Wyn Derbyshire

PRACTICE NOTES

Occupational pension schemes: inalienability and anti-forfeiture, statutory exceptions (incl. GMP and s9(2B)), trustee charges/liens/set-off for overpayments, key case law, and forthcoming Pensions Ombudsman enforcement powers

FORTHCOMING CHANGE : The Pension Schemes Bill, anticipated to secure Royal Assent in 2026, contains measures that confer on the Pensions Ombudsman authority equivalent to that of a competent court for matters concerning the recoupment of pension overpayments. This reform removes the necessity for trustees to seek County Court involvement in such cases, thereby cutting legal costs, easing administrative burdens and promoting a swifter, more effective recovery process for schemes and their members. For more detail, see LNB News 05/06/2025 42 and Pension Schemes Bill—tracker — Pensions Ombudsman and overpayments. THIS PRACTICE NOTE APPLIES TO OCCUPATIONAL PENSION SCHEMES ONLY This Practice Note explores the extent to which accrued pension entitlements under registered occupational pension schemes may be surrendered or forfeited. The general rule against surrender—the inalienability rule Under section 91(1) of the Pensions Act 1995 (PA 1995), a member’s accrued benefit rights in a registered occupational pension scheme cannot be assigned, commuted, surrendered or charged, and no lien or set-off may be exercised over them. Moreover, any agreement purporting to achieve any of these outcomes is unenforceable. This is termed the inalienability rule. In circumstances where the inalienability rule applies, section 91(2)...

Pensions

PRACTICE NOTES

Occupational pensions and employment contracts: dual rights, express/implied terms, lawful variation (amendment powers, TUPE) and consultation duties

Employer-backed pension arrangements are, in effect, tax‑favoured savings structures through which employers fund future financial support for staff and their dependants in later life. Unsurprisingly, the employment relationship, shaped by the contract of employment and general law, is central to pension scheme governance. The key aspects of that role are relevant to occupational schemes, though many of the same points also apply where pension provision is via personal pension arrangements to which an employer contributes. Dual nature of accrued pension rights under trust and contract law Accrued pension rights under an occupational pension scheme can typically be categorised as: pension rights of scheme members (trust beneficiaries) arising under the trusts of the scheme, and pension rights arising as contractual terms of the employment relationship between an employer and employee Members’ rights under the pension scheme trust are, in principle, enforceable against the scheme’s trustees through the courts in the same way as those of any beneficiary under a trust...

Pensions

PRACTICE NOTES

Occupational pensions fraud compensation: eligibility, recoveries, Pensions Ombudsman interaction and levy funding of the Fraud Compensation Fund, claims mechanics and post-Dalriada treatment of pension liberation schemes

The Fraud Compensation Fund (FCF) was set up as a statutory fund under section 188 of the Pensions Act 2004 (PeA 2004) to provide compensation to trustees or scheme managers of occupational pension schemes where a scheme’s assets have been reduced due to an act or omission amounting to an offence of dishonesty. The FCF is administered by the Board of the Pension Protection Fund (PPF), which was created under PeA 2004, s 107. For details on the PPF’s general operations, see Practice Note: The Pension Protection Fund—an introduction. The obligation to make fraud compensation payments The PPF’s obligation to pay fraud compensation in respect of an occupational scheme arises under PeA 2004, Pt 2, Ch 4. The duty to make such payments is set out in PeA 2004, s 182. Under PeA 2004, s 182(1), the PPF must make one or more fraud compensation payments in relation to an occupational pension scheme if: the scheme is not a prescribed scheme or a scheme of a prescribed description, eg a scheme with fewer than two members or a small self-administered scheme (SSAS)...

Pensions

PRACTICE NOTES

Pension contribution failures: deadlines, payment schedules/schedules of contributions, monitoring, reporting to the Pensions Regulator and members, and penalties across DC, DB and personal schemes (including auto-enrolment).

Before 2012, employers were under no broad duty to either: pay contributions for their staff, or set up pension arrangements for their staff The arrival of the auto-enrolment regime in 2012 reshaped this landscape, and employers caught by the auto-enrolment rules must pay into employees’ pension arrangements in line with those requirements. For details of the minimum employer contribution rates, see Practice Note: Auto-enrolment—what types of scheme may be used? Requirement to process core financial transactions—DC occupational pension schemes From 6 April 2015, trustees of relevant schemes (essentially defined contribution (DC) occupational pension schemes, with certain exceptions) must ensure core financial transactions are handled swiftly and correctly. Notably, ‘core financial transactions’ encompass receiving and investing contributions. The Pensions Regulator (TPR) therefore expects schemes to maintain robust controls to monitor and secure the prompt, accurate payment of employer and member contributions, with a particular focus on employer processes and appropriate oversight of any sampling method used to verify accuracy when processing contributions. Where ongoing weaknesses or errors are found, TPR expects trustees to challenge administrators constructively and support measures to strengthen...

