The main pensions developments over the past couple of weeks have come from TPR with its announcement of an oversight framework for professional trustees, a push for schemes to ensure they are ‘dashboard-ready’ and for poorly performing DC schemes to improve or consolidate, and its second climate adaptation report. We cover these together with the latest on potential legislative changes to the PPF and the launch of the Companies House identity verification service.
TPR round-up
TPR to introduce oversight framework for professional trustees
On 2 April 2025, the Pensions Regulator (TPR) confirmed that, as part of its shift towards a more prudential form of regulation, it will be introducing an ‘oversight framework’ for professional trustee (PT) firms. This follows its late 2024 initiative in which it liaised with the eleven largest trustee firms to help it identify good practice, risk areas, ways to improve outcomes and ensure compliance.
The PT sector has significantly expanded in recent years with over half of UK schemes having a professional or sole trustee and TPR has identified a need to engage more closely with the market in the interests of savers and effective governance.
“Between them, just 10 firms govern more than a trillion pounds of savers’ retirement income.
As part of our new risk-based and outcome-focused approach to regulation, we are extending our engagement with these firms to identify and mitigate any risks to pension savers.”
Market oversight report
TPR’s Market oversight: Professional trusteeship report outlines three key insights from the 2024 engagement exercise together with five areas which will come under the oversight framework.
| Insight | Detail |
|---|---|
| Different structures | There are varying business models and service offerings including several firms that also provide add-on services such as administration and professional advice. This brings both efficiencies but also the possibility of conflict risk. |
| Back office support | Certain PTs employ ‘back office’ support such as governance – this provides expertise but also possible accountability and quality assurance issues. |
| Expansion | Some firms are expanding rapidly increasing the availability of services but also raising possible issues around standards and entry criteria. |
| Future engagement area | Detail |
|---|---|
| Employer relationship | and how this is managed by PTs. |
| Profit and remuneration model | and whether it impacts decision-making, for example, are services diminished to save costs? |
| Sole trustee | why this model, is it influenced by cost and what are the internal controls? |
| In-house advisers | and whether this adversely affects decision-making or advice. |
| Scheme decision-maker | how are decisions made and whether they are made by those with appropriate knowledge and understanding with suitable delegation. |
Next steps
TPR’s Market Oversight team will set up supervisory relationships with PTs this summer with a view to all firms being overseen by the end of 2025. Data collection will form part of the engagement process.
Once it has assessed risk, TPR will set out its expectations and what mitigations are needed to deal with risks. It may also use its powers should a firm not meet TPR’s expectations on a significant risk. Good practice will also be shared.
PT firms will find TPR’s current thinking on its engagement to date useful to help prepare themselves for the upcoming initiative and any areas TPR may identify as requiring further consideration in the interests of members and effective delivery of professional trustee services.
Increased use of enforcement powers for poor governance of DC schemes – consider if DC savers need to be in bigger scheme
We reported back in September that TPR had used its compliance and enforcement powers ten times during January and June 2024 for breaches of the more detailed annual value for members (VfM) assessment that specified (smaller) defined contribution (DC) schemes have to complete. TPR’s July to December 2024 compliance & enforcement bulletin details an upswing in the use of its VfM enforcement powers during this period with nineteen schemes receiving penalties meaning total fines have now reached £97,750.
TPR said: “All savers deserve to be in schemes with good governance. Where trustees cannot compete with the best in the market, either in terms of value or governance, they should consider whether a transfer to a better-value scheme and winding up is what is best for their savers.”
TPR provides update on latest developments in fight against pension scams
The Pensions Regulator’s (TPR) 9 April press release outlines the latest action being taken by TPR and the Pension Scams Action Group (a multi-agency taskforce of law enforcement, government and industry to combat pension fraud) in the ‘fight’ against pension scams. This includes:
-
Artificial intelligence (AI)
TPR and PSAG have developed an AI tool to identify pension scam websites – this has been used to review 830 websites, remove 29 high-risk sites and refer 94 sites to relevant bodies.
-
Action Fraud replacement
Action Fraud is to be replaced later in 2025 by a new Fraud and Cyber Crime Reporting and Analytics Service. The new service will include improved intelligence gathering, report analysis and onward submission to the police.
