Wyn Derbyshire

PRACTICE NOTES

Enhanced protection in UK registered pension schemes: transitional post-2024 lump sum and death benefit allowances, protected PCLS, applications, loss, appeals and auto-enrolment

THIS PRACTICE NOTE RELATES TO REGISTERED PENSION SCHEMES Enhanced protection was among the initial two protections available to pension savers on A‑day (6 April 2006), when the registered pension scheme framework and the lifetime allowance concept were first brought in by the Finance Act 2004 (FA 2004). The second protection launched on A‑day was primary protection. In contrast to primary protection, anyone could apply for enhanced protection irrespective of the amount of their pension rights as at 5 April 2006. The purpose behind enhanced protection was to deliver transitional cover for individuals who, before A‑day, had already accrued pension savings that might otherwise have been negatively impacted by the advent of the lifetime allowance (which on A‑day stood at £1.5m). Although the lifetime allowance was removed with effect from 6 April 2024, enhanced protection still affords limited transitional safeguards in relation to an individual’s rights to (i) the lump sum allowance, (ii) the lump sum and death benefit allowance, and (iii) a tax‑free lump sum. For additional detail, see The benefits of enhanced protection, below. This Practice Note concentrates on enhanced protection. For a quick guide comparing the different allowance protections, see the Practice Note...

Pensions

PRACTICE NOTES

Estoppel in pension schemes: principles and case law on representations, reliance, and the limits of explanatory literature, group claims and administrator misstatements

Development of the doctrine of estoppel Estoppel is the commonly used label for the equitable doctrine which holds that where one individual (A) causes another (B), whether through words or conduct and whether explicitly or by implication, to accept a particular state of affairs as true, A ought not later to resile from the representations or acts that induced B to that belief, where it would be unjust or unconscionable for A to do so. Put shortly, where A has by statement or deed led B to that belief, A should not later contradict it if doing so would be unconscionable. Over time, the doctrine has expanded beyond its initial confines, and today the courts (both in England and Wales and elsewhere) recognise and apply a range of distinct forms of estoppel to meet the needs of particular cases...

Pensions

PRACTICE NOTES

Execution of Trust-Based Occupational Pension Scheme Deeds and Simple Contracts: Formalities, Witnesses, Delivery, Virtual Signings and Electronic Signatures (England and Wales)

This Practice Note applies solely to documents governed by the law of England and Wales. Its main focus is trust-based occupational pension schemes. A document is only enforceable by a court if it has been executed validly. It is therefore essential to follow the correct execution formalities. In pensions practice, the relevant paperwork will typically comprise trust deeds (contracts under seal) and various other forms of written agreements. While oral (ie non-written) agreements are uncommon in the pensions context, as a matter of principle they can be effective unless legislation mandates writing (for example, a contract for the sale of land under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (LP(MP)A 1989)). This should be kept in mind when examining, or seeking to manage, any specific pension scheme... Execution formalities for deeds Deeds concerning the trusts of occupational pension schemes are frequently encountered in pensions work. Examples include: definitive trust deeds and rules deeds of appointment and removal of trustees, and deeds

Pensions

PRACTICE NOTES

Executive retirement provision: FURBS, UURBS and EFRBS—UK tax treatment pre- and post-A-day and impact of disguised remuneration rules

Executive retirement benefit provision In much the same way as senior staff typically command higher pay than the wider workforce, they often also receive more generous pension support from their employers. Executive retirement benefits can be structured in several ways, such as: dedicated ‘executive’ tiers within group-wide occupational pension schemes offering richer terms than the main section executive-only registered occupational pension schemes trust-based, unregistered ‘top-up’ pension arrangements unfunded contractual pension promises Before A-day (6 April 2006), when the current registered pension scheme tax rules took effect, executive benefits exceeding the then applicable limits under the tax-approved pensions regime were commonly delivered through either: funded unapproved retirement benefit schemes (FURBS), or unfunded unapproved retirement benefit schemes (UURBS) Both FURBS and UURBS conferred certain tax advantages and were used effectively to top up executives’ existing occupational pension schemes. Since A-day, FURBS and UURBS are generally viewed as the funded and unfunded forms of Employer Financed Retirement Benefit Schemes (EFRBS) respectively. EFRBS are not within the tax regime that applies to registered pension schemes under Part 4 of the Finance Act 2004 (FA 2004)...