Pensions

PRACTICE NOTES

Pension dispute routes for scheme members—occupational and personal schemes, IDRP, Pensions Ombudsman, Financial Ombudsman Service, Pensions Regulator and FCA, plus court/tribunal options and state pension

THIS PRACTICE NOTE APPLIES IN RELATION TO OCCUPATIONAL AND PERSONAL PENSION SCHEMES Conflicts concerning pension schemes arise in many guises and contexts. The route for pursuing them will vary with the scheme’s nature and the particular circumstances, and may involve several possible forums available for resolution. This Practice Note concentrates on claims that dissatisfied members might bring in connection with their pension entitlements under either occupational or personal pension schemes...

Pensions

PRACTICE NOTES

Pension disputes: routes and forums for occupational, personal and state schemes—IDRP, Ombudsmen, regulators, courts and tribunals—an introductory guide for junior lawyers

This guide is chiefly directed at trainees, recently qualified solicitors and others who are new to, or inexperienced with, pensions law. Disagreements about pension schemes arise in many ways and, depending on the scheme type and the dispute’s character, there are different routes for pursuing them, and the applicable procedures for progressing those disputes can vary considerably. Disputes relating to occupational pension schemes An employee (or former employee) with a complaint about pension entitlements under a trust-based occupational scheme gained during employment may, subject to the specific facts, including the context and documentation on which their position depends, have two main paths to advance their claim: submit a written grievance to their employer—available where the pension issue can be shown to concern contractual rights under the employment contract in force at the relevant time (a contractual claim), or submit a written complaint to the scheme trustees (and possibly also the employer) if the matter arises from rights the individual holds under the trusts of the relevant pension scheme (for example, an alleged breach of trust claim) in the particular circumstances of the case Internal dispute resolution procedure Complaints against the scheme trustees will ordinarily first be handled by the...

Pensions

PRACTICE NOTES

Pension scheme types across state, public sector, workplace, occupational and personal arrangements (DB, DC, hybrid, cash balance, CDC, SSAS, EFRBS): an introductory guide for lawyers

This guide is chiefly intended for trainees, newly qualified lawyers and anyone else who is new to, or unfamiliar with, pensions law. A pension scheme is, at its core, a form of savings arrangement set up to provide benefits upon the happening of a triggering event, such as retirement or the death of a spouse, or another person upon whom the beneficiary was financially dependent. Pension schemes take many forms and operate widely in both the public and private sectors, and provision is also made by the State in the guise of the state pension. This guide considers the following examples of the different types of pension scheme: the state pension private sector pensions workplace pensions occupational pension schemes hybrid schemes cash balance schemes employer financed retirement benefit schemes (EFRBS) personal pension schemes self-employed pensions public sector pension schemes collective money purchase schemes (also known as collective defined contribution (CDC) schemes) For further details, see Practice Note: Types of pension arrangements for employees. The state pension The state pension has existed in various forms over the years, and immediately before 6 April 2016, it took the form of...

Pensions

PRACTICE NOTES

Pensions and insolvency: PPF entry and compensation, FAS, pre-pack sales, phoenix restructurings, TUPE and personal bankruptcy - an introductory guide

This guide chiefly targets trainees, newly qualified lawyers, and other individuals who are new to, or not yet familiar with, pensions law. This introductory guide explores relevant pensions law and practice matters that may emerge in the event of the insolvency, or potential insolvency, of employers sponsoring defined benefit (DB) and hybrid occupational pension schemes. Pension Protection Fund (PPF) The PPF is intended to offer support to members of eligible, underfunded DB pension schemes when sponsoring employers experience qualifying insolvency events...

