Issues affecting all schemes
Pension scams – member leaflet
The Pensions Regulator (TPR) has updated its member leaflet on pension scams so that it is branded from the Pension Scams Action Group rather than TPR. The content of the leaflet is unchanged.
Action
Trustees and administrators should ensure that
they use the most up to date version of the leaflet when sending it
to members.
Automatic enrolment – earnings thresholds
The government has announced that the 2024/25 automatic enrolment earnings thresholds will be retained for 2025/26, meaning they will be:
- Earnings trigger: £10,000.
- Qualifying earnings band: £6,240 – £50,270.
Action
No action required.
Pensions dashboards – system testing
The Pensions Dashboards Programme has published FAQs on system testing. These cover:
- What system testing is.
- Who is required to complete system testing.
- Available system testing resources.
Action
No action required, but trustees and
administrators of schemes that are subject to the dashboards
requirements may find the FAQs helpful.
Issues affecting DB schemes
DB surplus – relaxation of release rules
The government has announced plans to make release of surplus from ongoing DB schemes easier. Trustee consent to any release of surplus will be required. The government will publish details of the proposals this spring.
TPR has published a statement offering support for the proposals but flagging the need to protect members' benefits.
Action
Trustees and employers of DB schemes should
monitor further announcements on the government's
proposals.
Pension Protection Fund – 2025/26 levy
The government has announced that it is considering relaxing the statutory restrictions around the levy that the Pension Protection Fund (PPF) can charge to give the PPF greater flexibility to reduce the levy.
In light of the government's announcement, the PPF has announced that it has reduced its levy estimate for the 2025/26 levy year from £100 million to £45 million. This would be the lowest levy that the PPF has ever charged and 99.7% of schemes are expected to see a levy reduction. The PPF has also published the finalised rules and associated documents for the 2025/26 levy. The rules include a new provision that would enable the PPF to set a zero levy if appropriate levy legislative change is brought forward and sufficiently progressed over the course of 2025/26.
The key dates for the 2025/26 levy are:
- 31 March 2025 (midnight) – submission of scheme returns, contingent asset certificates, asset-backed contribution certificates and special category employer applications.
- 1 April 2025 (5pm) – submission of supporting contingent asset documents.
- 30 April 2025 (5pm) – submission of deficit reduction contribution certificates and exempt transfer applications.
- 30 June 2025 (5pm) – submission of full block transfer certificates.
Action
Schemes which have PPF contingent assets in place
and which need to recertify those contingent assets by 31 March may
wish to check whether the costs of recertification now outweigh the
potential levy saving.
Derivatives – clearing exemption
The government has announced that it will make the exemption for pension schemes from the clearing obligation under the European Market Infrastructure Regulation (as incorporated into UK law) permanent. However, if there are changes to market dynamics or structure or wider government reforms that have a material impact on the value of mandatory central clearing for pension schemes, the government may reassess the exemption.
Action
No action required.
Gilt market dysfunction – lending facility for large pension schemes
The Bank of England has announced the opening of its Contingent Non-Bank Financial Institution Repo Facility for applications. The new facility, which will only be activated during episodes of severe gilt market dysfunction, will lend to participating insurance companies, large pension schemes and LDI funds to help maintain financial stability. Applicants must satisfy various eligibility requirements to apply to participate in the facility. These requirements including holding gilts with a minimum market value which will be reviewed annually (and which the Bank has initially set at £2 billion). In certain circumstances, the Bank of England will also require a guarantor and an associated legal opinion.
Action
If trustees or employers are thinking about
participating in the new facility, they should talk to their usual
Mayer Brown contact.
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Mayer Brown is a global services provider comprising associated legal practices that are separate entities, including Mayer Brown LLP (Illinois, USA), Mayer Brown International LLP (England & Wales), Mayer Brown (a Hong Kong partnership) and Tauil & Chequer Advogados (a Brazilian law partnership) and non-legal service providers, which provide consultancy services (collectively, the "Mayer Brown Practices"). The Mayer Brown Practices are established in various jurisdictions and may be a legal person or a partnership. PK Wong & Nair LLC ("PKWN") is the constituent Singapore law practice of our licensed joint law venture in Singapore, Mayer Brown PK Wong & Nair Pte. Ltd. Details of the individual Mayer Brown Practices and PKWN can be found in the Legal Notices section of our website. "Mayer Brown" and the Mayer Brown logo are the trademarks of Mayer Brown.
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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
