HL UK Pensions Law Digest 14 July 2025

Welcome to our latest update, in which we cover:

Pension Schemes Bill

• Points of interest from the Bill’s second reading in the House of Commons.

Recouping overpayments

• A further determination from the Ombudsman.

Pensions dashboards: update from MaPS

• News from a recent town hall run by the Money and Pensions Service.

Pensions dashboards: data protection impact assessment (DPIA)

• A blog from PDP points out the wide extent of schemes’ and providers’ data protection duties.

Pension dashboards: data matching

• Updated guidance from the Pensions Administration Standards Association (PASA).

Pension Schemes Bill

The Pension Schemes Bill had its second reading in the House of Commons on 7 July 2025. The next step for the Bill is Committee stage in the Commons, scheduled to start on 2 September 2025 and to conclude by 23 October 2025. In the meantime, the Public Bill Committee has issued a call for evidence on the Bill.

Points to note from second reading include the following:

Mandatory investment targets

• The Pensions Minister (Torsten Bell) was challenged on the government’s power in the Bill to set mandatory investment targets for Master Trusts and personal pensions used for auto-enrolment. The Minister responded that the Bill explicitly recognises trustees’ fiduciary duties to members. He emphasised that the government does not currently intend to use this power, but that its existence makes clear to industry that change will actually come.
• In relation to divestment from fossil fuels, the government commented that investment is a matter for trustees. It points out though that it is consulting on UK Sustainability Reporting Standards and on transition plans.

Release of surplus

• Under changes made by the Bill, the trustees’ agreement will be needed for any release of surplus. The Minister commented that, where discretionary increases may only be made with the employer’s agreement, trustees may make employer’s consent to increase benefits a condition of an agreement to release surplus. He expects that employees would benefit in most cases of surplus release.

Virgin Media

• The Minister reiterated that the government will introduce legislation to give pension schemes affected by the decision in Virgin Media the ability to retrospectively obtain written actuarial confirmation that historical benefit changes met the necessary standards at the time.
• The Bill does not contain provision to address challenges arising from the Virgin Media decision. Legislation to allow retrospective confirmation could be made in regulations rather than primary legislation. However, resolving Virgin Media issues where the schemes concerned have transferred to the Pension Protection Fund (PPF) may require primary legislation.

Collective defined contribution (CDC)

• The Minister confirmed that legislation to allow multi-employer CDC schemes will be introduced as soon as possible after the Parliamentary summer recess.

Second stage of pensions review

• The second stage of the government’s pension review will be launched “shortly” and is expected to address pension adequacy.

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Recoupment of overpayments: further Ombudsman determination

The Deputy Pensions Ombudsman (DPO) has decided in favour of two pensioners (Mr and Mrs D) who had received significant overpayments from the BIC UK Pension Scheme. The DPO held that it would be inequitable for the pension trustees to recover the bulk of the overpayments.

The overpayments to Mr and Mrs D arose from increases to pre-1997 pensions (“Pre-97 Increases”) which the Court of Appeal later held were invalid.

Overpayments resulting from the Pre-97 Increases were the subject of a lengthy analysis by the Ombudsman last year, in the case of Mr E. For a reminder of the background and lessons learned, please see our previous article. The DPO applied a similar approach to Mr and Mrs D’s complaint.

Mr and Mrs D: amount of overpayments

The following overpayments had been made to Mr and Mrs D:

• £31,423 to Mr D, which the trustee sought to recoup at a rate of £121 per month for 21 years six months; and
• £16,408 to Mrs D, which the trustee sought to recoup at a rate of £62 per month for 21 years 10 months.

Possible ways of recovering overpayments

There were two ways in which the trustee could seek to recover overpayments:

• By repayment direct from Mr and Mrs D, through a claim against them for unjust enrichment; and/or
• By equitable recoupment, through deductions against future instalments of pension.

The trustee indicated that it would not try to recover overpayments directly from Mr and Mrs D, nor would it seek recovery of any amounts outstanding in the event of Mr or Mrs D’s death.

The DPO therefore only needed to consider whether it would be equitable to allow recoupment of the overpayments. To do this, she looked at the following questions.

Had Mr and Mrs D acted in good faith?

Mr and Mrs D had no reason to suspect that they were being overpaid. Payslips from the trustee included the Pre-97 Increases and Mr and Mrs D would have conducted their financial affairs on the basis they were entitled to the money.

Following the reasoning in Mr E, the DPO concluded that Mr and Mrs D would not have appreciated that they might be overpaid until the trustee explained this to members properly in March 2020.

Had Mr and Mrs D suffered detriment as a result of the overpayments?

Bank statements and details of expenditure showed that Mr and Mrs D were prudent pensioners. They had suffered detriment as their pattern of expenditure was higher than it would have been without the overpayments.

The DPO was satisfied that prudent pensioners like Mr and Mrs D would not have built up debts of over £31,000 and £16,000.

Would Mr and Mrs D have spent the money even without the overpayments?

Evidence showed that Mr and Mrs D lived within their means. They saved money in a separate account as a contingency fund for expenditure such as a new boiler and unexpected increases in day to day living expenses.

On reviewing the evidence, the DPO was comfortable that the funds in the contingency account were not built up as a result of the overpayments.

(The DPO did not explain the significance of her conclusion – but the implication seems to be that, had Mr and Mrs D been paid the correct, lower amounts of pension they would have spent less day to day and would still have built up a contingency fund. Savings which only built up because of the overpayments would have undermined the defence that that Mr and Mrs D had changed their position in reliance on the overpayments.)

Were any amounts recoverable from Mr and Mrs D?

Overpayments made after the trustee’s explanation in March 2020 could be recovered. These amounts were very small compared to the total overpayments: £542 from Mr D and £313 from Mrs D.

The DPO awarded £1000 each to Mr and Mrs D for distress and inconvenience. They agreed to pay the recoverable amounts from these awards.

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Dashboards: notice before launch and connection of State Pension

At a town hall on 9 July 2025, run by the Money and Pensions Service (MaPS), it was confirmed that:

• The DWP will give six months’ notice before the launch of the state-provided MoneyHelper Pensions Dashboard; and
• The State Pension has completed its connection to the dashboards ecosystem.

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Dashboards: data protection impact assessment

The Pensions Dashboards Programme (PDP) has issued a blog on understanding its data protection impact assessment (DPIA). The PDP’s comments include:

• PDP’s DPIA is a “cornerstone” of its broader consumer protection approach to delivering the dashboards architecture;
• PDP’s DPIA covers the processing of personal data by the Money and Pensions Service (MaPS);
• The DPIA does not cover the responsibilities of pension providers and schemes which connect to the dashboard architecture. Providers and schemes are reminded that they need to meet their data obligations to members as well as their dashboard duties;
• Providers’ and schemes’ duties include: accurately matching members to their pensions; protecting members’ data and not disclosing it to anyone other than the member; and ensuring that data returned to the member is accurate; and
• DPIAs for pension providers and schemes should reflect the large-scale processing which they will undertake, not only in respect of the view data for their members, but also for every find request which they receive.

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Dashboards: updated guidance on data matching

The Pensions Administration Standards Association (PASA) has updated its Data Matching Convention (DMC) guidance, following confirmation by the Pensions Dashboards Programme (PDP) last year that the Government’s new One Login service will be used to verify identity for dashboard purposes. The updated guidance is the final version before the commencement of Citizen User testing.

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Authored by Jill Clucas and Susanne Wilkins.