There have been two major developments in pensions – the eagerly awaited Pension Schemes Bill has been published and the Government has made an important (and very welcome) announcement on Section 37 certificates.

The key points for trustees and sponsoring employers of occupational pension schemes are summarised below.

Pension Schemes Bill

The Pension Schemes Bill has been introduced to Parliament. As expected, it includes measures relating to the following:

Defined benefit (DB) schemes

• Surpluses: changes aim to make it easier for trustees of DB schemes to release surplus back to employers and members.
• Superfunds: a legislative framework for DB superfunds is included.
• PPF levy: restrictions that prevent the Pension Protection Fund from reducing the PPF levy are being removed.
• PPF and FAS: the definition of “terminal illness” for the purposes of the PPF and the Financial Assistance Scheme is being extended.
• Pensions dashboards: changes aim to facilitate the display of PPF and FAS information on the Government-backed pensions dashboard service provided by the Money and Pensions Service.
• Pensions Ombudsman: the legal standing of the Pensions Ombudsman to act as a competent court in overpayment cases is being re-established.

Defined contribution (DC) schemes

• Consolidation: subject to some exceptions, multi-employer DC schemes will be required to have at least £25 billion of assets in their main default arrangement by 2030.
• Investment: the Government will be able to set mandatory investment targets for DC schemes (although it has said it has no current intention of using this power).
• Small pots: a legislative framework for providers to be authorised to act as consolidator schemes for small DC pots is included and there is provision for pots worth £1,000 or less to be automatically consolidated into those schemes.
• Value for money: a value for money framework for DC schemes is included.
• Decumulation: default decumulation solutions will be required for DC schemes.

This is a significant package of reforms to the UK pensions system. However, the Bill is unlikely to receive Royal Assent before 2026 and most of the measures will require regulations to be consulted on and made before they come into force. The Government has published a roadmap, which sets out the proposed timing of the various measures and indicates that most will come into force in the period from 2027 to 2030. It will therefore be some time before the reforms take effect.

We will track the Bill’s progress through Parliament and keep you updated on developments, as well as taking a deep dive into some of the topics in future publications.

Section 37 certificates

The Government has also confirmed that it will introduce legislation to give schemes affected by the Virgin Media decision (see our previous post for details) the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards. Although much will depend on the precise scope of the legislation and the ability of schemes to meet the requirements, this development will be widely welcomed by trustees and sponsoring employers of schemes previously contracted-out on a salary-related basis.

The change can be made by regulations, so we expect to see regulations laid before Parliament in the near future.

For more information on any of these developments, please speak to your usual Linklaters contact.