UK Public Service Pensions Update: November 2025

This month we highlight five developments relevant to the Local Government Pension Scheme (LGPS) and another five relevant to all public service pension schemes. We also summarise some recent Pensions Ombudsman decisions and identify key takeaways for funds.

If you would like to discuss anything in this newsletter, please contact one of the experts listed at the end.

Focus on the LGPS

Improvements (access and protection) consultation | Responses due by 22 December

The LGPS England and Wales "Scheme improvements (access and protections)" consultation, which we covered in our October 2025 update, includes proposals to implement "Fair Deal" protections in the LGPS and will close on 22 December. Respondents will need to allow sufficient time for drafting and internal sign‑off ahead of the 22 December cut‑off.

Pensions dashboards | Template MoU between administering authorities and AVC providers

Administering authorities now have access to a template memorandum of understanding (MoU) to help streamline pensions dashboards compliance with AVC providers following its publication by the Local Government Association (LGA) on 10 November.

The template MoU and explanatory notes help administering authorities and AVC providers agree how they will comply with dashboards requirements and data protection law.

We were delighted to collaborate with and support the LGA to prepare these items but confirm that administering authorities should seek their own legal advice in relation to the MoU and in relation to any legally binding arrangement they later enter into to reflect its content.

Governance | SAB response to TPR's proposed new enforcement strategy

The LGPS Advisory Board has published its response to the Pensions Regulator's (TPR's) recent consultation on a new enforcement strategy.

The response welcomes the direction of travel but raises several important points for TPR's consideration:

• Engagement: SAB invites dialogue with TPR on how the strategy will apply in the LGPS.
• Transparency: SAB calls for greater clarity where breaches or poor performance are reported but no enforcement action follows.
• Supervision: SAB requests insights from TPR’s current supervisory activities, thematic work or investigations into LGPS funds.
• Independent governance reviews: SAB asks how TPR plans to treat the outcome of independent governance reviews.
• Toolkit: SAB asks TPR to update its public service toolkit used by many for training and induction.

Investment | New materials to support UK Stewardship Code signatories

The Financial Reporting Council has published final guidance on the UK Stewardship Code 2026 and a support report for signatories. The updated Code applies from 1 January 2026.

'Fit for the future' | Local investment survey results

Hymans Robertson has published the results of its online survey on attitudes, ambitions, concerns and practical plans for local investment. 

All schemes

UK Budget watch | 26 November 

Budget day is Wednesday 26 November. As the media continues to report on the announcements the chancellor might make, funds might like to note that:

The Petitions Committee has asked the government to revise its response to a petition seeking a pension tax lock: "a commitment not to reduce the amount people can withdraw from their pension tax-free or the amount of tax relief given on pension contributions." The committee "felt the response did not respond directly to the request of the petition".

HMRC's October newsletter gives more information about the tax position where a member takes a pension commencement lump sum before the Budget but later wants to return it.

The McCloud remedy | New guidance from HMRC

HMRC has added an extra section: "Offsetting unauthorised payments for Chapter 1 members" to its October 2023 guidance note on what to do if the McCloud remedy results in changes to past unauthorised payments. This links to a new guidance note on offsetting tax charges for Chapter 1 members who have received top-up lump sums.

(Chapter 1 members are members of the public service pension schemes other than the LGPS or judicial pension schemes.)

Data protection | ICO publishes decision in relation to high profile cyber attack

The Information Commissioner's Office (ICO) has published its decision in relation to a recent high profile cyber attack affecting the pensions industry. The ICO decision includes details of technical and organisational measures that could have been taken to safeguard data held.

Funds should consider requesting refresher training on data and cyber security, reviewing internal controls and procedures, and testing emergency response protocols: it is likely to be a question of when, not if, a cyber attack occurs.

Administration | Guidance on the use of artificial intelligence

The Pensions Administration Standards Association has published new industry guidance, ‘Use of AI in Pensions Administration – Embrace the Opportunity with Caution.”

The guidance provides practical support for understanding AI opportunities and risks in pensions administration, emphasising high-quality data as essential and identifies applications from chatbots to fraud detection alongside risk management considerations.

Civil service pensions | Changes to the Civil Service Additional Voluntary Contribution Scheme 1988

In force from 4 November 2025 (with effect from 1 April 2025), the Civil Service Additional Voluntary Contribution Scheme (Amendment Scheme) 2025 amends the Civil Service Additional Voluntary Contribution Scheme 1988 to address a number of points relating to the transfer of protected life cover and “with profits” arrangements from Equitable Life to Utmost Life and Pensions.

The Pensions Ombudsman  | Recent decisions

Scheme directed to reconsider death benefit decision after member's son gave false information in beneficiary form (CAS-84909-V2W7)

What happened?

The deputy pensions ombudsman DPO upheld a complaint against a scheme administrator who paid a £60,000 lump sum death benefit to a son who gave false beneficiary information after his father's death.

