Public Service Pensions Update: August 2025
Published on 19th August 2025
Welcome to the latest edition of the UK Public Service Pensions Update
This month we look at two developments relevant to the Local Government Pension Scheme (LGPS), two relevant to all public service pension schemes and three recent Pensions Ombudsman decisions.
If you would like to discuss any of the items in this newsletter, please contact one of the experts listed at the end of the update.
Focus on the LGPS
The LGA, LGPC and LGPS Advisory Board respond to 'access and fairness' consultation
The Local Government Association (LGA) and the Local Government Pensions Committee (LGPC) have published their response to the government's consultation "LGPS in England and Wales: Access and fairness".
The response, which includes detailed comments on the draft regulations, is broadly supportive of the changes proposed. However, it does highlight a number of administrative challenges, identify several areas where guidance will be needed, and suggest changes to some of the proposals. The LGA and LGPC also express "serious concern…about the ability of administering authorities, pension software suppliers and payroll providers to prepare for so many Scheme changes in a short space of time" given the number of other major projects already in hand, and call for amendment of the LGPS regulations in advance of the increase in the normal minimum pension age to 57 in April 2028.
The LGPS Advisory Board has also published its response to the consultation. This sets out points the advisory board would like to add to the LGA and LGPC response and includes a request to acknowledge the fact that "to implement some of these proposals, administrators will need to review historic cases and will require updates to software systems, at a time when the scheme is facing significant challenges and workloads on fund officers".
We discussed the consultation in our May newsletter.
Investment | TPR invites input toward transition plan working group
In the last edition we highlighted three consultations which represent the first step towards developing a UK sustainability reporting framework. The consultations are on exposure drafts of UK sustainability reporting standards, assurance providers for sustainability-related financial disclosures, and how net-zero transition plan requirements could be taken forward.
We also reported that the Pensions Regulator (TPR) has confirmed that it will work with the pensions industry to develop and test a template for an (at this stage) voluntary transition plan for trust-based schemes.
TPR has since urged trustees to engage with the transition plan consultation before it closes on 17 September. TPR has also explained how schemes can submit written evidence to the industry working group that it is establishing to develop thinking around a practical approach to transition planning for occupational schemes.
TPR's update will be of interest to funds who would like to respond to the consultation or contribute toward the pensions industry working group.
All schemes
Data and cyber | PASA releases guidance on essential steps to protect member data from data breach, identity fraud and cyber-attack
The Pensions Administration Standards Association (PASA) has released guidance on essential steps for trustees and pension providers to protect member data from data breach, identify fraud and cyber-attack. This concludes with confirmation that in "the face of ever-evolving cyber threats, it’s imperative…to take a proactive and dynamic approach to data security.…Protecting sensitive member data isn’t just about mitigating risks; it's about safeguarding the integrity of the scheme and the peace of mind for all involved."
Funds might like to consider this guidance note, and PASA's recent guidance on best practices for administrators to mitigate identity-related fraud, bolster member protection, and future-proof processes in an increasingly digital landscape.
The guidance notes and TPR's general code of practice contain actions for funds, for scheme administrators, and others.
Member complaints | The Pensions Ombudsman confirms its priorities for 2025/26
The Pensions Ombudsman has published its corporate strategy for 2025-2028 and corporate plan for 2025/26. The corporate plan includes the following actions for 2025/26.
Build on the successful launch of expedited determinations by expanding their use into new areas.
Increase the use of lead cases to proactively manage systemic issues and reduce the number of applications.
Publicise determinations where learnings can be used to inform and improve administrative practice.
Refresh industry guidance on a variety of topics including "distress and inconvenience" awards.
Supporting the industry with first-tier complaint handling and internal dispute resolution procedure processes and escalating concerns where it identifies structural issues.
Improving signposting and guidance for members about how to raise a formal complaint with their scheme and when to go the Pensions Ombudsman if it remains unresolved.
