Our latest insight reports on guidance from the ICAEW on the Virgin Media ruling, TPR news, and HMRC’s update on the net pay top-up scheme.
ICAEW issues guidance on section 37 actuarial confirmation case
On 13 February 2025, the Institute of Chartered Accountants in England and Wales (ICAEW) published guidance on the Virgin Media 2024 Court of Appeal case which determined that rule alterations made to members’ contracted-out reference scheme rights between 6 April 1997 and 5 April 2016 without the necessary section 37 actuarial confirmation will be void. The guidance provides assistance but draws short of making specific recommendations – it is for trustees, sponsoring employers and auditors to reach their own view as to what may be an appropriate approach in the circumstances. It is mainly aimed at sponsoring employers and their auditors but will also be of relevance to pension schemes and trustees.
The guidance notes that auditors “must consider what impact (if any) the ruling may have on their risk assessment and planned procedures, as well as the auditor’s report.”
Trustee considerations
The guidance outlines the three main approaches that most trustees are taking, the possible justifications for each and main considerations.
Notably, this section includes wording that trustees may wish to at least identify what amendments have been made and whether section 37 confirmation was required.
-
Approach 2: gather information
Noting that even a restricted inquiry could helpfully inform next stages and that even if the Government does intervene to permit retrospective actuarial confirmation, schemes will probably have to work out which amendments need this.
-
Approach 3: carry out an in-depth assessment
Referencing that this could take a lot of time and be costly and that it might not be possible to calculate any additional liabilities at this stage.
TPR round-up
Blog on key initiatives over the next twelve months
The Pensions Regulator’s (TPR) 17 February blog outlines what the pensions industry can expect from the regulator during the next year as part of its move towards a ‘more prudential style of regulation’ including the following key initiatives:
- improved data standards;
- amendments to the supervision of ‘strategically significant’ schemes, beginning with master trusts (for more details see next item);
- the launch of an innovation hub;
- confirmation of TPR’s enforcement approach;
- working on the value for money framework and climate-related risks;
- improving trusteeship standards; and
- new guidance on alternative defined benefit scheme models.
TPR provides further details of its new DC governance approach
TPR has provided further details of its more ‘prudential’ approach to regulation of defined contribution (DC) schemes which will see TPR supervision move to a four segmented approach based on: (1) monoline master trusts; (2) commercial master trusts; (3) non-commercial master trusts and collective DC schemes; and (4) single and connected employer DC schemes.
The idea is that these changes will help TPR identify market and saver risks “sooner and enhance the pensions system” with master trusts becoming the “gold standard in pension provision.”
Master trusts will be assigned a specific multi-disciplinary team with members having expertise in financial analysis, business strategy, investment and governance. Supervision will be more strategic with fewer data requests but more ‘focused, expert-to-expert meetings.’ TPR’s announcement comes off the back of a pilot initiative with three large master trusts during which this new style of supervision was successfully trialled.
Sarah Smart to step down as Chair of TPR in July 2025
Sarah Smart, the current Chair of TPR is to leave the position this July. She has been on TPR’s board since 2016. A successor has not yet been appointed – the new appointment will be headed up by the Department for Work and Pensions under governmental public appointments guidance.
HMRC expected to implement top-up payment initiative in 2024-25 tax year
The Government has confirmed that it expects to start making top-up payments in 2026 (covering the 2024-25 tax year) to low earners who are in net pay pension schemes which will remove an inequity between this group and equivalent pension savers that use relief at source arrangements. Around 1m individuals will be in scope and they should each receive around £70 per annum. The requirement for HMRC to make these payments was introduced by the Finance (No. 2) Act 2023.