UK: Pensions Ready Reckoner - March 2016

Last Updated: 23 March 2016
Article by Clive Weber

A recap of latest developments in the ever-changing world of occupational pension schemes.





Budget – 16 March 2016

Key pension tax changes in the Chancellor's Budget:

  • save up to £4,000 per annum into a "Lifetime ISA" until your 50th birthday and then access it (along with a Government-funded "bonus") tax-free, either as a deposit for your first house or once you've hit 60
  • TPAS and "Pension Wise" to be scrapped and replaced
  • cash withdrawals (up to £500) to be permitted from DC funds in order to pay for investment and/or decumulation-related advice

Pre-existing tax changes not affected by the Budget

Already enacted - Finance (No 2) Act 2015:

  • Annual Allowance restricted for high earners from 06/04/2016
  • Pension input periods aligned with tax years from 06/04/2016

To be enacted – Finance Bill 2016 (expected July 2016):

  • Lifetime Allowance reduces to £1 million from the present £1.25 million from 06/04/2016, subject to the right to elect for protection
  • Inheritance tax not to apply to unused drawdown funds

Single State Pension from 6 April 2016

The Government has recently issued numerous regulations paving the way for the Single State Pension from 6 April 2016 and addressing the impact on occupational pension schemes. Notable areas for schemes to consider are:

  • where the scheme's benefit structure integrates with the pre 6 April 2016 state pension e.g. Basic State Pension deducted in calculating pensionable earnings
  • whether scheme rules relating to GMP revaluation need amending and, if so, whether under the scheme's amendment power or under trustees' statutory modification power from 6 April 2016

Secondary annuity market

Government is going ahead with the secondary annuity market from April 2017. The relevant tax legislation will be contained in the Finance Bill 2017. Authorised firms are to check whether annuity holders have received "advice" before holders sell their annuity income. The "Pensions Wise" guidance service will be expanded to cover annuitants considering selling their annuities.

Accessing (or transferring) DC trust based benefits

The Disclosure Regulations are being amended so that DC trust based schemes must provide generic risk warnings as a second line of defence, on top of the existing statements/warnings already required.

The pensions on divorce legislation is expected to be amended from 6 April 2016 to take into account the new DC flexibilities and how this interacts with e.g. attachment orders on divorce.

GMPs - sex equalisation

Government still intends to legislate but timing uncertain.


Employer debts: changes for non- associated multi-employer schemes

The consultation on possible changes to the employer debt legislation opened on 12 March 2015 and closed on 22 May 2015 since when nothing further heard...

Auto-enrolment:  LLP members

Government has consulted on Regulations enabling limited liability partnerships to exclude certain of the LLP's members (i.e. those who are genuinely partners in the business) from their auto-enrolment obligations. The Regulations have been issued and will apply from April 2016. For a more detailed exposé of the problems to which this issue could otherwise have given rise, please see our July 2014 Bulletin.



Liability management in DB schemes

The revised Code applies to incentive offers made to members on or after 1 February 2016. Employers considering such exercises and trustee boards reacting to employers' proposals should take the new Code into account.



Much activity, especially in the Court of Appeal.



Interpreting scheme provisions

BCA Pension Plan

A cost effective way to correct scheme rules: the High Court made an Order under section 48 Administration of Justice Act 1985 authorising trustees to apply the scheme rules in a particular way, on the basis it was clearly necessary to read certain words into the scheme rules to make sense of them. Please see our January 2016 Bulletin for further consideration of this interesting decision.

VAT – recipient of services

Airtours v HMRC

The taxpayer's appeal to the Supreme Court was heard on 25 February 2016. In 'Airtours' PWC provided its services (financial report on Airtours) under a tripartite agreement between PWC, Airtours and Airtours' bankers. Airtours sought to reclaim input tax. HMRC refused the claim on the basis that PWC's services were supplied to Airtours' bankers, and not to Airtours.

Bearing in mind HMRC's present stance on VAT and suppliers' services to pension trustees and employers under tripartite contracts (as recommended by HMRC), the Supreme Court's decision in 'Airtours' is eagerly awaited.

Bankruptcy and elections for pension

Horton v Henry

Court of Appeal hearing due April 2016 – in the light of the April 2015 pension flexibilities, this is an important forthcoming decision on whether trustees in bankruptcy can oblige bankrupt individuals to access DC funds under the new flexibilities, to enhance creditors' returns.

Employer's duty of good faith

Bradbury v BBC

Court of Appeal hearing due in February/March 2017 – a long time to wait! The High Court previously decided in May 2015 that the BBC was not in breach of its employer's duty of good faith by imposing a cap on pensionable salary.

