Pensions Bulletin 2025/01

All praise PSIG, but its future remains uncertain 

The Pension Scams Industry Group has received a clear vote of confidence by those who responded to the consultation it launched in May 2024 (see Pensions Bulletin 2024/17), but how this voluntary organisation, whose costs are privately-borne, is to be funded into the future, in response to the clear desire for it to continue and to expand its work, remains to be seen. 

In publishing its response to the consultation, PSIG has shown how valued the voluntary organisation is across all its activities – including in producing and maintaining its Code of Good Practice and running its monthly Pension Scams Industry Forum. If anything, stakeholders would like to see it doing even more, at greater speed, to assist the pensions industry in tackling the ever-evolving threat from pension scammers. 

Going forward, PSIG’s initial focus will be on updating the Code, which is dependent on the DWP delivering on the long-anticipated necessary changes to the 2021 Conditions for Transfers regulations on which, in June 2023 the DWP acknowledged there were difficulties in their application (see Pensions Bulletin 2023/25).  

However, if these regulations look likely to be delayed beyond mid-2025, PSIG will update its guidance to remind users how to deal with transfers in the most efficient and risk-controlled way. Publication of an updated Code will then depend on PSIG obtaining explicit support from the DWP, Pensions Regulator, FCA and the Pensions Ombudsman because of concerns that the absence of updated regulations might expose those who follow the updated Code in the event of complaints by a member or their representative in future. 

Separately, during the first half of 2025, PSIG will consider its objectives in the light of the consultation feedback and will set out some proposals for consideration. In the meantime, it is to scale down its privately borne governance costs, including its Companies House registration as a Community Interest Company, its data protection registration and its website development. 

UK sustainability disclosure standards move a step closer 

The Government is being recommended to endorse the first two global standards on sustainability disclosures for companies for use in the UK. These standards, IFRS S1 and IFRS S2, published in June 2023 by the International Sustainability Standards Board, cover sustainability-related financial information and climate-related disclosures respectively (see Pensions Bulletin 2023/32). 

This recommendation, publicised by the Financial Reporting Council, follows what seems to have been a significant delay by the previous Government which had intended to make endorsement decisions by July 2024, but did not commission an advisory committee to examine the issue until May 2024. 

That committee has recommended minor amendments to both standards for the purpose of their UK application. 

The Department for Business and Trade will now need to consider this recommendation and determine the way forward. Consultation by the Government is expected in the first quarter of this year. 

Law Commission delivers scoping paper on possible changes to divorce law 

The Law Commission’s review of the laws governing how finances are divided when couples end their marriage or civil partnership, announced in April 2023 (see Pensions Bulletin 2023/14), has reached its next stage with the publication of a scoping report. 

The Commission has concluded that the law needs to be reformed to “provide a cohesive framework in which parties to a divorce or dissolution can expect fair and sufficiently certain outcomes” and presents Government with four models that reform could take. These range from codifying the current case law to introducing default rules to determine the division of assets. The report asks the Government whether it agrees that the law needs to be reformed, and to choose the model for reform that should be adopted. 

Chapter 10 of the report examines the current law and practice on the treatment of pensions on the division of parties’ assets on divorce, before going on to set out the issues that pension assets present and the problems with how pensions are currently treated and valued. One of the issues coming through is that the significance of pension assets is not being widely recognised by divorcing couples, with women likely to lose out as a result. The report also points to the popularity of “offsetting” in which pension assets are undisturbed, but which although taken into account when considering other assets, such as the matrimonial home, can result in irrational or unfair outcomes, because of the ‘apples versus pears’ nature of comparison.  

Chapter 10 concludes by saying that, to address the unfairness issue, the key issue for law reform is whether pension sharing should be the default statutory position for addressing pension assets, or at least, whether there should be explicit mention in section 25 of the Matrimonial Causes Act 1973 of pensions as one of the factors the Court must consider when making financial provision orders (if this section is retained). And if a default statutory position were to be adopted for pension assets, whether equal sharing of pensions should be the starting point. The report also makes clear that any move to encourage much wider use of pension sharing orders would have to be accompanied by an overhaul of the associated pension sharing procedures to mitigate the costs and delays that often arise.  

The responsible Minister is now expected to respond as soon as possible, and in any event with an interim response within six months and a full response within a year. 

Virgin Media – could regulations resolve the issue? 

On 17 December 2024 three pensions industry bodies issued a further update to their members regarding the Virgin Media case. In it, the Association of Consulting Actuaries, Association of Pension Lawyers and Society of Pension Professionals said that their representatives have been in regular communication with the Department for Work and Pensions to discuss the issues arising from the July 2024 Court of Appeal decision and that the DWP has been examining what form any intervention could take. 

This update follows on from one immediately following the Court of Appeal decision. Back in July, these bodies mentioned a proposal for regulations that would enable the retrospective validation of any amendment that is held to be void solely because either a written actuarial confirmation was not received before the amendment was made, or where such a confirmation cannot now be located (see Pensions Bulletin 2024/29). In this latest update the same solution is suggested. 

The three organisations hope that a further update can be provided in early 2025. However, it is clear from this latest update that the DWP has not yet agreed to a regulatory approach to resolving the issue.