report

TPR’s 18 September LDI market oversight report assesses how well pension schemes have prepared for leveraged Liability Driven Investment (LDI) risk following the autumn 2022 gilt market disruption, action taken to improve operational resiliency and what trustees should focus on going forwards. Key highlights include:

Changes since 2021: The LDI market has fallen from around £1.5 trillion at the end of 2021 to around £0.7 trillion at 31.03.25. The duration of LDI exposure has also fallen from around 20 years to 13 years.

Improvements made: Resilience has improved as a result of changes made including having a 250 basis points minimum buffer, strengthened recapitalisation processes, restoration of depleted buffers within a timely manner (5 days), pre-agreed asset sale plans for raising collateral when required and having a greater focus on liquidity management (regular monitoring, stress tests and scenario analysis to avoid having to sell assets under pressure).

Areas for improvement: There are still areas where improvements need to be made. Trustees should build in flexibility in the cash call structure to prevent having to dispose of assets without consideration of market pricing. They should also ensure collateral assets are adequately diversified to prevent herding of asset sales by type, leading to reduced pricing and struggling to find a buyer. Resilience tests should also be conducted periodically including on operational processes and confirming that depleted buffers can be restored within 5 days. 

Schemes with LDI investment strategies should ensure they meet TPR expectations including the areas marked as requiring further consideration.

The Pension Protection Fund (PPF)

PPF confirms 2025/26 levy will be zero

The PPF has confirmed that it will not be charging a conventional (the position may be different for ‘alternative covenant schemes’ such as superfunds) PPF levy for 2025/26, a move that will benefit 5,000 DB schemes. This follows the flexibility provisions in the Pension Schemes Bill that will allow the PPF to restore the levy should it need to do so in the future. 

Pensions dashboards

The Pensions Administration Standards Association (PASA) has released the following materials:

Expert pensions advice

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