Pensions

PRACTICE NOTES

Final Salary to Career Average in Defined Benefit Schemes: Amendment Powers, Trustee Consent, Member Consultation, Employment Law, and Limits on Retrospective Change

Reducing the financial burden of defined benefit schemes on employers In recent years, a growing number of employers have sought to avoid or curb their exposure to the increasing costs of defined benefit pension schemes and the risks inherent in running them. To achieve this, many have either restricted entry to their defined benefit scheme—so that no new members are admitted—or, in more severe instances, closed the scheme to the future build-up of benefits. Alternatively, employers may look to amend the scheme’s operating provisions so that benefits accrue on a less generous footing. Each approach aims to limit costs and the scheme risks. One approach is to redesign the scheme so members cease to accrue benefits on a 'final salary' basis (i.e. by reference to pay at, or close to, the date their pensionable service ends) and instead on a 'career average' basis (i.e. by reference to pay averaged across a defined period, typically the member’s period of active participation in the scheme). Making a change of this nature amounts to a reduction in benefits and presents challenges from both an employment law and a pensions law standpoint...

Pensions

PRACTICE NOTES

Fixed Protection 2014 (UK): post-2024 lump sum and death benefit allowances, transitional tax-free amount certificates, loss/reinstatement, permitted transfers, joining schemes, death benefits, pension debits, auto-enrolment, appeals

THIS PRACTICE NOTE RELATES TO REGISTERED PENSION SCHEMES Through Schedule 22 of the Finance Act 2013 (FA 2013), the government brought in and implemented an allowance protection framework to accompany and facilitate the reduction in the lifetime allowance from £1.5m to £1.25m on 6 April 2014. This framework, called fixed protection 2014 (FP 2014), builds on the fixed protection regime first launched on 6 April 2012 (referred to as fixed protection 2012, or simply ‘fixed protection’). FP 2014 is the focus of this Practice Note. The initial, stated purpose of FP 2014 was to provide transitional protection for individuals who, before 6 April 2014, had already accumulated pension savings exceeding £1.25m, or who intended to do so on the assumption that the lifetime allowance would stay at least at £1.5m. Although the lifetime allowance was subsequently abolished with effect from 6 April 2024, FP 2014 still affords certain transitional protection concerning an individual’s entitlement to the following: the lump sum allowance, the lump sum and death benefit allowance, and a tax-free lump sum. For further detail, see The benefits of fixed protection 2014, below. Before 6 April 2023, individuals relying on FP 2014 were not able to continue to accrue...

Pensions

PRACTICE NOTES

Fixed Protection 2016 for UK Registered Pension Schemes: post-LTA abolition entitlements, transitional rules, applications, cessation events, transfers, new memberships, death benefits, pension debits and auto-enrolment

THIS PRACTICE NOTE RELATES TO REGISTERED PENSION SCHEMES By means of Schedule 4 to the Finance Act 2016 (FA 2016), the government brought in an allowance protection regime designed to sit alongside the cut in the lifetime allowance from £1.25m to £1m on 6 April 2016. Termed fixed protection 2016 (FP 2016), it mirrors earlier fixed protection regimes respectively launched on 6 April 2012 (fixed protection 2012, or simply ‘fixed protection’) and 6 April 2014 (fixed protection 2014). This Practice Note focuses on FP 2016, which is the subject of this Practice Note. The original purpose of FP 2016 was to give transitional protection to people who, before 6 April 2014, had already accumulated pension savings above £1m, or who expected to do so on the basis that the lifetime allowance would be maintained at no less than £1.25m. Although the lifetime allowance was removed with effect from 6 April 2024, FP 2016 still delivers limited transitional safeguards regarding an individual’s rights to (i) the lump sum allowance, (ii) the lump sum and death benefit allowance, and (iii) a tax-free lump sum. For added detail, see The benefits of fixed protection 2016, below. Prior to 6 April 2023, individuals...

Pensions

PRACTICE NOTES

Flexible retirement in registered occupational pension schemes: age discrimination, in-service pensions, accrual beyond 65, default retirement age repeal, life cover, auto-enrolment and transitional protections

This practice note chiefly concerns registered occupational pension schemes One outcome of recent pensions legislation reforms, including the introduction of anti‑age discrimination legislation (for further information, see Practice Note: Age discrimination for pension lawyers), has been to permit a new and wider flexibility in how members of registered pension schemes can accrue benefits and ultimately receive them from such arrangements. In particular, the past few years have witnessed the rise of the concept of ‘flexible retirement’ as a recognised approach. Concept of flexible retirement Broadly, flexible retirement captures the ability of members to: begin taking benefits from registered pension schemes whilst remaining in active service with the sponsoring employer of their pension arrangements; and continue to build up benefits, if they so choose, after normal pension date (typically age 65) and in ways that comply with the age discrimination legislation Legislative framework Since A‑Day (on 6 April 2006), registered pension schemes have not been required to retain a normal retirement date. Instead, the Finance Act 2004 (FA 2004) refers to a ‘normal minimum pension age’, which must be reached before certain authorised member payments can be made, aligning scheme practice with the age discrimination legislation...