There was no will and the son (Mr C) completed the scheme's claim questionnaire to suggest he was the only potential beneficiary. Because the lump sum was below its threshold value the scheme administrator decided to pay the lump sum death benefit to Mr C. Around a year and half later, one of the member's daughters (Ms N) contacted the scheme to say that Mr C had made a fraudulent claim on the pension policy.

What did the DPO decide?

The DPO upheld the complaint and directed the scheme administrator to carry out appropriate enquiries to identify potential beneficiaries of the death benefits and then take the decision again. She said:

"It is not unreasonable for a pension scheme to adopt a proportionate approach when distributing lump sum death benefits and to carry out a more limited investigation where the lump sum death benefit is of a low value. It is also not unreasonable to make use of documents such as the Questionnaire. However, the responsibility for identifying the potential beneficiaries and gathering sufficient information about them remains the responsibility of the trustee or manager exercising the discretion... 

"It may be that Mr C committed a fraud… in obtaining payment of the death benefit lump sum…by deception, but that did not discharge [the administrator] from its obligation to consider the other potential beneficiaries and consider its discretion properly. It was for [the administrator] to seek recovery of the sums paid to Mr C and it is difficult to see what rights the other potential beneficiaries would have against Mr C other than seeking to enforce [the scheme's] rights of recovery.

"I would also note that while a proportionate approach is reasonable, where unverified information is provided by a person who claims to be the sole beneficiary, it may be prudent to consider the possibility of fraud and the need to take extra steps to ensure that proper information is obtained.

"If a decision is taken on that basis, it seems to me that the decision maker would be taking an improper risk that the decision would be based on incorrect or insufficient information and that would not preclude intervention by the PO."

It made no difference that the claim questionnaire contained declarations of truth or accuracy and a warning that "it is a serious offence to make false statements; the penalties for false statements are severe and could lead to prosecution".

Key takeaway

Even for lower‑value cases, unverified sole‑beneficiary claims warrant proportionate checks; fraud by a claimant does not displace the administrator’s duty to exercise discretion properly.

Ill health early retirement - DPO confirms principles (CAS-86747-P1R3)  

What happened?

In a recent decision relating to the NHS Pension Scheme, the DPO considered some of the principles relevant to applications for an ill health early retirement pension.

Key takeaways

Unless scheme regulations say otherwise:

• It is for a medical adviser to exercise their professional judgment as to whether they need to see a member in person and need to obtain further medical evidence before providing their advice.

• The scheme decision maker can decide "within the bounds of reasonableness", the weight to attach to any of the medical evidence. It can "prefer evidence from its own advisers unless there is a cogent reason why it should or should not do so without seeking clarification. By way of example, this might include things such as an obvious error or omission of a fact or a misunderstanding of the relevant rules by" the medical adviser.

• A decision by a medical adviser to give little or no weight to a piece of evidence is not the same as failing to consider it.

• The decision maker can only be expected to make their decision on the basis of a medical condition as it was "understood at the time and to reconsider that decision in light of the medical prognosis available at each stage of the review process".

• The fact that a member's health does not follow the course originally expected does not, in itself, mean that the ill health retirement decision was wrong.

Ill health early retirement of an active member of the LGPS  (CAS-99869-W7F5)

What happened?

TPO has upheld a complaint by a member of the LGPS in relation to the time taken to process her application for ill health early retirement and the decision of her employer to dispute the stage two internal dispute resolution procedure (IDRP) decision-maker's conclusion that it should pay her £500 compensation for distress and inconvenience.

Key takeaways

The ombudsman's decision in this case is a reminder that  the employer, not the independent registered medical practitioner (IRMP), must decide whether the conditions for payment of an ill health early retirement pension under regulation 35 of The Local Government Pension Scheme Regulations 2013 (active member) are met. In reaching this decision, the employer should take into account, "from a lay perspective, all the medical evidence available", including but not limited to the IRMP's report and opinion.  If necessary, it should also ask further questions of the IRMP.

The decision is also interesting because the adjudicator took the view that regulation 77(4) allows a stage two IDRP decision maker to suggest or recommend that an employer pay compensation for distress and inconvenience, but that the suggestion or recommendation will not be enforceable. Unfortunately, the Pensions Ombudsman did not decide this point. The ombudsman used his powers to direct the employer to pay £500 for distress and inconvenience with the result that there was no need for him to consider the meaning of regulation 77(4).

House of Commons Library | New and updated briefing papers

Recent House of Commons Library briefing papers of interest include:

• COP30: The 2025 United Nations Climate Change Conference
• The UK’s plans and progress to reach net zero by 2050
• NHS pay and pensions
• Public service pension increases
• Pensions: Collective Defined Contribution (CDC) schemes.

This newsletter covers developments relating to public service pensions in England with a focus on the Local Government Pension Scheme.