The Pensions Ombudsman | Recent decisions
Scheme administrator had no duty to protect member from tax charges arising from change of tax residency (CAS-90949-P2D1)
The Pensions Ombudsman has partially upheld a complaint by a member of a group stakeholder pension plan about the time it took to transfer two policies to his self-invested personal pension (SIPP).
One of the transfers (the transfer of the smaller of the two policies) did not complete before the member became a Spanish tax resident on 1 January 2022. The other transfer completed in December 2021 but, the member said, was too late in the month for the SIPP to be able to pay a tax-free cash lump sum before 1 January 2022. As a result, the member complained that he had lost the ability to take a tax-free lump sum. A 45% Spanish tax charge would apply to any cash lump sum paid from the SIPP in the future. The member would also need to pay Spanish tax on any compensation that he received and asked that the stakeholder provider meet that tax charge.
The stakeholder provider accepted that there had been delays in processing the transfers but completed a loss assessment which showed that, although the transfer value of the smaller policy had fallen during the time taken to process the transfer, this loss was offset by an increase in the value of the larger policy during that time. (The transfer values had not been reinvested after arriving in the SIPP.)
The ombudsman agreed that, because the overall value of the polices had increased, the member had not suffered a financial loss as a result of the delay. The ombudsman also rejected the claim in relation to future tax loss. It said that the stakeholder provider did not have (and had not assumed) a duty to protect the member from taxes incurred due to his residency in Spain: "A pension scheme manager's scope of duty excludes protecting a member from taxes incurred because of a change in their tax residency. [The member's] claim for a future, unknown tax charge is, in effect, a claim for damages for pure economic loss."
The stakeholder provider had already paid £200 for distress and inconvenience and the ombudsman directed that it pay the member £500, less the £200 already paid.
LGPS – Ill health early retirement – a member's legal costs will only be awarded in 'rare and exceptional situations' - CAS-121348-Z6R0
The Pensions Ombudsman has partially upheld a complaint by a deferred member of the LGPS in relation to a decision not to backdate her ill health early retirement pension to the date she left local government employment. The member, whose health had deteriorated since she left the relevant Council's employment, appointed solicitors to help her with her internal dispute resolution procedure application. The council ultimately agreed to backdate the pension, but the submissions made by the member's solicitor were not intrinsic to this decision.
The ombudsman agreed that the member had suffered exceptional distress and inconvenience and awarded £2,500 for this. However, it did not make any award in relation to the member's legal costs. The ombudsman's service is "free to use and involves the investigation of a complaint as well as its determination". As such, the ombudsman will only award costs in "rare and exceptional situations", "weighing up factors such as the complexity of the case, the capacity of the applicant and the conduct of the respondent". In this case, although the ombudsman could see that the member might have wished to appoint a representative due to her health, it did not agree that the matter was "overly complex" such that a solicitor was needed.
Principal Civil Service Pension Scheme – Impact of partial retirement on widow's pension scheme refund (CAS-66472-F0T4)
The Pensions Ombudsman has not upheld a complaint by a member of the Principal Civil Service Pension Scheme that the effect of partial retirement on her widow's pension scheme (WPS) refund and pension commencement lump sum (PCLS) at final retirement was not made clear to her. The member "did not claim that she was misinformed" and so there was "no basis for compensation on the basis of negligent misstatement or estoppel by representation." The WPS refund was paid after the end of the member's service as a PCLS to the extent permitted under the Finance Act 2004 and the excess was correctly converted into an additional pension.
House of Commons Library | New and updated briefing papers
The House of Commons Library has published or updated the following briefing papers, which might be of interest to public service pension schemes and employers:
- Supreme Court judgment on the meaning of “sex” in the Equality Act 2010: For Women Scotland;
- Key documents: taxation;
- The Budget and the annual finance bill.
This newsletter covers developments relating to public service pensions in England with a focus on the Local Government Pension Scheme.
