HL UK Pensions Law Digest 29 July 2025

Welcome to our latest update, in which we cover: 

Inheritance tax and pensions: revised policy

• Please see our briefing for details of HMRC’s recent change in policy;

Pensions Commission and State Pension age review

• A relaunched Commission is instructed to “finish the job” on pension reform;

Pensioner poverty: results of inquiry

• The WPC’s recommendations for combatting poverty among older people;

Pensions dashboards: clearing “data debts”

• A blog from TPR urging data improvements to enable dashboards to function as intended.

Pensions Commission: "finishing the job"

The DWP has announced its relaunch of the Pensions Commission, with a remit to make recommendations for achieving a strong, fair and sustainable landscape in the UK.

The recommendations of the original Commission’s final report in 2005 led to: the introduction of auto-enrolment; reforms to State Pension; and increasing State Pension age to reflect increases in life expectancy.

Despite the recommended reforms having been made, current pension provision in the UK remains a concern, including because:

• The significant levels of voluntary saving above auto-enrolment minima, which were expected by the original Commission, have failed to materialise;
• Four in 10 working age individuals are not on track to meet the original Commission’s target replacement rates (of 80% /67% /50% for low /median /higher earners, respectively);
• A retiree in 2050 is likely to have private pension income which is 8% lower in real terms than an individual retiring in 2025; and
• Some cohorts are especially hard hit by inadequate retirement provision, in particular: low and average earners; the self-employed; some ethnic minorities; young people; single pensioners; and GenX (born 1965-79).

The revived Commission is tasked in particular with considering pension adequacy and delivering good retirement outcomes, not just savings pots.

The Commission is made up of Baroness Jeannie Drake, Sir Ian Cheshire and Professor Nick Pearce and its final report is expected in 2027.

Third review of State Pension age

Alongside the launch of the Pension Commission, the government has brought forward its third review of State Pension age (SPA). Regular reviews of SPA are required by legislation, with the first review concluding in 2017 and the second in 2023.

The government has asked Dr Suzy Morrissey (Deputy Director of the Pensions Policy Institute) to prepare an independent report for the review on specific factors, including:

• The merits of linking SPA to life expectancy;
• The role of the SPA in managing the long-term sustainability of the State Pension; and
• International experience of using automatic adjustment mechanisms for making decisions about SPA.

The review will also consider a separate report by the Government Actuary’s Department (GAD), which will look at latest life expectancy projections and will consider the proportion of adult life to be spent in retirement.

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Work and Pensions Committee: Pensioner Poverty 

The House of Commons Work and Pensions Committee (WPC) has issued a report following its earlier inquiry into pensioner poverty.

The WPC reported rising poverty among older people, for example:

• Pensioner poverty declined in the 2000s but has risen again from 2010, exacerbated by increases in the cost of living since 2021, especially rising energy prices; and
• In 2022/23, 2.8m pensioners were in households with below the Minimum Income Standard (MIS) needed for a minimum dignified socially acceptable standard of living, compared to 1.5m pensioners below the MIS in 2008/09.

Recommendations include that the government should:

• Commit to reporting on the gender pensions gap at least once every two years;
• Analyse the potential impacts of new policies on affected claimants, including older people (following criticism of how the eligibility restriction was introduced for the Winter Fuel Payment in winter 2024/25);
• Consult on a new “social tariff” scheme to provide more generous support with energy bills to pensioners in fuel poverty;
• Encourage greater claiming of State benefits by those eligible, including through the development of a strategy for benefits take-up in England by the end of 2025;
• Consider introducing a taper for Pension Credit, following concern that individuals just above the eligibility threshold also miss out on valuable passported benefits; and
• By the end of 2025, produce an impact assessment of the forthcoming increase in State Pension age from 66 to 67.

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Dashboards: blog from Pensions Regulator 

The Pensions Regulator (TPR) has issued a blog, encouraging schemes to address any “data debts” that may impede their connection to the dashboards architecture and their subsequent ability to return value data to members swiftly and accurately.

TPR’s recent research has shown that, while 80% of schemes are on track to connect to the dashboards architecture by their “connect by” date, preparations for returning “value data” (details of an individual member’s benefits) are not so well advanced:

• Only half of defined benefit (DB) schemes have recent DB value data for all members, and
• A quarter of schemes still hold some data in non-digital form.

As a reminder, when dashboards are up and running, schemes will have to provide value data to members in accordance with the following timescales:

• If the scheme has given the member a benefit statement within the previous 13 months, or performed a calculation for the member within the previous 12 months, value data must be provided immediately following a positive match; or
• Otherwise:
  • Within three working days of a positive match, for money purchase benefits; and
  • Within 10 working days of a positive match, for DB and hybrid benefits.

Over the coming months, TPR expects to scrutinise the dashboards preparations of the UK’s largest schemes, as well as launching a campaign to ensure that medium-sized schemes due to connect in 2026 are on track to do so.

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Authored by Jill Clucas.