Legal News

TPR said on 30 July 2024 that most trustees meet their ESG duties. However, it also reported that, among around 3,500 plans examined, just 1% wholly failed to include links to pertinent disclosures, such as statements of investment principles or implementation. Trustees are required to explain how ESG considerations have been taken into account within these statements, which must appear on a website that is publicly available and easy to access. Members of the savings plans must be supplied with a link to that site. Mark Hill, TPR’s climate and sustainability lead, noted that a focus on 'compliance only is a missed......

In this issue: Funding and investment Types of private pension schemes Scheme amendments The Pensions Ombudsman Daily and weekly news alerts Dates for your diary Trackers Funding and investment Final draft DB funding code of practice laid before Parliament on 18 July 2024 After a lengthy wait and anticipation, on 26 July 2024 the Pensions Regulator ( TPR) finally released the final draft of the eagerly awaited defined benefit ( DB) funding code of practice (the DB funding code), which will apply to scheme valuations with effective dates on or after 22 September 2024, supplanting the code. The final draft DB funding code was placed before Parliament on 18 July 2024 and is intended to mirror the Occupational Pension Schemes ( Funding and Investment Strategy and Amendment) Regulations 2024, SI 2024/462 (the Funding and Investment Strategy...

Original news Mr N ( CAS-44368- C3K1)—24 April 2024 Summary The Pensions Ombudsman has only partly supported a grievance concerning the recovery of a pension overpayment. Owing to an error, the Scheme did not cease a premature retirement payment once the full Scheme benefits commenced. A change of position defence was unavailable to the complainant, since he was not in good faith; he ought to have noticed that the premature retirement instalment continued. Nevertheless, the Ombudsman awarded compensation for significant distress and inconvenience because the Scheme’s correspondence was unduly combative and the mistake ought to have been identified sooner. The decision underscores that good faith is an essential component of any change of position defence. The Ombudsman also observed that the Scheme ought to have detected the problem earlier and moderated the tone of its...

Original news Mr G ( CAS-30170- T9C1)—27 June 2024 Summary The Pensions Ombudsman partly upheld a complaint about reclaiming a spouse’s pension overpayment that continued in error after the complainant remarried. Given repeated warnings in annual newsletters that the pension would cease on remarriage, the Ombudsman decided the complainant ought to have appreciated this, so a change of position defence was unavailable. There was no limitation bar: the Scheme could not reasonably have detected the mistake sooner, and time only began running much later when it was discovered. However, the Scheme committed maladministration by assuming Treasury guidelines obliged recovery in every instance. It fettered its discretion by failing to weigh hardship and by not considering whether Mr G had any repayment defences. The Scheme was therefore ordered to pay £500 to Mr G for significant distress and inconvenience. The...

Original news Mrs E ( CAS-31211- Y0H1)—20 May 2024 Summary The Deputy Pensions Ombudsman upheld a complaint concerning a death benefit payment. The scheme had paid the benefit to the member's former spouse instead of his widow, maintaining they were compelled to do so because the benefits had been placed in a trust for her at the time. Yet the rules had been revised and, in effect, granted the trustees complete discretion over death benefit payments even where an individual trust existed. By not exercising that discretion in this case, the trustees committed maladministration and were instructed to revisit the decision and award compensation for significant distress and inconvenience. This determination from the Deputy Pensions Ombudsman serves as a clear reminder that when trustees possess a discretion, they must actively apply it. What were the facts?......

Summary The Pensions Ombudsman has partly upheld a complaint about reclaiming an overpaid pension. The statutory Teachers’ Pension Scheme did not properly exercise its discretion under its rules or the general law of unjust enrichment, and proceeded as though Treasury guidance obliged recovery. It also breached section 91 of the Pensions Act 1995 ( PA 1995) by recovering the overpaid sums without first securing a court order. The determination underlines that pension schemes must give genuine consideration to any discretion available to them. What were the facts? Mrs L was a member of the Teachers’ Pension Scheme. She retired from the Scheme in 2010 and received both a lump sum and a pension......

Summary The Deputy Pensions Ombudsman has upheld a complaint regarding imprudent and reckless investment choices made by a pension scheme trustee. The trustee committed numerous breaches of trust and infringed statutory investment duties by channelling funds into concentrated, unregulated and very high‑risk assets. The trustee also failed to handle conflicts of interest, deriving personal gain from certain investments and from the Scheme’s administration. The determination makes the trustee personally responsible for repaying nearly £4m to the Scheme. This decision serves as a clear reminder that pension trustees may face personal liability for breaches of their investment obligations. Such decisions were reckless and poorly judged. What were the facts? Mr R, Mr N and Mr O were all members of the AJC2 Pension Scheme (the Scheme). Mr Hoole acted as the Scheme’s sole trustee; the Scheme was said to have more than 100 members, although this figure was...

