Legal Practice Notes

What is a cash balance scheme? Put simply, a cash balance pension scheme is an arrangement where a member accumulates a guaranteed pot of money during their pensionable service, which is then used to provide retirement benefits. When the member retires, this pot is generally applied to buy an annuity (or to deliver other retirement benefits) on whatever terms can be obtained in the market at that time. This kind of scheme blends features of a defined benefit ( DB) arrangement with aspects of a defined contribution ( DC) arrangement. That mix is important because it influences how the risks inherent in any pension arrangement are shared between the member and the sponsoring employer, as explored in this Note. Benefit structures Cash balance schemes come in different forms, but they broadly fall into two categories depending on how the retirement cash sum is...

Employers running final salary pension schemes, a form of defined benefit arrangement, have sought to curb financial exposure, with many reshaping benefits, shutting to new joiners or halting future accrual. Even where future accrual stops (a ‘frozen’ scheme), members may still keep a link to their final salary. If that link remains, and pay rises are subdued, a member’s deferred, revalued preserved pension can end up higher than anticipated compared with having no final salary link, which may lessen or even eliminate the expected impact of the employer’s liability reduction plans. This Practice Note looks at the meaning, preservation and consequences of a final salary link. For issues triggered by closing a defined benefit scheme to future accrual, see Practice Notes: Closing a pension scheme to future accrual—employer considerations and Closing a pension scheme to future...

Variation—pension sharing orders This Practice Note sets out guidance on changing pension sharing orders and pension attachment orders arising in family cases, alongside appeals. It also outlines the procedural elements for both variation and appeals, and addresses applications for capitalisation. Variation before final order/decree absolute Where no final order/decree absolute of divorce, dissolution or nullity has been made—and the pension sharing order has therefore not taken effect—the court may vary or discharge that order. An application to vary may only be issued before the final order/decree absolute is granted. Once a marriage or civil partnership has been dissolved, or a final nullity order pronounced, no application can be brought to vary a pension sharing order, even if it is yet to take effect. Filing an application to vary stops the pension sharing order from taking effect while the application is determined. Such...

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...

STOP PRESS : The Pensions Research Accountants Group ( PRAG) has released the Statement of Recommended Practice, Financial Reports of Pension Schemes 2026 ( SORP) following broad pre-consultations with stakeholder groups and a thorough review of feedback to the formal consultation, which closed in Q4 2025. SORP 2026 applies to accounting periods starting on or after 1 January 2026. The SORP was last overhauled in 2018, and the latest amendments ensure alignment with Financial Reporting Standard 102 and current pensions legislation and regulations. Consultation respondents largely endorsed the proposed changes in the three principal areas—fair value determination, investment risk disclosures and sole investor pooled arrangements—considering them appropriate and proportionate. This Practice Note is being updated to reflect these changes. THIS PRACTICE NOTE APPLIES TO UK OCCUPATIONAL PENSION SCHEMES This Practice Note on pension scheme annual reports and accounts is based on: the latest...

Background— EU law in the UK Pre-exit day The European Communities Act 1972 ( ECA 1972) was enacted to implement the United Kingdom’s obligations, as a Member State, under the relevant EU treaties and to ensure adherence to EU law. Under ECA 1972, s 2(1), certain EU rights and obligations intended to have direct effect applied in the UK without the need for additional domestic legislation. This encompassed rights under the EU Treaties and EU regulations setting out detailed legal rules. Other forms of EU law took effect via UK regulations made under ECA 1972, s 2(2), or, in some circumstances, through separate Acts of Parliament. This pathway covered EU directives, which stipulate overarching aims or frameworks while leaving each Member State to make its own provision to secure the required legal outcome. In its operation within Member States, EU law is...

FORTHCOMING DEVELOPMENT : The key provisions of the Pension Schemes ( Conversion of Guaranteed Minimum Pensions) Act 2022 will commence on a day still to be designated. Regulations to be made under the Act will cover (i) requirements for survivor benefits following conversion, and (ii) the scenarios in which employer consent is unnecessary or where another person’s approval will instead be required. Separately, the government’s 2019 guidance on using the GMP conversion legislation is expected to be updated to reflect recent developments, including measures in the 2022 Act. For further information, see: Pension Schemes ( Conversion of Guaranteed Minimum Pensions) Bill Hansard: Pension Schemes ( Conversion of Guaranteed Minimum Pensions) Bill, Volume 820: debated on Friday 25 March 2022 Hansard: Pension Schemes ( Conversion of Guaranteed Minimum Pensions) Bill, Volume 821: debated on Wednesday 27 April 2022 This Practice Note outlines and...

