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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.
Summary
- HMRC publishes draft normal minimum pension age transition rules for members aged 55 or 56 on April 5, 2028 who are entitled to access benefits.
- Pensions dashboards: interim guidance on manual reporting commencing in October 2026 for schemes not yet ready for daily automated reporting.
- High Court determines that a scheme rule required a forward-looking test for discretionary excess increases, limiting awards if there is material uncertainty over future employer contributions.
- TPR updates guidance on authorisation and supervision of unconnected multi-employer collective DC schemes.
HMRC: consultation on transitional rules for increase in minimum pension age
The Normal Minimum Pension Age (NMPA), which is the earliest age at which most individuals can access their pension savings without incurring tax penalties, will increase from age 55 to age 57 on April 6, 2028. Anyone who has not yet reached age 55 at that date will normally have to wait until age 57 to access their benefits. However, HMRC has for some time indicated that a transitional regime will be provided for individuals who have reached age 55, but not age 57, as at that date and who have become entitled to access their benefits.
HMRC is now consulting on draft regulations for that transitional regime. The draft regulations provide that members aged 55 or 56 on April 5, 2028, who have already taken steps to access benefits will be treated as having reached age 57 immediately before certain payments are made. This means that payments and lump sums continue to qualify as authorized payments where the entitlement arose before NMPA increased to age 57.
The provisions cover certain pension income payments, stand-alone lump sums, pension commencement lump sums, pension commencement excess lump sums and trivial commutation lump sums (TCLS) including access to subsequent TCLS payments where a qualifying payment was made before April 6, 2028.
The requirement that a member must have become entitled to their benefits—that is, taken steps to access them—means that members aged 55 or 56 who have a prospective right (rather than an actual right) to a pension or lump sum will have to wait until age 57. Schemes will need to communicate clearly with members to avoid confusion; for example, HMRC has commented previously on how the change in NMPA would affect the ability for members to take an uncrystallized funds pension lump sum (UFPLS). The change could trigger an increase in member activity in the run-up to April 6, 2028. The consultation ends on September 28, 2026.
Dashboards: guidance on interim manual reporting
The Pensions Dashboards Programme (PDP) recently announced that the mandatory implementation deadline for daily automated reporting of data would be extended to March 1, 2027, although the intention remains that parties should be able to report daily before the end of November 2026. Organizations that have not yet implemented daily reporting will be required to submit some key metrics manually (via file upload) until implementation is complete.
The PDP has now published guidance on how to report manually to the Money and Pensions Service commencing in October (for September 2026 data) in line with the reporting standards until they move to daily reporting via the Application Programming Interface. The guidance covers what data should be provided and how, with relevant deadlines.
High Court: scheme increase rule included forward-looking assessment
The High Court has ruled on the interpretation of the rules of the WPS Section of the Northumbrian Water Pension Scheme: Northumbrian Water Ltd v. Northumbrian Water Pension Trustees Ltd.
The WPS Section rules provided guaranteed annual pension increases for pre-2008 service in line with RPI up to 5%, with a further increase payable if RPI exceeded 5% and the trustee considered, after consulting the scheme actuary, that the additional increase could be paid without increasing the employer’s ordinary annual contributions. The scheme was in deficit on its last valuation and the parties sought directions on whether the trustee should be paying increases above the guaranteed amount. The disputed excess increases affected some 2,000 members and had an estimated value of about GBP26 million.
The case raised a number of issues around the interpretation of the specific rule—what did the reference to the level of employer contributions mean in terms of trustee considerations about the award of increases? Mr. Justice Richard Smith held that the rule required an assessment of whether employer contributions would have to increase in the future if a full RPI increase was paid, irrespective of whether that increase would be immediate or at the next actuarial valuation.
If the trustee considered that higher employer contributions were likely to be required, then it would be appropriate to consider the likely approach that would be adopted (including all reasonably foreseeable future events and any impact on the security of existing benefits if increases were granted). As to the relevant level of confidence about future contribution levels, the rule did not permit additional increases if there was ‘material uncertainty’ about whether additional employer contributions would be required.
The decision also considers a number of other issues specific to the circumstances of this scheme, including the relevance and implications of the scheme being sectionalized (and formerly segregated) with differing increase rules in other sections. In this respect, the court determined that members of this section should not be treated as solely entitled to the excess resources of the scheme where there were proper claims for increases under the provisions of other sections, and that an attribution of assets to sections was not required. The trustee should have regard to all relevant claims, to whether they are subject to conditions and to whether those conditions have been satisfied.
TPR: guidance on CDC authorization and supervision
From July 31, 2026, regulations allowing unconnected employers to participate in collective DC (CDC) arrangements came into force and, alongside them, the Pensions Regulator’s (TPR’s) revised Code of Practice for the authorization and supervision of CDC pension schemes.
TPR has published both new and updated guidance explaining how prospective schemes should meet the requirements, including guidance on how CDC schemes should approach holding cash and near-cash assets as part of their financial resources, meeting the systems and processes requirements, promotion and marketing, and other matters relevant to authorization and ongoing supervision.
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.
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