Pensions

PRACTICE NOTES

Identifying the statutory employer in DB occupational pension schemes: definitions, s75 employer debt, scheme funding, PPF entry, and steps for closed schemes or where no statutory employer can be identified

This practice note applies to defined benefit occupational pension schemes The importance of identifying a scheme’s statutory employer(s) A fundamental element of the law governing occupational pension schemes, particularly defined benefit (DB) schemes, is that the main burden of supporting the scheme lies with its sponsoring employers, as a matter of law alone indeed. An employer might have exited the scheme previously without settling all liabilities owed to it; in such circumstances they may still be a ‘statutory employer’ even though they no longer participate. They may therefore continue to bear obligations in relation to the scheme. Under the registered pension scheme regime, various specific obligations fall upon those who qualify as ‘statutory employers’, a notion carried over from the earlier tax-exempt approval regime in force before A-day (for further information on the pre A-day regime, see The pre A-day pensions tax regime [Archived]). These duties will typically extend beyond those that a participating employer assumes under the scheme’s trust deed and rules. For example, scheme rules seldom require payment of any buy-out deficit, whereas the employer debt regime may do so. The Pensions Regulator emphasises that working out who a scheme’s statutory employers are is clearly crucial to: assess...

Pensions

PRACTICE NOTES

Ill-health early retirement in UK occupational pension schemes: trustee and employer decision-making, discretion, medical evidence, communications, challenges, and serious ill-health lump sums

THIS PRACTICE NOTE APPLIES TO REGISTERED OCCUPATIONAL PENSION SCHEMES The scheme rules Within trust-based occupational pension schemes, provisions for ill-health early retirement usually place decision-making responsibility with the trustees, the sponsoring employer, or both acting together. The precise role can differ from scheme to scheme, and the language used may require careful interpretation to apply correctly. In some schemes, the role is confined to determining whether the ill-health test set out in the rules is met. In others, there is a discretionary element in deciding whether to grant an ill-health pension to a member. Because definitions and scope vary, uncertainties may arise when construing these provisions. For further information, see Practice Note: Ill-health early retirement—Interpreting the scheme rules. The identified decision maker must evaluate every application on a case-by-case basis, taking into account the specific facts presented. The ill-health rule On receipt of an application for ill-health early retirement, the decision maker should first review the relevant provisions in the scheme’s governing documents. It is essential to establish who has the authority to decide whether a member is to be awarded ill-health early retirement benefits...

Pensions

PRACTICE NOTES

Ill-health early retirement in UK registered occupational pension schemes: interpreting scheme rules, pre/post A‑Day tests, medical evidence, trustee/employer roles, Ombudsman case law and unauthorised payment risks

THIS PRACTICE NOTE RELATES TO REGISTERED OCCUPATIONAL PENSION SCHEMES A key feature of registered occupational pension schemes is their capacity to offer ill-health (often referred to as 'incapacity') benefits to members. These benefits are particularly significant where members are required to leave employment ahead of their normal pension date (NPD) as a result of serious illness... This Practice Note considers the range of issues that may arise when construing the rules of a registered occupational pension scheme, including issues of interpretation and application, for the purpose of deciding whether ill-health benefits ought to be awarded to a member. For further detail on the considerations relevant to trustees of occupational pension schemes and/or employers who are required to make decisions in relation to members’ ill-health early retirement requests, see Practice Note: Ill-health early retirement—decision-making and exercise of discretion... Nature of ill-health early retirement benefits Ill-health early retirement benefits are calculated strictly in line with the scheme rules. Benefits provided by defined benefit occupational pension schemes are frequently—though not invariably—more generous in comparison with 'normal' early retirement benefits...

Pensions

PRACTICE NOTES

Independent trustees in occupational pension schemes: definition, appointment routes (PA 1995 ss 7 and 23) and TPR register, fees, disclosure and liability; includes forthcoming DWP consultation on a public trustee

FORTHCOMING DEVELOPMENT: On 15 December 2025, the Department for Work and Pensions (DWP) opened a consultation reviewing whether the powers allowing the Pensions Regulator (TPR) to remove and replace trustees should be enlarged or redesigned. It observes that TPR’s present statutory powers to suspend, bar or substitute trustees are narrowly framed, seldom used, and may involve intricate, quasi‑judicial procedures. Where a change of trustees is needed, TPR typically appoints independent trustees from its independent register, which, in reality, comprises a limited pool of professional trustee firms and can be an effective yet expensive outcome, notably for distressed schemes or orphan arrangements with no trustees in post. In this light, the consultation assesses the practicality of creating a government‑appointed public trustee to provide a secure, independent, last‑resort option when trustees must be appointed or replaced. Independent individuals may act for occupational pension schemes, either as the sole trustee or as one of several trustees, or by serving as directors of a corporate trustee as circumstances may reasonably require periodically...

