Pensions Bulletin 2024/46

Pensions Regulator publishes standalone version of Fast Track tests and conditions

The Pensions Regulator has published a stand-alone version of the Fast Track tests and conditions for DB scheme funding valuations, previously published as Appendix 1 of its “Response to its Fast Track and regulatory approach consultation” (see Pensions Bulletin 2024/29).

Fast Track is a regulatory filter representing the Regulator’s view of tolerated risk such that where the Scheme Actuary confirms that the valuation meets the test criteria the Regulator is unlikely to scrutinise the valuation further. As well as some minor amendments to make the document stand alone, the Regulator has taken the opportunity to make some edits to the wording to further clarify some technical detail in the wake of feedback from the industry.

The Regulator also confirmed that it is engaging with the industry regarding the confirmation that the Scheme Actuary will be required to give in relation to “all Fast Track requirements” – and that it intends to publish this wording in the next few months.

DWP issues latest benefit and pension rates

The Department for Work and Pensions has issued a list of the benefit and pension rates that will operate from 2025 to 2026 following their annual uplift. These include the following:

• The new State Pension – which increases from £221.20 pw to £230.25 pw
• The old Basic State Pension – which increases from £169.50 pw to £176.45 pw
• The standard minimum guarantee of the Pension Credit – which increases from £218.15 pw to £227.10 pw for single people and from £332.95 pw to £346.60 pw for couples.

Separately, The Occupational Pensions (Revaluation) Order 2024 (SI 2024/1174) has been laid before Parliament setting out deferred pensioner revaluation factors for each deferment period based on the lesser of (a) the percentage increase in inflation (on a CPI basis since September 2011), subject to a floor of 0%, and (b) either 2.5% or 5.0% pa, each measured over the whole deferment period before comparison. This year the Order’s one year revaluation factor is equivalent to a 1.7% increase for both the 2.5% and 5.0% capped rates. This in turn will drive Limited Price Indexation pension increases that DB occupational pension schemes are required to deliver as a minimum.

Pensions and debt – Appeal Court decision makes good news for debtors

Mr White was the director of a company and sole member of an occupational pension scheme. The company went into insolvent liquidation. Manolete, a litigation funder, took an assignment from the liquidator for claims of breaches of fiduciary duty against Mr White and obtained a judgment against him for about £1 million.

Mr White has a prospective entitlement of about £750,000 from the pension scheme and Manolete applied to the High Court for an order that forced him to apply to the scheme for his “pot” to be paid to a bank account where it would then be available to part satisfy the judgment debt.

This application was successful, but Mr White appealed, and the Court of Appeal has now, in a very important judgment, unanimously overturned the order of the High Court. Mr White’s pension assets are beyond the reach of his creditors, at least until paid out.

The case turned on the interpretation of section 91 of the Pensions Act 1995, which provides that where an occupational pension scheme member has a right to a future pension it cannot be assigned or otherwise alienated.  Moreover, where a right cannot be assigned etc no court order can be made the effect of which would be that the member would be restrained from receiving that pension.

The High Court had held that section 91 was not breached by the making of the order because it did not itself prevent Mr White from receiving his pension monies, regardless of the fact that Manolete would instantly enforce its judgment debt over these monies.

The Court of Appeal held that this approach was “unreal”.  In reality the reference to “receiving” their pension in section 91 means receiving the pension for their own benefit, not their creditors’ benefit. The principles of statutory construction mean that a “real world” approach should be taken; when a series of individual steps are planned as a composite whole, the statute ought to be applied to that composite whole – the same approach as the courts take to tax avoidance schemes for example.  

Furthermore, the public policy intention behind section 91 is clear – it is a general prohibition on creditors having access to entitlements and rights to future pensions from occupational pension schemes.

Pensions Dashboard updates some of its standards

On 20 November 2024 the Pensions Dashboards Programme announced the publication of draft version 1.2 of its reporting standards, draft version 1.3 of its data standards and draft version 1.2 of its code of connection.

The update to the reporting standards had been promised back in September (see Pensions Bulletin 2024/36). Minor changes have been made to the two other standards.

A “view data model” is also now available, providing more information on the structure of a “view response”.

This now leaves the design standards which will be updated once they have been tested.  Further technical documentation to accompany the technical standards is also scheduled to be released.

State pension transitional protection increases put through

Two sets of regulations have been laid which for those reaching State Pension Age on or after 7 April 2025:

• Increase that part of any transitional new State Pension, which when calculated as at 6 April 2016, was above the then full rate (the “protected payment”), by the increase in the CPI (so by 33.9% for the nine year period ending on 5 April 2025); and
• Increase that part of any pension debit or credit on divorce, that has been applied to such a “protected payment”, by the increase in the CPI since the debit or credit was created on or after 6 April 2016.

The State Pension Revaluation for Transitional Pensions Order 2024 (SI 2024/1209) and The State Pension Debits and Credits (Revaluation) Order 2024 (SI 2024/1208) come into force on 7 April 2025 for most purposes.