Case Law
High Court grants rectification of amendment - Ballard v Buzzard [2024] EWHC 2765 (Ch)
The case concerned amendments to scheme documentation made or purportedly made by the Trustees. The issue arose as there was a requirement included in the Scheme's amendment power for amending document to be signed by all five of the Trustees, and although all five did sign, one of them (Mr B) signed only once in a signing block which indicated he was signing "For and on behalf of the Principal Employer".
It was considered that there was compelling evidence that Mr B supported the changes being made by each of the documents, intended that they should be signed by the Trustees and understood that he was one of the Trustees. The court held this amounted to powerful evidence that he did not intend, when signing his name against an execution block which indicated that he was signing on behalf of the Principal Employer, to exclude the obvious point that he wished to sign also in his capacity as a Trustee.
The High Court granted rectification of the signing blocks in the documentation to make clear that Mr B was signing in both capacities as Trustee and also on behalf of the Principal Employer.
New Law
The Occupational Pensions (Revaluation) Order 2024
For the purpose of the revaluation of benefits payable to or in respect of persons who attain their scheme’s normal pension age in 2025, this Order specifies the necessary revaluation percentages for each of the revaluation periods between 1st January 1986 and 31st December 2024.
Finance Bill 2025
The Finance Bill had its second reading in the House of Commons on 27 November 2024 and will now proceed to Committee stage.
News
TPR Publishes Fast Track submission tests and conditions
TPR has published guidance on the fast track submission tests and conditions which a scheme must satisfy to meet the Fast Track parameters for schemes submitting a valuation with an effective date on and after 22 September 2024 to TPR through the Fast Track submission route. The guidance makes clear that:
- Fast Track is not risk free, but is a regulatory tool which represents TPR's view of tolerated risk where it is unlikely to engage with a scheme in respect of their valuation.
- It does not represent minimum compliance. In some instances, the Fast Track parameters are set above the minimum level of compliance, whilst in other instances, adopting Fast Track may not be the appropriate route.
- Trustees should think carefully about whether Fast Track is right for their scheme and, in order to meet legislative compliance, whether a more prudent funding and investment approach is appropriate, particularly where there is very limited employer covenant support.
TPR publishes revised DB covenant guidance
TPR has published updated covenant guidance for trustees of defined benefit (DB) pension schemes, aligned with its new DB funding code with the aim of providing greater certainty over how TPR expects trustees to assess their employer covenant, embedding good practice and encouraging consistency across schemes.
Core sections of the revised guidance contain important new elements looking at: cash flow; reasonable affordability; maximum affordable contributions; reliability period; covenant longevity; and contingent assets. Areas of covenant assessment that require the highest level of judgement from trustees include several worked examples.
TPR expects trustees to use this guidance to review whether their existing covenant analysis is focused in the right areas and remains proportionate, especially if they have experienced a significant change in their scheme funding position in recent years.
Budget 2024 – Pensions announcements
Announcements from the recent budget which will impact pensions include:
- From 6 April 2027 most pension funds and pension death benefits will fall within someone’s estate and will be considered when calculating inheritance tax. The government launched a technical consultation on the proposals alongside the Budget on 30 October 2024. Most payments from both defined contribution and defined benefit schemes would fall within scope of the change. The main exception to this would be dependants’ pensions which would be taxed at the beneficiaries’ marginal rate of income tax. The exception does not include other payments to dependants, such as annuities or drawdown.
- The Chancellor announced a pay rise for over 3 million workers next year, as National Living Wage rises by 6.7% and that 18-20 National Minimum Wage will rise by £1.40 per hour - the largest increase on record - and it is understood marks first step towards a single adult rate. The announced increases are expected to bring more workers into scope of the auto-enrolment earnings threshold requiring them to be enrolled into a qualifying scheme (with relevant statutory contributions requirements applying).
If you have any queries about any of the issues covered, or you require advice on a pensions related matter, please do not hesitate to contact your usual contact.