Pensions

PRACTICE NOTES

Individual pension transfers: a practical guide to statutory rights, transfer conditions and scam safeguards, QROPS/overseas rules, partial/block transfers, DB‑to‑DC advice, and contracted‑out rights

FORTHCOMING DEVELOPMENT : Section 10 of the Finance Act 2022 will lift the normal minimum pension age (NMPA) from 55 to 57 on 6 April 2028, with an exception for members of the firefighters, police and armed forces public service pension schemes. The Finance Act 2022 will also allow members of registered pension schemes to draw benefits before 57 if, on or before 4 November 2021, they: had an unqualified right to take benefits; or were engaged in a substantive transfer to a scheme offering an unqualified right to a protected pension age under 57 on or before 4 November 2021. To use this new 2028 protection, the scheme’s rules must have included, as at 11 February 2021, an unqualified right to take scheme benefits before age 57. For further information, see Practice Note: Increasing the normal minimum pension age (NMPA) to 57—pensions impact. This guide is primarily aimed at trainees, newly qualified lawyers and others who are new to or unfamiliar with pensions law. This practice note applies mainly to trust-based occupational pension schemes. The ability to transfer accrued pension rights from one pension...

Pensions

PRACTICE NOTES

Individual Protection 2016 for UK registered pension schemes: post-2024 lump sum allowances, eligibility and application (by 5 April 2025), transitional reductions, HMRC withdrawal and appeals, and pension debit effects

THIS PRACTICE NOTE RELATES TO REGISTERED PENSION SCHEMES Through the Finance Act 2016 (FA 2016), the government created two protection regimes to accompany the cut in the lifetime allowance from £1.25m to £1m on 6 April 2016: fixed protection 2016 (FP 2016)—for more detail, see Practice Note: Fixed protection 2016 (FP 2016), and individual protection 2016 (IP 2016), which is the focus of this Practice Note IP 2016, like FP 2016, was originally designed to give transitional protection to people who had already accumulated pension savings on the basis that the standard lifetime allowance would stay at no less than £1.25m. Although the lifetime allowance was abolished with effect from 6 April 2024, IP 2016 still offers limited transitional protection regarding a person’s rights to (i) the lump sum allowance, (ii) the lump sum and death benefit allowance, and (iii) a tax-free lump sum. This follows abolition of the lifetime allowance with effect from 6 April 2024. For more information, see The benefits of individual protection 2016, below. In contrast to FP 2016, those holding IP 2016 have been able to keep building up benefits without forfeiting that protection since 6 April 2016—for added information, see After IP 2016 has...

Pensions

PRACTICE NOTES

Joint ventures: pension obligations from formation to exit—TUPE, Beckmann/Martin, auto-enrolment, scheme options, use of existing schemes and Pensions Regulator risks

The expression ‘joint venture’ (JV) is not a term with a precise legal definition under UK law. In essence, it denotes a commercial arrangement in which two or more participants agree to pool resources for the purpose of delivering an intended project, or another business activity. A JV vehicle might, for example, be established as a limited liability company, with each party acting as a shareholder. For more information on JVs, consult the Overview Document (available to those with a subscription in Lexis+® UK Corporate). Establishment of the JV vehicle—identify the pension issues When forming a JV between two or more sponsoring parties, the parties to the JV must identify the pensions issues that arise from setting up such a vehicle...

Pensions

PRACTICE NOTES

Lifetime ISA (UK): background, legislation, FCA/HMRC rules, eligibility, contributions, 25% bonus, authorised withdrawals and early-withdrawal charge (archived)

ARCHIVED: This archived Practice Note summarises Lifetime ISAs, covering their legislative basis and main characteristics. It is not maintained. What is the Lifetime ISA? The Lifetime ISA launched on 6 April 2017 for adults aged under 40. Individuals may save up to £4,000 each year and receive a government bonus worth 25% of their contributions. Money held in a Lifetime ISA can fund a first home purchase or be taken tax free once over age 60. For more detail, see Key aspects of the Lifetime ISA, below. In Budget 2025, the government signalled its intention to replace the Lifetime ISA with a new product targeted solely at first-time buyers. Opening a Lifetime ISA will still be permitted until the new product goes live, and current holders may continue contributing to their Lifetime ISA indefinitely. Factors which led to the creation of the Lifetime ISA Successive UK governments had long emphasised the need to promote long-term saving both within and outside private pensions. Over successive years, however, there were growing challenges regarding the suitability and fairness of the UK’s system of...

