HL Pensions Law Digest 31 March 2025

Welcome to our latest update, in which we cover:

• Pensions dashboards blog: connecting via a third party
  • Explaining the key steps when connecting to the dashboards ecosystem through a third-party connection provider.
• HMRC Newsletter 168:
  • Further information about: migrating to the Managing pension schemes service; capped drawdown tables; changing requirements for European QROPS; and the deadline for applying for lifetime allowance protections and enhancements.
• Phillips v National Grid Gas Plc
  • Considering whether claims in relation to the refusal of an incapacity pension were made out of time.
• Virgin Media: Parliamentary written answer
  • According to the Pensions Minister, the government is “actively considering” its next steps.

Pensions dashboards blog: connecting via third party

The Pensions Dashboards Programme (PDP) has issued a blog explaining some of the practicalities of connecting to the dashboards ecosystem via a third party. PDP expects that most pension schemes and pension providers will not connect directly but will use a third-party connection provider, such as their third-party administrator or an integrated service provider (ISP). Key steps are:

Check your “connect by” date

• Your “connect by” date is set out in the March 2024 guidance from the Department for Work and Pensions (DWP) for a scheme of your size and description. Compliance with the connect by date is not a statutory requirement, but schemes and providers must have regard to the guidance.

Agree your connection date with your connection provider

• Your connection date is the actual date when you plan to connect, preferably avoiding bank holidays and weekends.
• Your connection provider should submit this date via the PDP connection portal.
• If your chosen date is more than 30 days before or after your “connect by” date (see above), then you should notify PDP and the relevant regulator (the Pensions Regulator (TPR) for occupational schemes).

Check you have a registration code

• Your registration code is a unique code for your scheme provided by the relevant regulator (TPR for occupational schemes).
• In some cases your scheme will need more than one code, for example if you have multiple sections, with separate administrators and connection providers. PDP has issued guidance on how to obtain registration codes.

Register with the Money and Pensions Service (MaPS)

• You must register with MaPS using your registration code. Your connection provider may register on your behalf.

Connection by PDP

• PDP will connect your scheme on your agreed connection date. Once your connection is active (as shown on PDP’s connection portal), your scheme will be subject to the dashboard duties set out (for occupational schemes) in the Pensions Dashboards Regulations 2022/1220.

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HMRC Newsletter 168

HMRC’s latest newsletter, issued on 27 March, covers the following.

Managing pension schemes service

• Further details of how and when schemes should migrate to the Managing pension schemes service and on filing scheme returns for 2024/25 onwards.

Tables for capped drawdown funds

• Updated defined contribution (DC) drawdown pension tables and guidance, to be used from 1 September 2025 for calculating the “basis amount” for determining the maximum pension from capped drawdown funds.
• As a reminder, before pension freedoms were introduced on 6 April 2015, drawdown funds were “capped”, with members only permitted to take income withdrawal up to a maximum calculated in accordance with legislation and HMRC tables.
• All drawdown funds designated since 6 April 2015 are “flexi-access drawdown funds” and are not subject to a cap.
• The capped income rules continue to apply to pre-April 2015 drawdown funds, unless the member chooses to convert the fund to a flexi-access drawdown fund (or breaches the maximum withdrawal limit). Any further funds which the member designates for drawdown within the same arrangement will also be subject to the capped drawdown limits.
• While a member’s income withdrawal is only from capped drawdown funds, the reduced money purchase annual allowance does not apply. For this reason, some members have preferred to keep their DC pots in capped drawdown funds rather than converting to a flexi-access fund.

Transfers to QROPS in the EEA

• Further information about the alignment of requirements for qualifying recognised overseas pension schemes (QROPS) in the European Economic Area (EEA) with conditions for non-EEA QROPS. QROPS in the EEA must confirm to HMRC by 7 May 2025 that they meet the new conditions. HMRC’s list of recognised overseas schemes will be updated by 15 May 2025.

Abolition of the lifetime allowance

• A reminder that 5 April 2025 is the deadline for applying for:
  • Fixed protection 2016 and individual protection 2016;
  • International enhancements; and
  • Pension credit enhancements.

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Phillips v National Grid Gas Plc

The case concerned the application of limitation periods to a member's prolonged appeals for an ill health early retirement pension after dismissal on health grounds.

Background

• Mr P had been a craftsperson employed by the employer from 1981 to 2002. In 1999, he injured his back in an accident at work and was subsequently dismissed.
• At the time of his dismissal, the employer sent him a letter stating that his employment had been terminated “on the grounds of capability due to ill health”.

Ill health pension rules

• Mr P was a member of an occupational pension scheme, which provided enhanced pensions on a member’s dismissal “due to incapacity”.
• “Incapacity” for this purpose meant ill health or incapacity which, in the employer’s opinion, was likely to cause permanent incapacity to carry out the member’s duties.

Mr P’s application for ill health early retirement

• Mr P’s application in 2002 for an incapacity pension was turned down, on grounds that the employer had informed the pension trustees that Mr P had not been dismissed for incapacity.
• Mr P complained but a second employer’s opinion in 2008 also resulted in rejection.
• Following a further complaint, the pension trustees asked the employer in 2009 to reconsider its opinion. The employer did not give an opinion in response to this request.

Court applications

• Mr P complained in 2022 to the County Court, which dismissed his claims and gave summary judgment for the employer.
• The County Court found that even though it was “highly arguable” that the employer’s 2002 and 2008 opinions were wrong, Mr P’s loss arose in 2002 and 2008, meaning that his claim was outside the six year limitation period.
• Mr P appealed to the High Court.

What the High Court decided:

• Due to significant delays, most of Mr P’s arguments were time-barred.
• In addition, the employer did not have a continuous duty to provide an opinion on Mr P’s “incapacity” under the scheme rules. (Finding a continuous duty would have supported Mr P’s argument that his claim was not made out of time.)
• However, it was arguable that the employer was in breach of duty for failing to provide a fresh opinion when requested by the trustees 2009, and to do so within a reasonable time. When the “reasonable time” expired following the 2009 request had not been fully considered.
• Mr P’s appeal against summary judgment was allowed in part, so he could proceed with his argument in the County Court that the “reasonable time” extended until at least 2016, making his claim in 2022 within the six year limit.

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Virgin Media: Parliamentary written answer

In a Parliamentary written answer on 25 March the Pensions Minister, Torsten Bell, acknowledged that while the Virgin Media judgment “could result in uncertainty for schemes and members”, “the impact on individual schemes and their members will vary”. He confirmed that the government is “actively considering” its next steps.

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Authored by the Pensions team.