Kate Smith, the head of pensions at Aegon, stated on 30 July 2024 that Chancellor Rachel Reeves’s announcement in Parliament on 29 July 2024, confirming a cut to the communications budget, could significantly hamper the government’s capacity to promote the initiative to UK savers. The programme, which has suffered delays, seeks to help employees work out their income in retirement more accurately. The portals—known as dashboards—will allow Britons to find what experts reckon is £26bn in unclaimed savings across roughly 2.8 million lost pension pots. Smith cautioned the reductions could be costly and might ‘jeopardise the success of pension dashboards’......

Summary The Pensions Ombudsman partly upheld a complaint concerning an inaccurate retirement quotation. Depending on the erroneous figure was unreasonable, as it was not guaranteed and had been issued more than a year before the complainant left by reason of redundancy, notwithstanding his asserted reliance. He had also failed to mitigate any loss by seeking other employment or deferring the start of his pension. However, the Scheme was directed to pay the member £1,000 in compensation for significant distress and inconvenience. The Ombudsman’s decision serves as a reminder that complainants’ reliance on wrong information must itself be reasonable. What were the facts? Mr S was a deferred member of the Husqvarna Pension Scheme (the Scheme). In February 2018, he received a non-guaranteed pension estimate from the Scheme’s pension manager......

NOTE In Thomas v Southwark Council [2024] EWHC 2739 ( Ch), delivered on 31 October 2024, the High Court overturned, on appeal, the Pensions Ombudsman’s determination in this case to the extent it concerned the cohabiting partner’s pension, and remitted the appellant’s application to the respondent ( Southwark Council) for reconsideration and a fresh decision. For further details, see News Analysis: Council must reconsider appellant’s application for cohabiting partner’s pension ( Thomas v Southwark Council). Original news Mr S ( CAS-92836- R6B0)—23 February 2024 Summary The Pensions Ombudsman dismissed a complaint about a scheme’s refusal to pay a death grant and a cohabiting partner’s pension. The scheme properly exercised its discretion in declining the death grant, because the complainant had been incorrectly described as a husband on the death benefit nomination and was not identified in the will. There was also no evidence of financial...

According to the ABI, the eleven firms that have signed the Mansion House Compact — among them Aegon, Aviva and Scottish Widows — collectively held close to £800m in unlisted equity within their DC portfolios as of February 2024. Further signatories are L& G, Phoenix, Nest, Smart Pensions, M& G and Mercer. The ABI noted this represents 0.36% of the aggregate value of those funds overall, signalling solid progress consistent with the commitment made in 2023. Introduced by former Chancellor Jeremy Hunt in July 2023, the Compact set an accord between the government and nine of the largest pension companies to allocate at least 5% of DC holdings to unlisted equities by 2030......

The Pensions Regulator The regulator confirmed that its new defined benefit funding code explains to trustees, sponsoring employers and advisers the guidance and expectations for meeting legislation on funding and investment strategies. Described as the DB funding code, the framework promotes robust long-term planning and sound risk management behaviours, the regulator noted. Guidance to help trustees design funding plans that reflect the level of backing available from their sponsoring employers. Direction on how maturing schemes can reduce heavy reliance on sponsors over time. Neil Bull, the regulator’s executive director of market oversight, called this “the final step” in realising the new funding code. He said the DB funding code achieves the right equilibrium between security and flexibility for scheme-specific funding and investment approaches, in the best interests of members and employers. It will enhance......

Reeves told the House of Commons that the incoming Labour administration must raise certain taxes and pare back expenditure to close a £22bn “black hole” in the public finances attributed to its predecessor. She said the Budget would require tough choices to satisfy fiscal rules spanning spending, welfare and taxation. Initial steps worth £5.5bn will arrive in October 2024 to begin bridging the shortfall, alongside departmental savings of at least £3.2bn, leaving a further £2.3bn to be met through extra tax receipts. A second package totalling £8bn is planned for next year. While she spoke, the Treasury opened industry consultations on scrapping preferential tax treatment for high-net-worth, non-domicile taxpayers, and separately on bringing “carried interest” paid to fund managers within the scope of income tax rather than capital gains. The proposals would align carried interest with income tax rates rather than capital gains. Under the...

The Court of Appeal, sitting as a panel, unanimously threw out the telecoms group’s appeal on 25 July 2024, holding that the High Court correctly decided that, without a scheme actuary’s confirmation, any changes to benefits in contracted‑out, salary‑related pension schemes were of no effect. The appellate court determined that the prerequisites for altering the ‘rights to payment of pensions and accrued rights to pensions’—the so‑called section 9(2B) rights—cover pension rights for both past and future service and demand confirmation from the scheme actuary to satisfy the rules. Justice Christopher Nugee reasoned that, viewed through the purpose of the rules, it is hard to accept that the 1997 amending regulations’ revised definition of ‘ Section 9(2B) rights’ was intended to narrow the reach of the regulation so that it would cease to apply to forward‑looking reductions in the overall benefits package. From 1997 until 2016,...

