HL UK Pensions Law Digest 12 May 2025

Welcome to our latest update, in which we cover:

• Pensions dashboards: schemes with multiple administrators
  • A toolkit from the Pensions Administration Standards Association (PASA) for schemes with multiple administrators (including AVC providers);
• Pensions dashboards: standards for providers and schemes
  • The DWP has approved legally binding standards for pension schemes and providers within scope of the dashboards requirements;
• Pensions dashboards: data protection impact assessment (DPIA)
  • A DPIA has been published for the Money and Pension Service (MaPS) in relation to its provision of the central dashboards architecture;
• Pensions dashboards: questions for the Pensions Minister
  • The House of Commons Work and Pensions Committee has asked for answers to outstanding dashboards-related questions from the Pensions Minister;
• Navigating the tariff fallout: SPP guidance
  • The Society of Pensions Professionals (SPP) has issued guidance on the impact of tariffs and market disruption;
• Overseeing bulk purchase annuity growth
  • A recent speech by the Prudential Regulation Authority (PRA) sets out its approach to overseeing growth in the bulk annuity purchase market;
• Taxation of state pensions
  • A briefing paper from the House of Commons library explains the impact of the freeze on the income tax personal allowance on taxation of state pensions.

Pensions dashboards: PASA toolkit for schemes with multiple administrators

The Pensions Administration Standards Association (PASA) has published a toolkit for schemes with more than one administrator, for example schemes where a separate provider administers additional voluntary contributions (AVCs). Key points are as follows:

• The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) expect all parts of a scheme to connect to the central dashboards architecture (CDA) on the same date. Where this is not possible, any remaining sections should be connected as soon as possible.
• Trustees of an occupational scheme who are unable to connect all sections of the scheme on the same day should follow TPR’s guidance on breaches of the law. However, TPR will not normally consider such a breach to be materially significant if prompt action is taken to connect the remaining sections by 31 October 2026.
• Scheduling by the Pensions Dashboards Programme (PDP) may mean that, where a scheme uses more than one integrated service provider (ISP), not all the ISPs are connected to the CDA by the scheme’s staging date set out in the DWP guidance.
• The PASA toolkit sets out recommended practical steps for schemes with multiple administrators. These include:
  • Checking the date each administrator connected / is planning to connect to the CDA;
  • Where not all administrators will be connected to the CDA by the scheme’s preferred connection date, deciding whether to delay connection for the whole scheme or to connect just the sections where this is possible; and
  • If the trustees decide on a staged connection approach, noting this as a breach in scheme records and considering whether to report to TPR.

Pensions dashboards: approval of standards for providers and schemes

The Pensions Dashboards Programme (PDP) has announced that the standards for pension schemes and providers in scope for the dashboards requirements have been approved by the DWP.

The standards are a set of legally binding rules and controls for the practical implementation of dashboards services and the supporting digital structures. The standards are:

• Data standards: formatting requirements for data which schemes and providers must comply with when returning data to dashboards;
• Technical standards: setting out how providers and schemes interface with the central technical architecture and with each other;
• Reporting standards: requirements for generating, recording and reporting operational information to enable performance measurement and regulatory oversight; and
• The code of connection: the requirements to connect and remain connected, plus security, service and operational standards applicable to participants in the dashboards ecosystem.

Pensions Dashboards: data protection impact assessment

The Pensions Dashboards Programme (PDP) has published a data protection impact assessment (DPIA) concerning the processing of personal data by the Money and Pensions Service (MaPS) in relation to:

• MaPS’ delivery of the PDP, including building and operating the central dashboards architecture; and
• Connecting schemes and providers to the central architecture.

A separate DPIA will cover MaPS’ provision of the MoneyHelper public service dashboard.

The PDP has previously confirmed to us that the DPIA for processing by MaPS would not cover processing by schemes or connecting parties in detail; and that schemes, providers and connecting parties will need to complete their own DPIAs.

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Pensions dashboards: questions from the Work and Pensions Committee

The Work and Pensions Committee of the House of Commons (WPC) has published a letter to Torsten Bell, Minister for Pensions, setting out various questions relating to pensions dashboards. The WPC has requested a response by 21 May 2025.

