Pensions Weekly Update – 10 June 2025

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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 Pension Schemes Bill was presented to Parliament on 5 June. It covers a variety of topics, which had been trailed by the government in the preceding weeks.

The scale and consolidation provisions (generally speaking, a requirement for master trusts and group personal pension plans that are automatic enrolment schemes to scale up to £25 billion by 2030, and to meet an asset allocation requirement) seem to go further than had been expected, with the asset allocation requirement being hardcoded into primary legislation, rather than giving the government power to make regulations to require it in the future.
The provisions relating to the Local Government Pension Scheme (LGPS) also go further than had been indicated by the government’s outcome of consultation on the LGPS: Fit for the future.
The refund of surplus provisions are likely to be a welcome measure for employers that have surplus trapped in a defined benefit (DB) pension scheme, with trustees being given the power to modify schemes’ rules to make a refund of surplus and previously restrictive legislative powers being repealed or relaxed. The government announcement heralding the bill referred to a hope that the new provisions would unlock “some of the £160 billion surplus funds to be reinvested across the UK economy and boost business productivity and deliver for members”. The impact assessment, however, estimates that only an “additional £11.2 billion surplus will be extracted as a result of the preferred option to legislate over a 10-year period”. It goes on to note that this figure is highly uncertain, and the exact amount will depend on market response and future economic conditions.

For more on the bill, please see part two of our weekly update on 6 June 2025.

Indicative timings for the new measures, contained in the government’s roadmap were interesting. Other than LGPS reform, it is unlikely that the anticipated changes will be implemented before 2027, once supporting regulations are in place. See last week’s update for more on this.
We also mentioned in part two of last week’s update that on 5 June, the government made an announcement in response to the Virgin Media decision relating to section 37 of the Pension Schemes Act 1993 and its consequences for some pension schemes that had been contracted-out on a DB basis. The government said that it would “introduce legislation to give affected pension schemes the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards”. Many trustees and employers will welcome this decision but, as we noted last week, the devil will be in the detail. It is not yet clear whether scheme actuaries will be able to give a blanket confirmation, covering all potentially affected deeds of amendment or whether the retrospective confirmation will be required on a deed-by-deed basis. Its timing is also not yet known. Likewise, the potential applicability to schemes that have wound up, bought out benefits and/or transferred into another arrangement is not known. It is hoped that these issues will be addressed in legislation quickly, particularly given the impact that the section 37 issue could have for the Pension Protection Fund (PPF) and for schemes imminently winding up. Watch this space!
The Pensions Regulator (TPR) has published end-game guidance on the various options trustees can consider when planning how to meet the long-term objective of their scheme, recognising that new options are now available due to changes in funding levels and developments in the market. The guidance suggests factors the trustees should consider when deciding to run on a DB scheme, and/or utilise other arrangements. Potential options the guidance considers include the following:

Fiduciary management
Appointment of professional trustees
DB master trusts and DB multi-trusts
Capital-backed arrangements
Superfunds
Longevity insurance
Buy ins/outs

The guidance also contains commentary on TPR’s expectations regarding the release of surplus. Pending final form legislation, TPR states that trustees “may want to start thinking about how they could generate additional surplus and release it under the new proposals”. Note also that TPR considers it good governance practice for trustees to adopt a policy on surplus extraction, which is appropriate to the context of their individual scheme.

The Financial Reporting Council (FRC) has published an updated stewardship code that will apply from 1 January 2026. The code is a voluntary code that aims to achieve effective stewardship through a set of principles and reporting measures. The code applies to asset owners, asset managers and service providers.
Many questions were asked by attendees at a recent webinar hosted by our Labour & Employment colleagues on handling workplace investigations. Our colleagues have now published part three and part four of their answers.

If you would like specific advice on any of these issues or anything else, please contact a member of our Pensions team.