The Pensions Brief: March 2025

Issues affecting all schemes

Pension scams – updated member leaflet

The Pensions Regulator (TPR) has updated its member leaflet on pension scams to remove the reference to Pension Wise.

In addition, TPR has published a blog post providing an update on its work to combat pension scams. This notes that TPR has undertaken work in the following areas:

• Member education via initiatives such as the Pension Scams Action Group (PSAG), the ScamSmart campaign and TPR’s “Pledge to combat pension scams”.
• Intelligence sharing by forming closer senior-level strategic partnerships across key PSAG members.

The post also calls on schemes to report scams and to develop and adopt robust anti-scam practices. It notes that Action Fraud is improving the current reporting process, with a phased introduction of the new service underway and continuing throughout 2025.

Action
Trustees and administrators should ensure that they use the updated version of the scams leaflet when sending it to members.

TPR – 2025 approach

TPR has published a blog post setting out its vision for 2025 and what schemes can expect. It will continue to implement its approach to a more prudential style of regulation and to encourage an open and transparent dialogue with those who run schemes – ultimately, TPR wants them to have clarity on TPR’s expectations and to engage with TPR early to prevent problems arising later.

Over the next 12 months, TPR plans to:

• Say more about the need for better data and how it will support schemes.
• Continue to change how it supervises the most strategically significant schemes, starting with master trusts.
• Launch its innovation hub.
• Set out its future approach to enforcement and tackling serious crimes.
• Make sure value for money is at the heart of its work.
• Continue to protect member outcomes from climate-related risks and benefit from opportunities from the UK’s transition to a net zero economy.
• Implement a more strategic approach to raising standards of trusteeship.
• Help DB schemes consider the full range of alternative models of provision through new guidance.

Action
No action required.

Issues affecting DB schemes

Virgin Media – guidance on sponsor accounting treatment

The Institute of Chartered Accountants in England and Wales (ICAEW) has published guidance on the Virgin Media ruling. While the guidance may be of use to trustees, it is primarily aimed at sponsors and their auditors. It aims to set out the ICAEW’s current understanding of the key judgements and considerations that the main parties involved might need to take into account in relation to the ruling. The guidance is for general informational purposes only and does not make any recommendations regarding the most appropriate course of action for any individual scheme.

From a trustee perspective, the guidance notes that:

• The most appropriate approach for trustees to take will depend on the specific circumstances of their scheme.
• However, the approach chosen by the trustees may impact the approach that the sponsor takes towards recognising the impact of the ruling in its accounts. Trustees may therefore wish to consider discussing their approach and the rationale for it with the sponsor. The sponsor’s auditor is also likely to request information from the sponsor on the trustee’s approach and their rationale for it.
• While trustees may be willing to share the legal advice that they have received with the sponsor and its auditor, they are not obliged to do so.

From a sponsor perspective, the guidance notes that there are three potential accounting treatments under IFRS or FRS 102:

• Do not recognise any amounts or make any disclosure – this option is only likely to be suitable where trustees are confident that the ruling does not apply.
• Disclose the potential implications of the ruling in the pension note but do not recognise any amounts – this is expected to be the most appropriate option in most cases.
• Remeasure the DB obligation and recognise a change to the liability – this is not expected to be possible in most cases as most trustees will not yet have made a detailed assessment of the ruling’s impact.

In addition, a case is currently being heard in the High Court which we understand may consider some issues arising out of the Virgin Media ruling.

Action
No action required, but sponsors of DB schemes may find the guidance helpful when preparing their accounts and when responding to any auditor enquiries. Trustees of DB schemes may also find the guidance helpful when responding to any auditor enquiries.

Scheme merger to utilise surplus – court decision

The High Court has approved the merger of one pension scheme (the executive scheme) into another scheme (the main scheme). The principal employer of both schemes was in liquidation and the schemes were in wind-up. Historically, the schemes’ trustees had adopted a common approach to funding with the aim of achieving parity of funding between the schemes. However, events outside the trustees’ control had unexpectedly led to the main scheme being in surplus and the executive scheme being in deficit. The merger required the main scheme’s amendment power to be exercised to permit the bulk transfer.

The court held that:

• The amendment power was wide enough to enable it to be exercised in the way proposed. The power expressly provided (a) that it continued until the main scheme had been wound up and (b) that it could be exercised by the main scheme trustee without the need for principal employer consent where the employer was in liquidation. There was therefore no express fetter on the power, nor was there a principled basis upon which a fetter should be implied.
• The merger was a proper exercise of the main scheme trustee’s powers, even though it would enable the members of the executive scheme to benefit from the surplus in the main scheme. The stated objective of the main scheme was to provide members with “Scale Benefits” which did not include benefits provided by way of augmentation, and the Scale Benefits would be provided in full notwithstanding the merger. The main scheme trustee had had regard to a broad range of factors, including what was fair and equitable in all the circumstances, and had reached a balanced decision that was objectively justifiable. There was no indication that irrelevant factors had been taken into account.

Action
No action required.

Issues affecting DC schemes

TPR – DC market oversight

Following a 12 month review, TPR has announced that it is evolving its approach to supervision and regulation of the DC market to make master trusts the gold standard in pension provision. The shift in approach will see schemes split into four segments of supervision:

• Monoline master trusts.
• Commercial master trusts.
• Non-commercial master trusts and collective DC schemes.
• Single and connected employer DC schemes.

Each segment will have tiers of engagement based on the specific risks they present to market and member outcomes. In addition, every scheme in the monoline and commercial segments will be allocated a dedicated multi-disciplinary team of named individuals with expertise in financial analysis, business strategy, investment and governance. This expertise will also be available for the other segments.

Action
No action required.

Mayer Brown news

Recent Mayer Brown work

• Andrew Block and Liam Kellett advised global investment firm Marlin Equity Partners (Marlin) on the UK pensions aspects of its majority growth investment in Napier Technologies Limited, a London-based compliance technology firm supplying anti-money laundering software to a global customer base. Andrew also advised Marlin on the UK pensions aspects of its acquisition of EIDO Holdings Limited, a provider of digital consent and patient information solutions.
• Henry Corrigan and Joel Silverstein advised JOST Werke SE on the UK pensions aspects of its acquisition of the Hyva Group.

Mayer Brown Insights

All our Insights are available here.