The questions for the Minister cover:

• Clarity over the responsibility for overseeing the work of different bodies involved in delivering dashboards and for ensuring their work is coordinated;
• Current expectations of when the Dashboards Available Point (DAP) will be (the DAP is the date on which dashboards will become available to the general public);
• How many providers and schemes have applied to defer connection beyond October 2026 and when responses to the applications will be notified;
• Issues with data, including how robust data must be before the DAP, and the intended approach to un-digitised data; and
• The timing and permitted scope of private sector dashboards.

Pensions Regulator (TPR): third party applications

The Pensions Regulator (TPR) has issued guidance on applying to TPR for it to use its powers, including:

• Power to appoint an independent trustee;
• Power to extend the deadline for a cash equivalent transfer value (CETV); and
• Powers relating to the prohibition or suspension of trustees.

The guidance reminds applicants that;

• It is for the applicant to demonstrate that the power should be used.
• Applications cannot be progressed unless all the information requested is included in the application.
• Some applications can only be made by certain persons, such as a trustee or a member.

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SPP: navigating the tariff fallout

The Society of Pension Professionals (SPP) has issued guidance for the UK pension industry on navigating the fallout of US tariffs. Points to note include the following:

Defined benefit schemes

• Trustees should consider how tariffs, increased costs, supply chain disruption, and difficulty raising finance may impact their employer covenant.
• Economic uncertainty and covenant concerns may in turn impact trustees’ willingness to agree to use surplus in ways envisaged under future government proposals.

Local Government Pension Scheme (LGPS)

• LGPS funds with a high allocation to growth assets may be significantly impacted. There could be some indirect impact on members in the form of higher Council Tax bills.

Defined contribution (DC) schemes

• Savers nearing retirement and who have a substantial proportion of their pot invested in equities may see a significant reduction in potential retirement income.
• Members already in drawdown may face a difficult decision whether to continue drawing the same amount, risking faster depletion of funds.
• It would be helpful for government and the pensions industry to remind savers that making significant decisions in reaction to recent market movements often leads to poor outcomes.

Overseeing bulk purchase annuity growth: PRA speech

The Prudential Regulation Authority (PRA) has published a speech on oversight of the growing bulk purchase annuity (BPA) market, given at the Westminster and City Annual Bulk Annuities Conference on 29-30 April 2025. Points to note include:

• The previous year saw a greater number of smaller BPA transactions; while market forecasts for this year anticipate potentially more than 300 buy-in transactions for the first time.
• The PRA is working to support investment by insurers, including by:
  • Speeding up the process for obtaining Market Adjustment (MA) approval;
  • Consulting on proposals for an MA “investment accelerator”; and
  • Working with HM Treasury and the National Wealth Fund to understand the investment structures which would encourage and enable insurers to invest in productive assets.
• The PRA is taking steps to ensure that the insurance sector can safely absorb the high projected volumes of new BPA business, including by:
  • Scrutinising changes in insurers’ terms and conditions, in particular the use of solvency triggered termination rights, which allow pension trustees to terminate a buy-in arrangement if the insurer’s solvency position breaches a pre-agreed threshold;
  • Keeping funded reinsurance risks, and measures to mitigate such risks, as a supervisory priority for 2025; and
  • Focussing on potential implications of changing global risk, including on the credit defaults and downgrades which insurers may experience and on the collateral assets backing funded reinsurance transactions.
• The PRA is seeking to improve transparency, including by publishing the results of its new Life Insurance Stress Test (LIST) for the largest UK life insurers towards the end of the year. When designing the firm-specific disclosures the PRA consulted users, including pension trustees, on the information which would help them understand insurers’ resilience.

Taxation of state pensions

The House of Commons Library has published a briefing paper on the taxation of state pension. The paper comments that the current policy of increasing state pension in line with the triple lock while freezing the income tax personal allowance means that:

• An increasing number of pensioners have income above the personal allowance and so are liable to income tax; and
• The new (single-tier) state pension may in future increase to more than the personal allowance.

By way of background:

• The current maximum amount of new (single-tier) state pension is £230.25 per week (approximately £11,973 per year), although some individuals with legacy state earnings-related pension (SERPS) or state second pension (S2P) may receive more than this.
• The basic state pension (for individuals retiring before 6 April 2016) and the new single-tier state pension currently increase in line with the triple lock, which is the highest of earnings growth, inflation and 2.5%.
• The income tax personal allowance has been frozen at £12,570 since April 2021. In the Autumn 2024 Budget, the new government confirmed that the personal allowance will remain frozen at this level until the end of the 2027/28 tax year.

Authored by Jill Clucas.