This Practice Note focuses on the practical issues arising on the winding-up of defined benefit ( DB) pension schemes Where a wind-up is anticipated, many of the points outlined below can be addressed in advance, and, preferably, a project plan should be prepared and agreed by the trustees and the employer. In such a case, the scheme employer must also consult any employees who are affected and ensure it meets its statutory auto-enrolment duties (further details on both are provided below). Attention should additionally be given to whether changes could, or should, be made to the scheme’s trust deed or rules before winding-up begins because, subject to the scheme’s amendment power, alterations may not be permitted once winding-up has been triggered. For more information, see Practice Note: Interpretation of restrictions on pension scheme amendment powers. In certain situations, advance planning will not be...

What is a guaranteed annuity rate ( GAR)? Many pension contracts arranged before 1988 included a GAR for members. This gives a right to a specified annuity rate, which applies if the member purchases an annuity from their pension provider. It can deliver a higher income than the open market might offer, particularly where the GAR was set when market annuity rates stood above current levels. A GAR can therefore be valuable. However, it is crucial to review the terms and conditions linked to any GAR, as some include restrictions, for example: availability only at the scheme’s selected retirement date (so it may not apply on early or late retirement)—although some providers allow a grace period so the GAR remains valid beyond the member’s normal retirement date; or the GAR may not apply if joint-life cover is chosen rather than single-life, or if...

ARCHIVED: This Practice Note is archived and no longer maintained. It offers contextual guidance on the main types and doctrines of EU law and legislation, and considers how Brexit affects EU-derived law and legislation in the UK, as background reading. For more detail on this topic, see the Practice Notes: Brexit—key legislation explained and Retained EU law and assimilated law. For broader Brexit materials, see: Brexit collection. This Practice Note is not maintained. Effect of Brexit on EU law in the UK The UK ended its EU membership at 11 pm on 31 January 2020 (exit day). From that moment, directly applicable EU law no longer applied to the UK under the EU Treaties, and the UK was no longer bound by duties under those treaties, which oblige Member States to ensure their domestic legislation complies with obligations set out in EU laws. EU law itself, and its...

This Practice Note sets out the considerations that apply on and after 6 April 2016 (the date on which contracting-out on a salary-related basis—also described as DB contracting-out—was abolished) when undertaking a ‘buy-out’ of the following contracted-out salary-related ( COSR) rights: guaranteed minimum pensions ( GMPs)—the benefits built up by members of COSR schemes as a result of contracting out between 6 April 1978 and 5 April 1997 Section 9(2B) rights (also called post-1997 COSR rights)—the benefits built up by members of COSR schemes as a result of contracting out between 6 April 1997 and 5 April 2016 The legislative requirements that apply differ according to whether the relevant COSR rights are GMPs or Section 9(2B) rights. For guidance on the considerations that applied before 6 April 2016 to the buy-out of COSR rights, see Practice Note: Buying out Section 9(2B) rights and GMPs before 6 April 2016 [...

This practice note concerns schemes that were contracted-out salary-related ( COSR) schemes before 6 April 2016 From 6 April 2016, salary-related contracting-out (often referred to as DB contracting-out) came to an end. Any schemes that had COSR status immediately beforehand automatically stopped being contracted-out with effect from that date. This practice note outlines the statutory requirements applying on and after 6 April 2016 to schemes that were COSR schemes before then. For background on the ending of DB contracting-out, see Practice Note: Abolition of DB contracting-out—an introduction [ Archived]. For a general explanation of contracting-out, see Practice Note: What does ‘contracting-out’ mean for pension lawyers? They therefore no longer hold contracted-out status. Legal framework for former COSR schemes The principal contracting-out requirements for former COSR schemes are chiefly contained in the following legislation: Part III of the Pension Schemes Act 1993 ( PSA 1993) the...

This Practice Note centres on the FCA requirement at COBS 19.5 for workplace personal pension schemes to set up an independent governance committee ( IGC). For wider detail on the governance duties that apply to workplace personal pension schemes, see Practice Note: Governance requirements applicable to DC workplace pension schemes— Governance requirements for workplace personal pension schemes. What is an IGC? Since 6 April 2015, certain FCA‑authorised pension providers must have a governing body called an IGC, although in some limited scenarios a governance advisory arrangement ( GAA) may take its place. For more on GAAs, see Alternative arrangements to IGCs—governance advisory arrangements ( GAAs), below. IGCs act independently of the provider and are intended to perform a function akin to trustees of occupational pension schemes. An IGC is established to represent the interests of the following groups so that their investments benefit from an...

