Pensions law trustee update - Q4 2023

Priorities for trustees this quarter are to:

• Consider whether they are impacted by the decision of Virgin Media Ltd v NTL Pension Trustees II Ltd & Ors. This decision is relevant for schemes which were contracted-out on a defined benefit (DB) basis from 6 April 1997. In this case, the court held that certain amendments made to contracted-out benefits accrued between 1997 and 2016 are void if they were introduced without written actuarial confirmation, as required under Section 37 of the Pensions Schemes Act 1993 (PSA93). This case could have potentially far-reaching implications.
• Understand how the Mansion House proposals may impact their pension scheme. Aspects of these proposals will impact both DB and defined contribution (DC) schemes.
• Ensure that they are on track to meet the new single mandatory deadline for pension dashboard connection of 31 October 2026, by which all in-scope occupational pension schemes will need to have connected to a pension dashboard.
• Consider whether they need to revise scheme documentation as a result of recently published draft legislation, which sets out how the Government will seek to implement the second phase of the abolition of the lifetime allowance. This is scheduled for April 2024.

In addition, trustees should be aware that:

• As a result of Brass Trustees Ltd v Goldstone, the court may support a trustee's request to ultimately force the winding up of a pension scheme. A trustee may petition the court for the winding up of the employer when sponsors have fallen behind with their financial obligations to the scheme.
• In BBC v BBC Pension Trust Ltd & Anor, the court held that an amendment power, which prevented amendments which would "substantially prejudice" the members' "interests", protected future pensions accrual in the context of the scheme in question. This means that, other than in very limited circumstances, it will be difficult for the BBC to make changes to active members' future service benefits using the scheme's amendment power. Trustees should bear this in mind if they have a similar amendment power in their scheme.
• The case of Killik & Co LLP v HMRC confirms the position in Revenue and Customs Commissioners v Sippchoice Ltd (Sippchoice 2), which held that in specie contributions and contributions as payments in kind to a Self-Invested Personal Pension Scheme (SIPP) will not receive tax relief.
• The Pension Ombudsman's determination in the case of Mr Y has reiterated that a sponsoring employer's, trustees' and scheme administrator's duties do not extend to warning members about personal tax implications as a result of options around the taking of benefits.