Employer duties

IBM v Dalgleish

Court of Appeal hearing not now anticipated until May 2017 – the High Court decision in 2014/15 that IBM were in breach of the duty of good faith, and the Court's remedies awarded as a consequence of the breach, are being appealed.

Indemnity for section 75 debt

Heis v MF Global Services

Arrangements between group companies including indemnity provisions were, according to the High Court in May 2015, wide enough to include any section 75 debt falling due. The appeal is due to be heard by the Court of Appeal in May 2016.

Defective deeds

Briggs v Gleeds

In July 2015 the High Court held that a series of amending deeds were legally ineffective as they had not been properly executed. This and other matters, including the meaning of the scheme's alteration powers, are being appealed and are due to be heard in the Court of Appeal in July 2016.


Buckinghamshire v Barnardo's

The High Court decided in July 2015 that RPI had not been replaced by CPI and therefore under the wording of the scheme rules the trustee could not switch to CPI. This finding is being appealed. The members are cross-appealing on section 67 Pensions Act 1995, arguing that the trustees switching to another index would breach the section 67 protection for subsisting rights. See our November 2015 Bulletin for the High Court decision. The Court of Appeal hearing is on 5 and 6 October 2016.

RPI/CPI, take two

British Airways v Spencer

British Airways are seeking to overturn the decision of the BA pension scheme trustees to give themselves power to award discretionary pension increases, following the Government's switch from RPI to CPI for statutory purposes. Likely hearing of appeal by Court of Appeal in October 2016.

Statutory right to transfer

Hughes v Royal London Mutual Insurance Society

The High Court has held that a member had a statutory right to transfer, overturning the decision of the Pensions Ombudsman.  Please see the separate article elsewhere in this Bulletin for more detail.





Limitation periods


In a case heard last month, the Pensions Ombudsman held that the date when the six-year limitation period relating to an action for the recovery of pension overpayments stopped was the date upon which the scheme administrator first notified the member of the overpayments and sought repayment.

Ill-health early retirement


An employing authority in the Local Government Pension Scheme was held to have no duty to advise a member of the option of applying for an enhanced ill-health early retirement pension from active status on his redundancy, despite the fact that the LGPS had known that the member had taken sick leave in 2010 for a brain tumour. The Ombudsman held that unless the member had specifically applied for an ill-health pension, his employer was not under any duty to advise him of his ill-health benefit options.

Personal pensions: SIPP provider responsible for transfer delay

Lloyd and others

The Deputy Ombudsman held that a SIPP provider was in large part responsible for delays in making in specie transfers for four account holders to a new provider. This was mainly because the provider had neglected to inform the relevant parties that its procedures required the transfer request to come straight from the new provider.

Early retirement terms


It was held that the scheme rule requiring employer consent for an unreduced early retirement pension was not overridden by a member communication which did not refer to the requirement. Further, the Ombudsman held that the employer was entitled to withhold its consent to early retirement without any breach of its implied duty of good faith as it could take its own financial interests into account in making that decision.

Winding up


The Ombudsman held that a former sponsoring employer unjustifiably stopped a member's monthly pension payments which it had been funding itself, following the winding up of the occupational pension scheme, until the employer was acquired by a new owner in 2013. The Ombudsman held that a reference in the scheme booklet to a pension being payable for life from the date of retirement amounted to an enforceable promise to pay such a pension. The employer's failure to do so was maladministration.  Please see the separate article elsewhere in this Bulletin for more detail.

Transfer values


In December 2015, the Deputy Ombudsman held that it was maladministration for a pension provider to supply incorrect annual benefit statements and transfer authority forms which implied there was no transfer penalty and then to impose such a penalty on a transfer without giving notice to a member. However, she held that following the Steria decision, the provider was not estopped from going back on its incorrect representations about the transfer value as the provider's existing offer of reinstatement meant the member would not suffer detriment if it was not held to the representation.

Recovery of overpayments


In November 2015, the Ombudsman dismissed a complaint by a pensioner about the actions of the scheme administrator and trustees in seeking to recover overpaid pension and failing to put one of his additional voluntary contribution (AVC) funds into payment on time. The Ombudsman held that the respondents were legally entitled to recover the overpayment and reduce the pension to its correct level unless the member had a good defence. The member was unable to provide adequate documentary evidence to support such a defence or to support his claim for increased compensation for late payment of his AVC fund. The case demonstrates the difficulties which can arise for administrators and trustees when seeking the recovery of overpayments.

Time limit for complaints


In November 2015, the Ombudsman dismissed a member complaint that an employer failed to inform them about valuable pension transfer options as it was outside the three-year time limit applying to complaints. The Ombudsman held that the member ought reasonably to have known about the omission complained of in 2005, seven years before she brought her complaint in 2012.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.