Pensions

Written by Alison Thomas

Key developments in 2025

As predicted in last year's review, the Pensions Scheme Bill (the Bill) signalled some major changes coming for the sector.  The Bill had its first reading in Parliament in June 2025 and a list of over 200 government amendments was published on 1 September 2025.  Among the amendments was a framework for a legislative override for the ruling in Virgin Media v NTL Pensions Trustees II Ltd [2024] EWCA Civ 843 (Virgin Media) which sent shockwaves through the industry in 2024. 

Impacted schemes will need to meet certain criteria set out in the draft legislation to take advantage of the remedy provided in it (essentially, retroactive actuarial approval).  While most of the criteria are likely to be relatively easy to meet, particular attention should be paid to carve-outs for schemes where trustees have already taken 'positive action' whereby they have treated the amendment as void or where the validity of any amendment has already been adjudicated or remains at issue in legal proceedings begun prior to 5 June 2025. There are still lingering questions about how these carve-outs are to be implemented in practice (such as the scope of the term 'legal proceedings'), and so we will have to wait and see if any further guidance is issued to assist insurance and pension professionals in assessing their risks relating s37 issues going forward. The Virgin Meida remedies are set to come into force 2 months after the Bill receives royal assent.

What to look out for in 2026

Looking ahead, the Bill is set to bring more changes in 2026 and beyond.  The Bill sets out new frameworks for guided retirement, consolidation of small inactive pension pots, transferring DB surpluses back to employers, Value for Money (VFM) assessments, and expansion of the Pension Ombudsman's (TPO) powers.  Of particular interest to trustees, administrators, and insurers alike will be the amendment making TPO a 'competent court' for the purposes of enforcing equitable recoupment decisions from TPO.  This will allow trustees to directly enforce TPO decisions to recoup overpayments, when previously, trustees would have to incur the time and costs of obtaining a county court order in. The TPO power expansion is set to come into force 2 months after the Bill receives royal assent, while other changes are set to come into force gradually through 2030.

Cybersecurity is sure to be a hot topic for pensions next year, particularly with the final pensions dashboards integration deadlines looming.  Earlier this year, the ICO levied a £14 million fine against Capita (a frequent third-party contractor for pension schemes) for data breaches which included breaches concerning pensions data. This makes it clear that pension professionals must take data security seriously and ensure the proper controls are in place.  The pensions dashboard implementation is sure to magnify any pre-existing problems in schemes' data security processes and present fresh risks, as schemes must ensure their member data is accurate, accessible and yet secure to comply with the Pensions Dashboard Regulations.  Deadlines for integration already passed for the biggest schemes and master trusts earlier this year, and the timetable for integration continues into June 2026.