Pensions Weekly Update – 25 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 government has updated its roadmap setting out background to the Pension Schemes Bill and indicative timings on progress. It clarifies a few points, picks up some typos and adds in the source to some statements. The update does not substantially change the chart at the end of the roadmap that contains the indicative timings of the Pension Schemes Bill along with the regulations, codes of practice and guidance that will be published as a consequence of the bill.
HM Revenue & Customs (HMRC) has published a policy paper relating to the deduction of VAT by employers on the management of pension fund assets. First, some background:
- Before the PPG case in 2013, HMRC took the position that an employer of a defined benefit (DB) pension scheme could reclaim VAT on administration services provided to the scheme but not on investment management services. HMRC allowed a pragmatic approach that where supplier invoices covered both administration and management services, it would assume that 30% of the invoice related to administration services and 70% of the invoice related to management services.
- Following the PPG case, HMRC changed its policy so that investment management services could be VAT deductible if the supply of those services was to the employer. The invoice had to be addressed to the employer. This resulted in some schemes entering into tripartite agreements for the supply of investment management services between the provider, the employer and the trustees. Employers could continue to reclaim VAT on administration services even if they did not meet the conditions in relation to the reclaim of VAT on management services, and they could continue to use the 30/70% split.

In its new policy published on 18 June 2025, HMRC will no longer view investment costs as being subject to dual use. Instead, all the associated input tax incurred will be seen as the employer’s and deductible by the employer, subject to normal deduction rules. Where trustees are supplying pension fund management services to the employer and charging for them, they will also be able to deduct input tax incurred for the purpose of providing those services, provided they are VAT-registered. The new policy will apply from 18 June 2025. The policy specifies that this applies in respect of occupational pension schemes. While it does not differentiate between defined contribution (DC) and DB schemes, note that different case law and arrangements do cover VAT in relation to DC schemes. HMRC plans to publish guidance to explain the policy change by autumn 2025.

Patrick Coyne, The Pensions Regulator’s (TPR) interim director of policy and public affairs, is urging trustees to start preparing for the Pension Schemes Bill. He says that this legislation will fundamentally reshape the DC market and that trustees should “look now at how they are outcome-focused, building scale, are data-led and supporting savers into retirement”.
Two key industry appointments have been announced:
- Kirstin Baker will be the new interim chair of TPR, effective from 1 August 2025. She is currently the senior independent member of the TPR board.
- Deborah Evans will be the new chair of The Pensions Ombudsman (TPO) from 1 July 2025 for a period of five years. She replaces Anthony Arter, who has filled the role of interim chair since January 2024.
TPO has issued an announcement highlighting the achievements of the pilot Pensions Dishonesty Unit (PDU). Funding for the PDU came to an end on 31 March 2025 due to broader government funding constraints, but runoff funds will be available until October 2025 to complete specific investigations. The PDU was established in 2021 to investigate allegations of serious breaches of trust, misappropriation of pension funds and dishonest or fraudulent behaviour. TPO says that it may still decide to investigate a specific case within an occupational scheme “where there is no prospect of alternative redress, where there is a reasonable likelihood of redress and/or there is a novel legal issue or different type of scam involved”.
For more reading on the Pension Schemes Bill, please see an article by professional support lawyer, Claire Dimmock, that appears in Law360.
Our labour and employment colleagues have produced a global hot topics in employment law midyear review, which highlights recent legislative and/or political developments resulting in new issues for companies to be aware of.