Issues affecting all schemes
Pension scams – member leaflet
The Pensions Regulator (TPR) has updated its member leaflet on pension scams so that it is branded from the Pension Scams Action Group rather than TPR. The content of the leaflet is unchanged.
Action
Trustees and administrators should ensure that they use the most up to date version of the leaflet when sending it to members.
Automatic enrolment – earnings thresholds
The government has announced that the 2024/25 automatic enrolment earnings thresholds will be retained for 2025/26, meaning they will be:
- Earnings trigger: £10,000.
- Qualifying earnings band: £6,240 – £50,270.
Action
No action required.
Pensions dashboards – system testing
The Pensions Dashboards Programme has published FAQs on system testing. These cover:
- What system testing is.
- Who is required to complete system testing.
- Available system testing resources.
Action
No action required, but trustees and administrators of schemes that are subject to the dashboards requirements may find the FAQs helpful.
Issues affecting DB schemes
DB surplus – relaxation of release rules
The government has announced plans to make release of surplus from ongoing DB schemes easier. Trustee consent to any release of surplus will be required. The government will publish details of the proposals this spring.
TPR has published a statement offering support for the proposals but flagging the need to protect members’ benefits.
Action
Trustees and employers of DB schemes should monitor further announcements on the government’s proposals.
Pension Protection Fund – 2025/26 levy
The government has announced that it is considering relaxing the statutory restrictions around the levy that the Pension Protection Fund (PPF) can charge to give the PPF greater flexibility to reduce the levy.
In light of the government’s announcement, the PPF has announced that it has reduced its levy estimate for the 2025/26 levy year from £100 million to £45 million. This would be the lowest levy that the PPF has ever charged and 99.7% of schemes are expected to see a levy reduction. The PPF has also published the finalised rules and associated documents for the 2025/26 levy. The rules include a new provision that would enable the PPF to set a zero levy if appropriate levy legislative change is brought forward and sufficiently progressed over the course of 2025/26.
The key dates for the 2025/26 levy are:
- 31 March 2025 (midnight) – submission of scheme returns, contingent asset certificates, asset-backed contribution certificates and special category employer applications.
- 1 April 2025 (5pm) – submission of supporting contingent asset documents.
- 30 April 2025 (5pm) – submission of deficit reduction contribution certificates and exempt transfer applications.
- 30 June 2025 (5pm) – submission of full block transfer certificates.
Action
Schemes which have PPF contingent assets in place and which need to recertify those contingent assets by 31 March may wish to check whether the costs of recertification now outweigh the potential levy saving.
Derivatives – clearing exemption
The government has announced that it will make the exemption for pension schemes from the clearing obligation under the European Market Infrastructure Regulation (as incorporated into UK law) permanent. However, if there are changes to market dynamics or structure or wider government reforms that have a material impact on the value of mandatory central clearing for pension schemes, the government may reassess the exemption.
Action
No action required.
Gilt market dysfunction – lending facility for large pension schemes
The Bank of England has announced the opening of its Contingent Non-Bank Financial Institution Repo Facility for applications. The new facility, which will only be activated during episodes of severe gilt market dysfunction, will lend to participating insurance companies, large pension schemes and LDI funds to help maintain financial stability. Applicants must satisfy various eligibility requirements to apply to participate in the facility. These requirements including holding gilts with a minimum market value which will be reviewed annually (and which the Bank has initially set at £2 billion). In certain circumstances, the Bank of England will also require a guarantor and an associated legal opinion.
Action
If trustees or employers are thinking about participating in the new facility, they should talk to their usual Mayer Brown contact.
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