Pensions

PRACTICE NOTES

Pensions in business (asset) sales: TUPE, section 75 debts, Beckmann/Martin rights, auto-enrolment and pension protection—A beginners’ guide for corporate transactions

This guide is primarily directed at trainees, newly qualified lawyers and anyone who is new to, or not yet familiar with, pensions law. Types of commercial transactions In essence, commercial deals fall into two broad categories: share purchases or share sales, that is, transactions centred on acquiring the shares of a target company (or a number of target companies). For an overview, see: Share sales and pensions—overview, and Practice Note: Pensions and share sales—beginners’ guide business purchases or business sales, that is, transactions resulting in the acquisition of businesses operated by sellers (in which case the buyer is not acquiring the actual companies running the target businesses within the sellers’ groups), and any employees engaged within the target businesses are transferred into the employment of the buyer by operation of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (the TUPE Regulations), SI 2006/246. These are commonly referred to as TUPE transfers. For an overview, see: Business sales / TUPE and pensions—overview Pension issues on a business sale As a general rule, from a pensions standpoint, business sales will usually present fewer issues—at least for the buyer—than share sales...

Pensions

PRACTICE NOTES

Pensions in share sales: due diligence for DC and DB schemes, section 75 debts, TPR notifiable events and clearance, moral hazard and criminal offences—an introductory guide

FORTHCOMING DEVELOPMENT : Under the Pension Schemes Act 2021, a secondary notifiable events framework is being introduced (pursuant to section 69A of the Pensions Act 2004) designed to capture certain employer‑related notifiable events in relation to a DB scheme. The framework requires the trustees to be copied into their notification to the Pensions Regulator, and for both the trustees and the Regulator to receive an accompanying statement, also known as a declaration of intent, setting out and explaining the notifiable event and how any detriment to the scheme is to be mitigated. On 8 September 2021, the Department for Work and Pensions (DWP) published a consultation on draft regulations which, among other things, in particular, detail the types of events that will fall within the scope of the secondary notifiable events regime...

Pensions

PRACTICE NOTES

Pensions Ombudsman for Trust-Based Occupational Schemes: Jurisdiction, Processes, Exclusions, Redress and Appeals, including 2026 Overpayment Recovery Powers

This guide is chiefly intended for trainees, newly qualified lawyers and anyone new to or unfamiliar with pensions law. THIS PRACTICE NOTE APPLIES TO TRUST-BASED OCCUPATIONAL PENSION SCHEMES This beginners’ guide reviews the Pensions Ombudsman’s remit to handle occupational and personal pension complaints and disputes, covering: the Ombudsman’s role who can submit a complaint to the Ombudsman and the method for doing so the kinds of complaints/disputes that are outside scope the Ombudsman’s remedies how to appeal the Ombudsman’s determinations What is the role of the Pensions Ombudsman? The Pensions Ombudsman investigates and determines: specified authorised complaints about injustice resulting from maladministration by trustees, managers and employers involved in occupational and personal pension schemes disputes of fact or law between specified authorised complainants and trustees, managers and employees connected with occupational and personal pension schemes any question about performing trustee duties when referred by a trustee who is the sole trustee of a scheme For further information about the nature of maladministration, see Practice Note: The Pensions...

Pensions

PRACTICE NOTES

PPF levy regime: zero conventional levy, ongoing Alternative Covenant Schemes (ACS) charges, forthcoming legislative reforms and administration levy abolition; methodology, risk measurement, appeals and deadlines

STOP PRESS : On 18 March 2026, the Pension Protection Fund (PPF) issued its levy policy statement and the final rules for 2026/27, together with guidance for pension schemes on meeting the levy rule requirements, and setting out how the PPF intends to operate in areas where the rules allow discretion. The accompanying guidance explains how schemes should demonstrate compliance with the levy requirements and clarifies the PPF’s expected approach wherever discretion applies. The PPF’s policy statement and final rules for 2026/27 implement its earlier announcement confirming that no PPF levy will be charged to conventional schemes for 2026/27, while a proportionate, risk-based Alternative Covenant Schemes (ACS) levy will be retained. The existing ACS framework is largely unchanged; however, the PPF has committed to accelerate its review of the ACS levy methodology to ensure it remains proportionate from 2027/28 onwards. Meanwhile, it has introduced a limited set of targeted refinements, as consulted upon, alongside a small addition to the ACS Guidance prompted by consultation feedback. The PPF further notes that its insolvency risk portal will close from 1 April 2026, and recommends that schemes download from the portal any information they may need in the future by 31 March 2026...