TPR confirmed that, under the terms of the new agreement, ITV will bring the 2,800 Box Clever scheme members into its own pension arrangement. This move guarantees members their full entitlements, including back payments owed to them, replacing the reduced-level payments they had been receiving since 2014 under the Pension Protection Fund ( PPF). ' Today's announcement shows how we deploy our powers to safeguard savers and, if required, vigorously pursue matters through the courts to secure an acceptable outcome,' said Mel Charles, the regulator's interim executive director of regulatory compliance. Box Clever was created in 2000 as a joint venture between Granada (now part of ITV) and Thorn Finance Ltd, which has since been renamed Carmelite Capital Ltd. When the venture failed in 2003, the pension fund was left underfunded and, as a result, prompted TPR to examine whether ITV had...

Personal finance policy priorities differ among age groups, the company said. People above 50 put a premium on certainty around the state pension, while younger cohorts favour fresh schemes to help them onto the property ladder, in particular. It underlines differing priorities between generations. According to Aegon, its research — a July 2024 Opinium poll of 2,000 adults run for the firm — found 45% of over-60s viewed long‑term clarity on the state pension and the triple‑lock as a priority. Just 21% of under‑50s placed this among their chief concerns. Keir Starmer’s government, in the party manifesto, pledged to keep the triple‑lock, whereby state pensions rise by 2.5%, by average earnings growth, or by inflation — whichever proves higher......

In this issue: Funding and investment Pensions Regulator Types of pension scheme Daily and weekly news alerts Dates for your diary Trackers Funding and investment Government launches promised pensions review as part of its economic growth mission On 20 July 2024, the Chancellor of the Exchequer, Rachel Reeves, confirmed the start of the official pensions review, fulfilling Labour’s pre-election manifesto commitment. This review sits within the new administration’s drive to ‘boost growth and make every part of Britain better off’. It will prioritise channelling more investment, growing savers’ pension pots, and cutting waste across the pensions framework. Ministers contend that redirecting defined contribution schemes could unlock £8 billion of fresh productive capital for the UK economy, while raising individual pension pots by more than £11,000. The £360 billion Local Government Pension Scheme—hailed as ‘an engine for UK...

The Labour government’s move to appoint Emma Reynolds as a minister straddling two Whitehall departments—the Department for Work and Pensions ( DWP) and HM Treasury—marks a break with tradition, as pensions policy has historically sat within the DWP. Even so, the Treasury still oversees trust-based pension schemes via the Financial Conduct Authority ( FCA) and continues to steer pensions taxation policy. Alex Anslow, associate director at Sackers, noted: “ To my knowledge, this is the first formal post spanning both departments,” adding that it is “a welcome step towards a joined-up approach, given how inherently fragmented the pensions regulatory framework is.” The arrangement aims to better align oversight and policy levers across government. Tug Of War A century ago, pensions were chiefly shaped by tax policy under the Treasury’s remit. During the 1960s and 70s, they were re-cast as social policy and moved to the DWP, where...

On Saturday 20 July 2024, Chancellor Rachel Reeves revealed that the review forms part of a 'big bang' package of reforms the party plans to set out to accelerate economic recovery. Reeves and the Prime Minister, Sir Keir Starmer, met with figures from the pensions industry on Monday 22 July 2024 to agree the scope of the review. Labour's wording mirrors that of the former administration, when Boris Johnson and Rishi Sunak set out their own vision for the field. The Conservatives advanced their plans through the Mansion House reforms in 2023, intended to harness the £2.4 trillion pensions market as a catalyst for investment across the UK. Reeves said the review being launched is the newest stage in a big bang of changes to unlock growth, step up investment and secure savings for pensioners, adding that there is no time to lose......

The FRC announced five immediate alterations intended to ease the reporting load on existing signatories to the Code, which was established in 2010 to increase the overall level of transparency in investments. It obliges asset managers, pension firms and other financial institutions to steward capital responsibly and deliver long-term value for clients. Signatories must submit a detailed stewardship report to the FRC, clearly showing how the organisation has put the Code’s principles into practice over the past 12 months. The FRC said the swift updates ‘will clarify areas that signatories flagged as hard to tackle, cut the amount of reporting, and allow signatories greater flexibility in defining how they carry out their stewardship responsibilities.’ The changes permit signatories to reuse material from earlier reports and to include cross-references. The FRC added that the immediate reporting revisions to the Code are due to......