HL UK Pensions Law Digest 8 September

Welcome to our latest update, in which we cover: 

Virgin Media: resolution in sight

• Welcome legislation to help resolve issues arising from the Virgin Media case;

Pension Schemes Bill: where are we now?

• The Bill’s current stage in the Parliamentary process, plus lots of government amendments;

Pensions Regulator: DB funding analysis 2025

• TPR’s latest data shows improved funding levels for schemes in tranche 18;

Pensions Regulator: good news for the Edinburgh Woollen Mill scheme

• TPR reports how positive engagement can avoid anti-avoidance action;

Guided retirement and targeted support

• A podcast from TPR and the Financial Conduct Authority explores measures to help individuals.

Virgin Media: resolution in sight 

In a very welcome development for former contracted-out schemes, the government has published amendments to the Pension Schemes Bill to allow the retrospective validation of amendments which may have otherwise been invalid, following the Court of Appeal’s decision in the Virgin Media case. The provisions will come into force two months after the Bill receives Royal Assent (Royal Assent is expected to be given in Spring 2026).

For details please see our recent briefing.

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Pension Schemes Bill: where are we now?

The Bill is currently in “Committee stage” in the House of Commons. Eight part-day sessions have been scheduled for this stage, running from 2 September to 23 October 2025. The Committee will have a break from 16 September to 13 October, while the House of Commons is in recess for the party conference season.

Various pension industry bodies were invited to present evidence to the first two sessions, held on 2 September 2025. Subsequent sessions will give detailed consideration to amendments to the Bill, proposed both by the government and by individual MPs.

Amendments to the Pension Schemes Bill

On 1 September 2025, the government tabled nearly 89 pages of amendments to the Bill. Apart from the new clauses concerning Virgin Media issues (please see above), many of the amendments are technical or clarify the way in which new provisions are intended to work.

In relation to the new power for trustees to pass a resolution to allow payment of surplus to the employer (if certain conditions are met), the amendments clarify that:

• A resolution may give power to pay surplus to an employer only when a scheme is ongoing, it may not confer power to refund surplus on winding up; and
• An existing power to pay surplus to the employer on winding up will not prevent trustees passing a resolution to allow a refund of surplus while the scheme is ongoing.

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Pensions Regulator: defined benefit funding analysis 2025

The Pensions Regulator (TPR) has published its annual analysis of funding levels and recovery plans in defined benefit (DB) schemes. The analysis is based on tranche 18 schemes, which have effective valuation dates from 22 September 2022 to 21 September 2023. Because most schemes have a three year valuation cycle, tranche 18 schemes are in the same cohort of schemes as tranches 15, 12, 9, 6 and 3. Key points to note include:

• 62% of schemes in tranche 18 reported a surplus, up from 27% in tranche 15;
• The average funding level on a technical provisions basis was 104%; and
• For schemes in deficit, the average length of recovery plan was 4.4 years (compared to 6.3 years in tranche 15).

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Pensions Regulator: proactive approach avoids anti-avoidance measures

The Pensions Regulator (TPR) has issued a report of its regulatory intervention following the insolvency of Edinburgh Woollen Mill Ltd (EWM) in November 2020.

TPR praised the proactive approach of the buyer of the employer’s business, and commented that this removed the need for TPR to pursue formal anti-avoidance action.

Background

• EWM was the sole sponsoring employer of a defined benefit (DB) pension, with £37m of assets at its previous valuation.
• Prior to the COVID-19 lockdowns, EWM and its wider group had consistently generated significant profits and had paid deficit repair contributions in accordance with the schedule of contributions.

Financial difficulties and TPR investigation

• TPR was contacted in October 2020 by the trustee’s covenant adviser, who was worried about a lack of information on EWM’s financial position and the risk of it becoming insolvent.
• Following EWM entering administration in November 2020, TPR commenced an enquiry and was concerned by EWM’s rapid decline into insolvency, given its history of profitability and that significant COVID-19 assistance may have been available to it, including furlough payments for staff.
• TPR’s investigation raised issues about certain financial transactions in the period leading up to EWM’s insolvency, including the payment of substantial dividends to its holding company.

Buyer for EWM’s business and scheme rescue

• Purepay Retail Limited (Purepay) acquired EWM’s business from its administration.
• TPR entered into negotiations with Purepay, alongside the Pension Protection Fund (PPF) and the scheme trustee. As a result of the negotiations:
  • A scheme rescue was secured in December 2024 and the scheme exited its PPF assessment period;
  • Purepay became the scheme’s statutory employer through a scheme apportionment arrangement; and
  • Purepay contributed £7m to the scheme and agreed to a recovery plan to repair the deficit by March 2028, plus a suite of covenant protections.

TPR commented that the scheme is now funded well above the PPF funding level and is expected to reach full funding on a low dependency basis within three to four years.

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Guided retirement and targeted support: podcast

The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have issued a joint podcast, discussing:

• The guided retirement (default decumulation) requirements, included in the Pension Schemes Bill; and
• The current consultation on the new FCA-regulated activity of providing targeted support.

The podcast considers the reasons for adding targeted support to the current advice / guidance regime and comments that:

• In the year to May 2024, only about 9% of consumers received regulated financial advice; and
• Increasingly, individuals are turning to unregulated sources of “advice”, with about 45% of investors aged 18 to 34 using social media to research investments.

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Authored by Jill Clucas.