Pensions Weekly Update – 30 April 2025

Authors:

Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

The Department for Work and Pensions (DWP) issued the Small Pots Delivery Group report, which outlines the recommendations of the delivery group and the government’s response. This takes us a step forward towards the automatic consolidation of defined contribution (DC) individual deferred pension pots of less than £1,000, which have arisen in the default funds of schemes used for automatic enrolment. Although much more work needs to be done before automatic consolidation can become a reality, legislation for a multiple default consolidator approach will be included in the forthcoming Pension Schemes Bill. The DWP plans to consult with the industry on regulations in 2026, and elements of the legislation are expected to come into force in 2027/2028. The government says that duties on pension schemes to transfer and consolidate eligible pots is expected to come into force from 2030 – a phased implementation approach is likely to be adopted.
David Walmsley, Director of Trusteeship, Administration and Defined Benefit (DB) Supervision at The Pensions Regulator (TPR) has published a blog post on how to make transferring to a superfund run as smoothly as possible. The blog contains some practical pointers, including that trustees do not need to obtain a physical buyout quotation from the insurance market before deciding whether buyout would be affordable. Likewise, TPR does not expect trustees to undertake extensive due diligence on legal and governance structure, systems and processes and key people of all superfunds listed on TPR’s website, because TPR has already carried out that process. TPR is generally supportive of DB consolidation via superfunds and is looking forward to legislation being contained in the forthcoming Pension Schemes Bill. The blog notes that TPR will shortly be publishing a guide on “Defined Benefit Scheme Endgame Options Guidance’.
TPR has published its first annual funding statement under the new DB funding regime. The statement is to assist employers and trustees of DB pension schemes and is particularly relevant to schemes with valuation dates between 22 September 2024, and 21 September 2025. The statement notes that the aggregate funding level of DB schemes as of 31 December 2024 was 123%, with less than 15% of schemes expected to have a deficit. On a buyout basis, around 54% of schemes were in surplus. The statement includes clarificatory information around covenant and trustees’ assessment of supportable risk.
TPR has published a speech delivered by Patrick Coyne, Interim Director of Policy and Public Affairs, at a recent Pensions Age conference. TPR sees innovation for improvements within the pensions industry as a priority, and confirms its plans to launch a new innovation hub this summer to facilitate and test a range of innovation services with the market. TPR says “we want our regulatory framework to help stimulate new ideas and support what’s already there.”
HM Revenue and Customs (HMRC) has published newsletter 169. This contains another reminder for schemes to migrate over from the pension schemes online service to the manage a pension scheme service. It also contains confirmation that the application deadline for both fixed protection 2016, and individual protection 2016 has now passed and that individuals can no longer apply for either protection online.
Don’t forget to register for our webinar taking place on 1 May 2025, which will examine the latest developments in UK business immigration law. You can also listen to our podcast series on sponsorship licence guidance.