Pensions

PRACTICE NOTES

Money purchase benefits: revised statutory definition (Pensions Act 1993/2011), Supreme Court guidance (Bridge) and KPMG, implications for hybrid schemes, funding, employer debt, PPF, and transitional regulations

The question of the nature of money purchase benefits In recent years, significant attention has been directed at defining the nature of money purchase benefits. With the weighty and increasing financial obligations that defined benefit pension schemes may place upon employers, being able to specify, with precision and without ambiguity, exactly what a scheme’s benefits are has grown in importance. This matters especially for hybrid pension arrangements, which commonly combine multiple, differing kinds of benefits within a single structure. For more detail on the various forms of pension arrangements, see Practice Note: Types of pension arrangements for employees. For most practical purposes, a benefit will be a ‘money purchase benefit’ where it falls within the statutory definition of that expression in the Pension Schemes Act 1993, s 181. However, in certain contexts an equivalent definition can be found in another provision, for example in the Pensions Act 2008, s 99, in the context of auto-enrolment...

Pensions

PRACTICE NOTES

Negotiating service agreements for occupational pension scheme advisers: statutory appointment requirements, benchmarks, delegation, liability caps, indemnities, termination and fees

THIS PRACTICE NOTE APPLIES TO REGISTERED OCCUPATIONAL PENSION SCHEMES Given the intricacies of contemporary pensions law and scheme administration, it is little surprise that trustees of occupational pension schemes typically engage professional advisers to help them discharge their responsibilities. In addition, trustees of most registered arrangements are under a legal duty to appoint specified professional advisers, though certain schemes are excluded from these duties, depending on the character of the relevant pension scheme. For more information, see Appointing pension professional advisers and other service providers. Types of professional advisers Professionals commonly engaged in connection with (defined benefit) occupational pension schemes include: scheme auditor scheme actuary fund manager custodian of assets legal adviser Strictly, there is no statutory obligation on trustees of registered pension schemes to appoint legal advisers; however, where any individual is appointed as a legal adviser by someone other than the trustees and the trustees rely on that person’s skill or judgement, the trustees may incur penalties under the provisions of the Pensions Act 1995, s 10. An equivalent consideration applies to fund managers...

Pensions

PRACTICE NOTES

Occupational pension scheme governance for new lawyers: ESOG and ORA, risk management, contributions, conflicts, advisers, TKU, EDI, record-keeping and DC obligations

This guide is aimed at trainees, newly qualified lawyers and others who are new to pensions law, and also offers a high-level overview for in-house lawyers who are not pensions experts. Good scheme governance is crucial as it helps ensure a pension scheme is administered effectively and in members’ best interests. Specifically: it gives trustees clear oversight of day-to-day operations, responsibilities and delegations, promoting consistent compliance with legal and regulatory requirements it supports better decision-making and improved value for members Good governance spans several areas, including: the duty to have an effective system of governance (including internal controls) risk management conflicts of interest working with advisers equality, diversity and inclusion (EDI) record-keeping Effective system of governance (including internal controls) Since 13 January 2019, trustees of occupational pension schemes must put in place and operate an effective system of governance (ESOG) that includes internal controls. That framework should be proportionate to the size, nature, scale and complexity of the scheme’s activities. Among other matters, this duty requires schemes to undertake an own-risk assessment (ORA) to evaluate how well their policies...

Pensions

PRACTICE NOTES

Occupational pension scheme trustees: roles, decision-making, TKU, funding, liability and advisers—an introductory guide for trainee and newly qualified lawyers

This guide is chiefly directed at trainees, newly qualified lawyers and others who are new to, or not familiar with, pensions law. Background Trustees occupy a pivotal position within the pensions landscape. This is especially true for occupational pension schemes, although trusts and their trustees also appear in various other forms connected to pensions in everyday practice. For instance, pension and life assurance schemes may set up trusts to receive death-in-service lump sums that are owed to beneficiaries who cannot give 'good receipt' for monies due to them at the relevant time, including children below the age of legal majority and individuals who are otherwise legally incapacitated personally. Trust-based pension schemes remain governed by the ordinary principles of trust law (e.g. the overarching duty for trustees to act in the best interests of their beneficiaries, always ultimately subject, of course, to the applicable legal framework). Moreover, pensions case law and legislation place additional duties and obligations upon pension scheme trustees in practice...

Pensions

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