Pensions

PRACTICE NOTES

Pre‑6 April 2011 drawdown under UK registered pension schemes: unsecured and alternatively secured pensions, PCLS, GAD limits, death benefits, taxation, transfers and age‑75 rules [Archived]

THIS PRACTICE NOTE CONCERNS DRAWDOWN PENSIONS STARTED BEFORE 6 APRIL 2011 — ARCHIVED: This archived Practice Note outlines the legal framework applying to drawdown arrangements under registered pension schemes entered into before 6 April 2011, when these were referred to as ‘unsecured pension’ and ‘alternatively secured pension’. This archived Practice Note is not maintained. For information on the legal regimes for drawdown on or after 6 April 2011, see the following Practice Notes: Drawdown between 6 April 2011 and 5 April 2015 [Archived] Drawdown from 6 April 2015 Drawdown and death benefits from 6 April 2015 What is a drawdown pension? The A‑day tax simplification measures, effective from 6 April 2006, introduced a new drawdown regime for registered pension schemes, replacing the previously limited facility to draw down pensions that existed beforehand. The A‑day changes brought in the concepts of the ‘unsecured pension’ and the ‘alternatively secured pension’. Following amendments to the drawdown regime on and after 6 April 2011, the term ‘drawdown pension’ replaced those expressions. For further details on the A‑day changes, see Practice Note: The Finance Act 2004, A‑day and the pensions...

Pensions

PRACTICE NOTES

Pre-pack administrations: pensions issues—TUPE, DB liabilities, PPF entry, Regulator powers and phoenix risks (UK)

This Practice Note explores the issues that may arise when the sponsoring employer(s) of a pension scheme becomes the subject of a ‘pre-packaged administration’ (also referred to as a pre-pack administration or simply a ‘pre-pack’). Pre-packs involve selling an insolvent company’s business and/or assets under terms negotiated and settled before the company enters administration, with completion taking place straight after the administrator’s appointment or very soon after. What is an administration? An administration is an insolvency procedure intended to promote, where possible, the rescue of companies in financial distress (or at least their underlying businesses) and to avoid the necessity of liquidation if at all possible. First introduced in 1986, administrators—who are a type of insolvency practitioner—have powers to oversee administrations. The ambit of administration was expanded in 2003 to further encourage a ‘rescue culture’. Reforms included an automatic moratorium preventing enforcement of security and certain other creditor actions without the administrator’s consent or the court’s leave. From a pensions standpoint, a key point is that appointing an administrator does not, in itself, terminate the employment of individuals working for the relevant company...

Pensions

PRACTICE NOTES

Primary protection (FA 2004): post-6 April 2024 rules on lump sum allowance and lump sum and death benefit allowance, calculations, applications, late notifications, loss and auto-enrolment (UK)

THIS PRACTICE NOTE RELATES TO REGISTERED PENSION SCHEMES On A-day (6 April 2006), primary protection was among the first two safeguards offered to pension savers when the registered pension scheme regime and the lifetime allowance concept came into force under the Finance Act 2004; the companion protection was enhanced protection. Unlike enhanced protection, primary protection was only available if, on 5 April 2006, the individual’s total registered pension scheme rights—whether crystallised or uncrystallised—exceeded £1.5m. Its purpose was to provide transitional cover for those who had already accumulated pension savings before A-day that could otherwise have been negatively impacted by the new lifetime allowance, which was initially set at £1.5m. Although the lifetime allowance was abolished from 6 April 2024, primary protection still delivers limited transitional safeguards for an individual’s entitlements to: the lump sum allowance; the lump sum and death benefit allowance; and a tax-free lump sum. For more detail, see The benefits of primary protection, below. This Practice Note focuses on primary protection...

Pensions

PRACTICE NOTES

Private sector occupational pensions: indexation and revaluation from RPI to CPI—statutory framework, scheme rule interaction, key case law, PPF/FAS impacts, and forthcoming alignment of RPI with CPIH

FORTHCOMING DEVELOPMENT : Section 10 of the Finance Act 2022 is set to lift the normal minimum pension age (NMPA) from age 55 to age 57, with effect from 6 April 2028, while members of the firefighters, police and armed forces public service pension schemes are excluded from the change. The Act further provides that members of registered pension schemes may draw benefits before 57 where, on or before 4 November 2021, they already held an ‘unqualified right’ to access benefits, or were already in the midst of a substantive transfer to a scheme that, on or before 4 November 2021, conferred an unqualified right to a protected pension age of under 57. To rely upon this protection in 2028, the scheme’s rules must, as at 11 February 2021, have expressly contained an unqualified right to take entitlement to scheme benefits before reaching age 57. For additional guidance, see Practice Note: Increasing the normal minimum pension age (NMPA) to 57—pensions impact...

