Legislative solution to Virgin Media/Section 37 confirmed.
Crucial and long awaited confirmation that the DWP will introduce legislation to give pension schemes affected by the outcome in the Virgin Media cases the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards. Timescales for that change have yet to be confirmed but, depending on the final legislation, should bring an end to an issue which had the potential to add £billions of liabilities to UK defined benefit schemes.
Pension Schemes Bill 2025
The long-awaited Pension Schemes Bill 2025 has now been published. The key provisions of the Bill include the following.
Defined Benefit Pensions
Power to pay surplus to employer
Permitting trustees of well-funded Defined Benefit pension schemes to return funds to employers and members when it is deemed safe, including circumstances where previously scheme rules may not have permitted such payments.
PPF
The removal of the restrictions that prevent the Board of the Pension Protection Fund (PPF) from reducing the annual pension protection levy it collects, when it is not required - allowing the PPF to collect less from businesses and to set a zero levy.
Making provision for PPF and FAS information to be displayed on the Government-backed pensions dashboard service provided by the Money and Pensions Service.
Permitting lump sum payments from the PPF and FAS to members with a life expectancy of up to 12 months, increased from 6 months as applies currently.
Defined Contribution Pensions
Value for money
Introduction of a Value for Money framework with the aim of shifting focus from cost to value, and ensuring savers are not kept in underperforming arrangements for extended periods.
Consolidation of small dormant pension pots
Enabling the consolidation of small dormant pension pots, defined as those with no contributions for at least 12 months and no action taken by the individual regarding investment decisions, that are valued at £1,000 or less.
Default pension benefit solutions
Implementing Default Pension Benefit Solutions will ensure that savers retain the options available through pension freedoms while also receiving additional support. This support will come in the form of automatic enrolment into default solutions, which they can choose to accept or opt out and make their own decisions.
Superfunds
Introduction of a legislative framework for defined benefit Superfunds including in relation to aspects such as:
- Authorisation and Approval: including the authorisation of superfunds by the Regulator and the approval criteria for individual superfund transfers.
- Ongoing requirements for superfunds once they have received a transfer.
- Special Procedures: including special procedures for events of concern, such as financial difficulties or regulatory breaches.
- PPF+ schemes: provisions will permit schemes to enter Superfunds on a PPF+ basis (i.e. where a DB scheme with a failed employer comes out of PPF assessment because it is funded above PPF compensation levels but has insufficient assets to secure full benefits on the insurance market) where that will increase the proportion of the liabilities likely to be satisfied and will not lead to any member of the PPF+ scheme being worse off by reference to PPF compensation levels than they would have been if the superfund transfer were not made. It is thought that permitting inclusion of such schemes may expand the Superfund market.
Pensions Ombudsman
Re-establishing the legal standing of The Pensions Ombudsman (TPO) to make enforceable determinations in pensions overpayment recoupment cases without requiring a county court judge’s order.
Timescales & Regulations
A date for the bill’s second reading has not yet been scheduled. It is anticipated that further details regarding many of the new provisions will be addressed in regulations to be reviewed in due course. The supporting documentation suggests that the estimated timelines for the introduction of these regulations and their effective dates are as follows:
- Value for Money – regulations process 2026/27, first publication of data and assessment 2028.
- Small pots - regulations process 2027/28, duties in force from 2030.
- DB Superfunds – regulation consultation 2026 with a view to coming into force in 2028.
- DB Surplus - regulation consultation 2026 with a view to coming into force in 2027.
If you have any queries about any of the issues covered, or you require advice on a pensions related matter, please do not hesitate to contact your usual contact.
