Pensions Weekly Update – 8 January 2025

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We wish our readers a happy New Year.

If you are still catching up on recent pensions news, here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

The Pensions Ombudsman (TPO) has published an end of year blog reflecting on changes to TPO’s operating model during 2024. This includes a switch to requiring all complainants to exhaust a pension scheme’s internal dispute resolution procedure (IDRP) before bringing a complaint to TPO, along with new case management initiatives. In particular, where a case may have wider relevance to other schemes or members, TPO is adopting a lead case approach, which supports the timely resolution of other similar complaints. TPO asks pension trustees to:

Ensure their IDRP or complaint process is robust and well-communicated
Ensure that signposting to TPO is clear and up-to-date (see suggested wording)
Contact TPO (stakeholders@pensions-ombudsman.org.uk) at an early stage if a scheme has a complaint affecting multiple members, so TPO can assess whether a lead case approach would be appropriate

If you would like assistance reviewing your IDRP in light of this, please get in touch.

The Pensions Regulator (TPR) has updated its Pensions dashboards: initial guidance to include references to the general code of practice and to the Gov.UK One Login (which will be used to verify the identities of dashboards users). The updated guidance also expands on data matching criteria for schemes with multiple sections, or multiple administrators.
The Pension Scams Industry Group (PSIG) has published the results of a consultation on the organisation's future direction. The PSIG is a voluntary body created by the pensions industry to share good practice and stop pension scams – the organisation is unable to expand on its current activities without funding. The PSIG will reassess its objectives and issue proposals to the industry later this year. In the meantime, the PSIG’s privately-borne governance costs (including website development) will be scaled down. The PSIG still plans to publish an updated code of good practice when the conditions for transfer regulations 2021 are amended (or will publish updated guidance, if amendments are delayed), provided that it has early engagement with, and support from, government and industry regulators. The PSIG will continue to liaise with the Department for Work and Pensions (DWP) on the content and timing of amendments to transfer regulations.
The Pension Protection Fund (PPF) has responded to a request for information from the Work and Pensions Committee (WPC), in respect of indexation of compensation that relates to pre-1997 pension accrual. This forms part of the work being carried out by the WPC to gather evidence in relation to the lack of inflation proofing for pre-1997 pension increases generally by pension schemes. The WPC will also be considering evidence from a campaign group called the Pre-1997 Alliance. Currently, PPF compensation relating to pre-1997 pension accrual does not receive increases, regardless of whether pension would have been increased under a scheme’s rules. The PPF notes that it is unable to pay compensation in this regard without a change to legislation but provides some illustrative figures to show the impact that the payment of additional compensation would have on the PPF’s liabilities. For example, if, going forward, the PPF were to pay increases capped at 2.5% in respect of pre-1997 accrual for those members whose scheme rules provided increases, this would increase the PPF’s liabilities from £19.9 billion as of 31 March 2024, to £21.6 billion. If the PPF were to adopt the nuclear option of retrospective pre-1997 pension increases of CPI capped at 5% and prospective post-1997 pension increases of CPI capped at 5% including arrears, this would increase the PPF’s liabilities to £32.5 billion. This would give an overall funding level of 102%, versus the current funding level of 167%.
The Law Commission has published a scoping report into whether the law governing financial remedies on divorce requires reform. It considers the use of default remedies and notes that only 32% of divorcing spouses reported using some form of legal support for financial arrangements. It also addresses the fact that, despite the value of a pension often being the biggest single asset of matrimonial property, research revealed that 24% of divorcing individuals did not know if their spouse even had a pension (let alone have knowledge of its value).
Many thanks to those who entered our festive quiz. The judges were impressed by the number of correct entries – our readers certainly know their pensions facts! Well done to our three winners, who have been notified. You can check the correct answers on our website.