This practice note concerns defined benefit occupational pension schemes. What is a section 75 debt? Sections 75 and 75A of the Pensions Act 1995 aim to ensure defined benefit occupational pension schemes are properly funded on wind-up, or when the sponsoring employer goes into liquidation. In a multi-employer arrangement, a liability also arises for any employer that stops employing active members while another employer still has at least one active member (an ‘employment cessation event’), even though neither the scheme nor the exiting employer is being wound up. For further detail on when section 75 debts arise and how they are assessed, see the following Practice Notes: How to deal with a section 75 debt—an introduction When is a section 75 debt triggered? Calculating a section 75 debt What is the tax treatment of a section 75 debt? When a section 75 debt is payable, the key tax question is whether the payer can...

THIS PRACTICE NOTE APPLIES TO MULTI‑ EMPLOYER DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES This Practice Note examines relevant transfer deductions—covering the statutory framework, the method of calculation and potential practical challenges. It addresses their legislative basis, approaches to calculation and the kinds of practical difficulties that may arise. When can a relevant transfer deduction apply? Such deductions arise where a statutory debt (the section 75 debt) is triggered in relation to a participating employer in a multi‑employer pension scheme under the Pensions Act 1995, ss 75–75A, and the Occupational Pension Schemes ( Employer Debt) Regulations 2005, SI 2005/678 (the Employer Debt Legislation). This occurs, for example, on an employment‑cessation event—namely, where one participating employer stops employing active members while another participating employer continues to employ at least one active member. Put plainly, absent a section 75 trigger under the Employer Debt Legislation, a relevant transfer...

Specific measures usually operate to secure a basic level of pension protection for employees whose roles are compulsorily transferred from central government to private sector contractors due to the outsourcing of services. These safeguards are commonly known as ‘ Fair Deal’. Fair Deal protection—background history Fair Deal guidance first appeared in Annex A of the HM Treasury Guidance ‘ Staff Transfers From Central Government: A Fair Deal for Staff Pensions’, issued in June 1999, and was directed solely at central government departments and agencies. This initial guidance (referred to as ‘old Fair Deal’ in this Practice Note) developed over time as follows: In January 2000, old Fair Deal was annexed to, and cited in, the Cabinet Office Statement of Practice ‘ Staff Transfers in the Public Sector’ ( COSOP), which was later revised in November 2007 and December 2013. This annexing was...

Practice Note This Practice Note outlines the process to be followed when seeking a pension sharing order or a pension attachment order within family proceedings, covering the form the application should take, the information required about the relevant pension scheme, the steps to be taken during the proceedings, how to draft the order, and the actions needed to put the outcome into effect. It also explains the requirements for deploying Form P1 or Form P2. An application for pension provision is made using Form A under the Family Procedure Rules 2010 ( FPR 2010), SI 2010/2955, typically alongside an application for other financial orders. The fast-track (shortened) financial remedy procedure is not available. See also Practice Note: Issuing financial proceedings in Form A (standard procedure). Where a pension order is pursued following an overseas...

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...

Personal pensions, brought in during 1987, were hailed as creating fresh options for both employees and the self-employed. It soon became clear the proposition could equally be promoted to employers, and the group personal pension ( GPP) swiftly emerged to meet that demand. In essence, a GPP is a collection of individual personal pension policies housed within a single personal pension scheme and run by the provider for the workforce of one employer, or a group of employers. GPPs are therefore ‘workplace personal pension schemes’. Consequently, rules apply to GPPs that do not apply to personal pensions used outside the workplace. For example, they are overseen by independent governance committees ( IGCs) (see —principal legal features below) and limits apply to charges borne by members. For more detail on workplace requirements for GPPs, see Practice Note: Personal pensions—an...

THIS PRACTICE NOTE APPLIES TO OCCUPATIONAL AND PERSONAL PENSION SCHEMES Central to the disclosure framework for occupational and personal pension schemes are the Occupational and Personal Pension Schemes ( Disclosure of Information) Regulations 2013, SI 2013/2734 (the 2013 Disclosure Regulations), which took effect on 6 April 2014, and remain the core source within the disclosure regime for such schemes. Nonetheless, further disclosure duties appear, in a fragmented way, across other areas of pensions legislation. Accordingly, this Practice Note concentrates on the disclosure obligations that fall outside the 2013 Disclosure Regulations. For guidance focused specifically on the 2013 Disclosure Regulations, see Practice Note: Disclosure requirements applicable to occupational and personal pension schemes from 6 April 2014. In this Practice Note, any reference to ‘trustees’ is intended to include the managers of a contract-based scheme......