-
Experts
TPR has arranged for specialists to work in scam agencies to harmonise the work carried out by scam prevention organisations.
Commentary: TPR note that surveys carried out indicate that many schemes do not appreciate that scams should be reported to Action Fraud and reiterates that trustees should ensure they do so in appropriate cases.
TPR issues second climate adaptation report with message for small DC schemes to “improve or consolidate if they cannot protect savers from climate risk”
TPR’s second Climate adaptation report (the first was published in 2021) provides TPR’s analysis of its and the schemes it regulates resilience to climate change, future ‘adaptation priorities’ and how TPR is working with the pensions industry to address climate risks and difficulties. It covers the relevant climate change risks for occupational pension schemes, their obligations in respect of climate change and how trustees are addressing risks.
As regards TPR steps, reference is made to an internal TPR ESG team consisting of an ESG, Climate and Sustainability Lead, Senior Sustainability Adviser and specialist advisers and the forthcoming setting up of a central ESG, climate and sustainability team.
TPR’s accompanying press release references TPR data showing that smaller DC schemes perform worse than their larger counterparts when it comes to addressing climate change risks and too many smaller schemes lack adequate knowledge and understanding in this area.
“Trustees, in line with their fiduciary duties, should consider material financial risks arising from climate change and nature loss when making long-term investment decisions and how these risks can be mitigated.
“Where trustees cannot meet our expectations on protecting savers, they should ask themselves if consolidating into a larger scheme would be in their savers’ best interests.” [Source: TPR press release]
Action: Although the press release concentrates on smaller DC schemes, TPR expects all schemes to meet their statutory obligations in respect of climate change and wants schemes to achieve more than minimum compliance.
Dashboards: series of short films released in push for schemes to be ‘dashboard-ready’
On 11 April 2025, TPR released a set of short films “highlighting the difference pensions dashboards will make to savers.” They form part of TPR’s push to ensure that schemes in scope are ready to connect on their staging date.
The press release lists five key actions for trustees: (1) ensure scheme data is ready for dashboards; (2) use TPR’s checklist to keep on top of preparations; (3) appoint a dashboards contact on TPR Exchange; (4) liaise with relevant parties including the scheme administrator and AVC provider(s); and (5) maintain an audit trail of the process and have trustee board oversight of the project.
Pension Protection Fund (PPF): possible legislative change and strategic plan
The Pensions Minister’s 20 March 2025 written parliamentary answer on what measures the forthcoming Pension Schemes Bill may contain on the PPF notes that the Government “will continue to consider whether there are further opportunities for change in the pensions compensation system.”
This most likely refers to the possibility that the PPF’s surplus could, with legislative changes, be used to increase compensation levels – the most likely candidate should this be the case being indexation of pre-1997 pension rights (which is “firmly on [the Government’s] radar”) and possibly a change to the 90% compensation level for those members below normal pension age as at the assessment date. See our insight for details of current parliamentary work on indexation of pre-1997 pensions – the Government’s response is expected in the ‘coming weeks’.
The PPF’s press release and strategic plan for 2025-28 refers to the time being right for legislation review, referencing current liaison with the Government on both potential compensation changes and the levy flexibility changes that it is anticipated the Pension Schemes Bill will include, allowing the levy to be reduced further than it presently can, possibly down to zero. The PPF notes that it has now been protecting DB members for 20 years and “continues to act as the ultimate ‘backstop’ for around £1tr in liabilities.” Its goals for the next three years include “to: act in the interests of those it protects; adapt and evolve; build on its strong foundations; and help shape positive change in the pensions industry.”
Companies House guidance on identity verification by individuals and Authorised Corporate Service Providers
On 8 April 2025, Companies House announced the start of its new identity verification service for new and existing company directors, persons with significant control and agents who file information at Companies House together with guidance for individuals on how the process will work and guidance for Authorised Corporate Service Providers, registered and authorised agents that can verify people’s identity.
Pensions implications: The requirement to verify relevant individuals’ identity (and other changes such as the requirement for corporate directors to be natural persons) impacts scheme employers and also corporate trustees and they will need to ensure that the requirements are complied with.
See our ECCTA 2023 hub for further information about the Economic Crime and Corporate Transparency Act 2023 under which identity verification and other prevention of economic crime and corporate structure abuse reforms are being introduced.