Pensions

PRACTICE NOTES

Reducing Benefits in Defined Benefit and Collective Money Purchase Schemes: statutory constraints, scheme amendment/consent, consultation/employment issues and HMRC scheme pension/unauthorised payments rules

THIS PRACTICE NOTE LOOKS AT PENSIONS REDUCTION IN THE CONTEXT OF ONGOING REGISTERED DEFINED BENEFIT PENSION SCHEMES Reducing a member’s pension entitlement (that is, cutting accrued benefits or a pension already in payment) within a continuing defined benefit occupational scheme gives rise to complex questions in modern pensions law, and there are several hurdles to clear—or navigate around—before any reduction can lawfully occur. Key obstacles include: sections 91–93 of the Pensions Act 1995 section 67 of the Pensions Act 1995 the provisions of the scheme’s governing documentation Further, decreasing a pension in payment may create adverse consequences under the pensions tax regime, which must be weighed carefully before proceeding (see Reducing pensions in payment—position under the pensions tax regime below). A reduction might be considered in various contexts, for example scheme restructuring or reclaiming overpayments, and both legal and tax impacts should be evaluated before any step is taken. For more illustrations of pensions reduction, see Common scenarios of pensions reduction below. Sections 91–93 of the Pensions Act 1995 Section 91 of the Pensions Act...

Pensions

PRACTICE NOTES

Registered occupational pension schemes: statutory and regulatory record-keeping duties—HMRC, anti-money laundering, pensions dashboards, winding up, DB funding, auto-enrolment, whistleblowing, data security and retention

THIS PRACTICE NOTE RELATES TO REGISTERED OCCUPATIONAL PENSION SCHEMES STOP PRESS 1: On 18 November 2025, the Pensions Regulator (TPR) urged trustees to treat member data as their foremost ‘strategic asset’ so schemes are prepared for pensions dashboards by the final connection date of 31 October 2026. After engaging with hundreds of schemes, TPR noted improvements in data quality but pointed to gaps in value data and excessive reliance on administrators, warning that neglect could put dashboard compliance at risk. It also issued refreshed member data guidance that brings together all existing data-related guidance, sets out clearer expectations for trustees and shares best practice to strengthen data management capability. TPR adds that it is reviewing data readiness among the UK’s largest schemes and will step up engagement in 2026. For more information, see LNB News 18/11/2025 43. STOP PRESS 2: On 19 November 2025, the Pensions Administration Standards Association (PASA) released guidance, ‘The Six Data Quality Dimensions for Pension Scheme Member Data’, together with a supporting Data Improvement Plan (DIP) template, following TPR’s updated member data quality guidance on 18 November 2025 (see above)...

Pensions

PRACTICE NOTES

Restructuring defined benefit pension schemes: options, amendment power limits, trustee consent, employment and consultation duties, and avoiding Pensions Act 1995 section 75 employer debts

Employers may seek to reshape a defined benefit pension scheme for several reasons, including keeping the scheme aligned with recent legislative and case law changes, aiming to harmonise pension provision across the relevant corporate group, and seeking to control or reduce future pension spend. Types of scheme restructuring Typical approaches to restructuring defined benefit arrangements include: adjusting the scheme's accrual rate for future service (eg from 1/60th of final salary per year to 1/80th) shifting from final salary to career average accrual rates running incentive exercises (eg enhanced transfer offers) closing to new joiners ending future accrual (with or without keeping a link to final salary) consolidating schemes buying out members' benefits For more information, see: Pension scheme incentive exercises Changing from final salary to career average accrual rates Scheme closure—overview Pension scheme mergers—considerations for employers and trustees De-risking—pension buy-outs and buy-ins Preserving a final salary link—what does it mean?...

Pensions

PRACTICE NOTES

Retirement Annuity Contracts (RACs): historic UK personal pensions, pre-A-day limits, approval and early access, and current registered scheme treatment and allowances

ARCHIVED This archived Practice Note reviews an earlier form of personal pension—the retirement annuity contract—and sets out how it contrasts with today’s personal pension arrangements. For further information on personal pension schemes, see Types of personal pension schemes—overview. Personal pension schemes—central role in private pensions sector Personal pensions, in their different guises, occupy a central place in the UK private pensions landscape today. Launched on 1 July 1988, they provide notable flexibility, being open to: employees (with employers allowed to pay in and obtain the tax relief without a tax charge arising for the employee) the self-employed (and, to a degree, individuals with no earnings) Retirement Annuity Contracts—background and aims However, personal pension schemes were preceded by another type—the Retirement Annuity Contract (RAC). Since the introduction of personal pensions on 1 July 1988, no fresh RACs can be established, but RACs set up before that date may continue and can still accept contributions. RACs were first created by the Finance Act 1956 as defined contribution arrangements for individual members...

Pensions

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