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HL UK Pensions Law Digest 22 September 2025

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AdobeStock_387989381

A bite-sized summary of recent UK pension news 

Welcome to our latest update, in which we cover: 

Pensions Regulator: revised enforcement strategy

  • Consultation by TPR on its updated approach;

Pensions Regulator: speech on the changing nature of DB pensions

  • A reminder of TPR’s expectations of DB trustees;

Pensions dashboards: toolkit on warnings and unavailability codes

  • A toolkit from PASA on using codes when value data is not up-to-date;

Consolidation of small pots: Feasibility Review

  • Pensions UK’s recommendations for infrastructure to implement small pot consolidation;

Bulk purchase annuities: speech by the Prudential Regulation Authority

  • The PRA’s concerns at the growing use of funded reinsurance in the BPA market.

Pensions Regulator: revised enforcement strategy 

The Pensions Regulator (TPR) is consulting on a revised enforcement strategy, aimed at making its enforcement “smarter, more strategic and more impactful”. TPR explains that its changed approach includes:

  • Putting saver outcomes first through preventing harm, securing redress and building saver confidence;
  • Setting clear enforcement priorities and applying these consistently;
  • Using targeted enforcement to take a proportionate, risk-based approach concentrating on the most serious harm to savers;
  • Identifying risks early and considering enforcement options from the start;
  • Using digital and data tools to detect trends, guide decisions and track results;
  • Working with external partners and stakeholders to respond more effectively to complex or emerging risks; and
  • Publishing enforcement outcomes to clarify expectations and drive improved compliance and behaviours.

TPR expects to revisit its wider suite of enforcement policies and procedures, and it may consult on specific policies to ensure alignment with its new strategy.

Consultation on the revised strategy closes on 11 November 2025.

Return to Contents.

Pensions Regulator: changing nature of DB pensions 

The Pensions Regulator (TPR) has published a speech given recently by David Walmsley, Director of Trusteeship, Administration and DB Supervision, entitled “Securing benefits and investing for growth; the changing nature of defined benefit pensions”. Key themes include the following.

  • The defined benefit (DB) landscape has changed, with over 75% of schemes now in surplus on a low dependency basis, giving more strategic options for trustees.
  • The new funding landscape and the surplus provisions in the Pension Schemes Bill offer trustees greater flexibility. Trustees are recommended to establish a surplus policy and are reminded that the final decision on whether to release surplus is theirs. TPR intends to consult formally on detailed surplus release guidance once the legislation is enacted.
  • TPR reemphasised its expectations for increased professionalism among trustees and higher standards of investment governance. In relation to environmental, social and governance (ESG), box-ticking and ensuring compliance is not enough. TPR expects trustees to engage with emerging frameworks like the Taskforce on Nature-related Financial Disclosures and to support credible transition plans.
  • Next steps by TPR include:
    • Examining how sole trustee models deliver effective governance and manage potential conflicts of interest; and
    • Launching a new strategy on raising standards in trusteeship, with consultation expected this autumn.

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Pension dashboards: toolkit on warnings and unavailable codes

The Pensions Administration Standards Association (PASA) has issued a toolkit, designed to achieve consistency in the use of “Warning” and “Unavailable” codes, when an administrator or provider cannot provide complete and accurate value data (information about an individual member’s benefits) immediately in response to a member’s “find request”. The toolkit explains when particular codes may be used and sets out expectations for good practice.

Examples of codes and their use are:

  • ANO: when a response is outstanding from a third party, such as an actuary or additional voluntary contribution (AVC) provider;
  • MEM: when an action or decision needed from the member is outstanding;
  • DBC: indicating that an estimated retirement income (ERI) will not be provided for a deferred defined benefit (DB) or cash balance (CB) member;
  • CUR: where benefits are held in a non-sterling currency;
  • DEF: for use where an active member has become deferred, until the scheme updates or removes the ERI (as this is calculated based on assumed ongoing accrual or contributions); and
  • PSO: warning that benefits may be subject to change as a pension sharing (or pension splitting) order is held on the member’s record.

PASA intends to issue a separate toolkit covering specific issues relevant to cash balance schemes later in 2025.

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Small pots: Feasibility Review

Pensions UK (formerly the PLSA) has published the Small Pots Feasibility Review, considering different models for the infrastructure needed to implement the government’s plans for automatic consolidation of small, inactive defined contribution (DC) pots.

For a reminder of the proposed consolidation regime, as set out in a Report by the Small Pots Delivery Group in April 2025, please see our article.

The Feasibility Review recommends the adoption of a “federated” delivery model, which would allow ceding schemes to interact directly with approved consolidators, using agreed standards for messaging and data. The Review rejected the alternative model of a purpose-built centralised architecture holding records of all members’ DC pots.

Under the Review’s recommendations, broadly:

  • A ceding scheme wishing to know where to transfer a deferred member’s small pot would send a “consolidator enquiry” to each approved consolidator, using a standard message and including the member’s personal details;
  • Each consolidator would then compare the data in the request with its membership records and would respond in one of three ways: “Match Made”; “Possible Match”; or “No match”; and
  • Subsequent steps by the ceding scheme would depend on the responses received. Where all consolidators respond “No match”, a central “carousel” process would allocate a consolidator to which the ceding scheme should send the member’s pot.

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Bulk purchase annuities: speech by PRA 

The Prudential Regulation Authority (PRA) has given a speech about balancing innovation and risk in the life insurance sector, noting that the bulk purchase annuity (BPA) market continues to expand rapidly and that funded reinsurance (FundedRe) is increasingly used as a source of capital. These trends give rise to regulatory concerns, including:

  • The potential for a build-up of systemic risk in the UK and internationally;
  • A move away from investment in UK productive assets towards internationally based reinsurers; and
  • The leveraging of different (and less restrictive) regulatory requirements applicable to FundedRe arrangements compared to economically similar structures outside a “reinsurance” wrapper.

The PRA plans to host roundtables to discuss these issues further in autumn 2025.

Return to Contents.

 

Authored by Jill Clucas.

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