Welcome to your weekly update from the A&O Shearman Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.
High Court approves decisions facilitating wind-up and distribution of surplus
The High Court has approved decisions in principle by the trustee of the Coca-Cola Company Pension and Assurance Scheme that involved varying existing buy-in arrangements to facilitate the winding up of the scheme and use of surplus to augment pensions: KO UK Pension Trustees v Barker (Coca-Cola Company Pension and Life Assurance Scheme).
The trustee had, in principle, decided to:
- agree to vary a termination payment payable in connection with the scheme's existing buy-in policy, reducing the amount payable to match the cost of a replacement policy covering the same liabilities. In return the principal employer would give notice to terminate the scheme, allowing the trustee to access surplus to augment member benefits during the winding-up of the scheme
- exercise the power to augment benefits by giving all beneficiaries an equal percentage augmentation (an increase of around 27%).
On the basis that these were momentous decisions which would lead to the scheme's termination and winding up, the trustee sought the court's blessing for its proposed decisions. The court described the combined decisions as "in effect, swapping a contingent possibility of a greater surplus in the future, which would fall to be shared between fewer beneficiaries... for present, or imminent, augmentations for a larger number of beneficiaries."
The context for the decisions was that the buy-in policy was structured to allow for additional accrual by five remaining active members of the scheme (on payment of additional contributions each year); insured liabilities were reinsured with a captive reinsurer within the Coca-Cola group. Termination of those arrangements would (without amendment) trigger a payment greater than the cost of a replacement buy-in policy and would therefore increase the existing surplus in the scheme.
However, the trustee could only terminate the insurance agreement on specific events, including the commencement of winding-up of the scheme. The trustee had no power to augment benefits unilaterally while the scheme was ongoing, and no unilateral power to trigger winding-up. The proposal in relation to the buy-in policy came from the reinsurer, which was interested in the release of regulatory capital held in respect of its obligations under the reinsurance agreement (which is entirely separate from scheme assets), but did not want to make the full termination payment and thereby increase the surplus held by the trustee. The principal employer would not give notice to terminate the scheme unless the trustee agreed to the reduced termination payment.
The compromise proposal was as set out in the bullet points above; the court commented that "the deal presently proposed would prevent the scheme from becoming a form of tontine, under which a dwindling cohort of the longest living scheme members may, in future, 'scoop the pool'" if the scheme were terminated. It noted that the employer group could simply wait matters out, and that members (with finite lifespans) could not. Having considered all the complexities involved, including the need for consultation with active members which meant that arrangements in relation to those individuals could not yet be finalised, the court was satisfied that the trustee had acted properly in reaching its decisions, and approved the proposed transaction and distribution of surplus.
The context is quite complex and scheme-specific but the court was willing to look at the practical realities of the situation and approve the decisions in principle taken by the trustee. The decision is currently unavailable on public sources; please contact your usual A&O Shearman adviser for more information.
Pensions UK publishes updated vote reporting template and guidance
Pensions UK (previously the PLSA) has published an updated version of its vote reporting template, alongside new detailed technical guidance. The aim of the template is to support improved transparency, consistency, and engagement between asset managers and asset owners, by creating a standardised and comprehensive way of reporting voting activity. The new guidance provides detailed explanations for each field within the template and clarifies data expectations, formatting, and interpretation. Use of the template is voluntary but is aligned with regulatory frameworks such as the UK Stewardship Code and Implementation Statement requirements.
See the template and read the technical guidance.
TPR: master trust bulletin
The Pensions Regulator (TPR) has published its latest master trust bulletin. The bulletin discusses a range of issues relevant to master trusts, including:
- requirements to include information on illiquid asset investment in statements of investment principles (SIPs), clarifying that these requirements apply to all default arrangements, not just the core or primary default offering and including notes on best practice
- a focus on private market investment: encouraging trustees to develop and stress test clear policies on this and setting out specific considerations
- tips on how to plan for and draft an implementation strategy following a triggering event
- recommendations on engaging with service providers about the use of AI
- expectations on challenging advisers in relation to how well they are considering systemic risks
- guidance on improving climate reporting.
It also notes that TPR is reaching out to schemes with more than 100,000 active and deferred members to assess how they are improving data quality for dashboards, and will be requesting data on asset allocation, investment performance and returns ahead of value for money requirements coming into force.
PDP blog post on dashboards testing
The Pensions Dashboards Programme (PDP) has published a blog post discussing progress on live testing of the dashboards system. The blog post includes a brief description of the experience of accessing pension records through the system. Internal testing of the user journey took place in the summer, ahead of the first phase of targeted consumer testing with a small number of participants, likely to last around 12 weeks with up to 15 connected schemes.
Pension Academy Online, Tuesday, October 7 and Thursday, October 9, 2025
Our next Pensions Academy Online sessions will take place on Tuesday, October 7 and Thursday, October 9, 2025. Each webinar begins at 9:30am and will last approximately one hour. We will be covering:
Legal update—Tuesday, October 7
We'll round up all the latest developments and outline what's on the pensions horizon.
Pensions 2030 and beyond: preparing now for the future (DC-focused) landscape—Thursday, October 9, 2025
The Pension Schemes Bill currently going through Parliament heralds significant change across the UK pensions landscape, with a shift towards fewer, bigger and better-performing DC offerings. We'll look at how the big picture fits together, from the perspectives of trustees, employers and members, to help you plot a route from here to there.
If you would like to attend please register here.
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.
