A bite-sized summary of recent UK pension news
Welcome to our latest update, in which we cover:
Pensions Regulator: sanctions for making illegal loans
- TPR’s latest Regulatory intervention report outlines measures taken against individuals involved in illegal pension scheme loans;
Joint-agency initiative: compensation for scam victims
- Good news for victims as £81.5m compensation is paid from the Fraud Compensation Fund;
HMRC Pension schemes newsletter 172
- Including an update on claiming personal pension relief;
State Pension age review
- A call for evidence on factors for consideration in the forthcoming review of State Pension age.
Pensions Regulator: sanctions for making illegal loans
The Pensions Regulator (TPR) has warned that trustees who fail to comply with the employer-related investment (ERI) rules may face large fines or a prison sentence. The warning was issued alongside a Regulatory intervention report outlining the criminal sanctions and enforcement action taken against trustees who breached the ERI rules.
Reminder: ERI restrictions
Under s40 Pensions Act 1995 and the Investment Regulations 2005:
- Loans to a person connected or associated with the sponsoring employer are prohibited; and
- No more than 5% of the value of the scheme assets may be invested in land occupied or used by the employer.
Breach of s40 is a criminal offence, punishable by an unlimited fine and / or imprisonment.
Background facts
- The Worthington Employee Pension Top Up Scheme (the “Scheme”) is a defined contribution (DC) occupational pension scheme, established in 2006 to provide top up pension benefits for long-serving employees of Marcus Worthington and Company Ltd (MWCL). As at March 2018, the Scheme had 57 deferred members.
- MWCL entered administration in 2019.
- In December 2019, the insolvency practitioner alerted TPR to suspected ERI breaches, reporting that between 2009 and 2016 the trustees had loaned funds and later invested £700,000 (99% of the Scheme funds) to entities connected and associated with MWCL.
- TPR’s investigations showed that the loans had been converted into a beneficial share in a real estate investment, with land let to companies connected and associated with MWCL.
- Trading difficulties and cash flow issues later resulted in the insolvency of MWCL and the companies in its corporate group. MWCL was dissolved in January 2022.
- Marcus Worthington was the sole remaining trustee of the Scheme until TPR replaced him with an independent trustee in February 2025.
- TPR pursued criminal and regulatory proceedings, initially against three trustees and an adviser to the Scheme.
Criminal proceedings
- Stephen Smith (a former trustee and finance director of MWCL) pleaded guilty to making five prohibited loans. He received a 10-month suspended prison sentence, was required to do 150 hours of community service, and was ordered to pay £1,000 in prosecution costs.
- TPR also initiated criminal proceedings against Derek Thomas, a professional adviser, for assisting or encouraging prohibited loans. However, Mr Thomas died before the proceedings concluded.
- Charges against two other trustees (Marcus Worthington and Mr Boardman) were not pursued, on evidential grounds and because of personal circumstances.
Regulatory action
- TPR instead opened a regulatory case against Mr Worthington. TPR’s Determinations Panel found that he had knowingly agreed to each of the six ERI breaches and fined him £29,000.
Compensation for fraud
- TPR has pointed out that, where certain criteria are met, the independent trustee may be able to pursue a claim from the Fraud Compensation Fund for compensation payable to the Scheme.
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Joint-agency initiative: compensation for scam victims
The Pensions Regulator (TPR), the Fraud Compensation Fund (FCF), the Pensions Ombudsman and Dalriada Trustees, have announced that a total £81.5m compensation has been paid to 58 pension schemes whose members were victims of pension fraud.
The joint-agency initiative follows a decision by the High Court in 2020 that occupational pension schemes established as part of a scam arrangement could potentially be eligible for compensation from the FCF. The FCF pays compensation to eligible occupational schemes which have lost out financially due to dishonesty, where the sponsoring employers are insolvent.
Members wanting to know if their scheme is being considered for compensation can check a list on the FCF website. Where a scheme is not listed but may be eligible for compensation, members may contact the FCF directly for advice and support.
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HMRC Pension schemes newsletter 172
Topics covered by HMRC Newsletter 172 include:
Changes to claiming personal pension tax relief
From 1 September 2025:
- HMRC will require evidence in more cases to support new requests for higher rate or additional rate tax relief through the individual’s tax code in the current year; and
- Individuals will no longer be able to claim personal pension relief by telephone, but must submit claims online or by letter.
HMRC comments that administrators may experience an increased rate of enquiries, as individuals adjust to these changes.
Testing HMRC’s new look up service for lifetime allowance protection
Administrators who expect to need to view lifetime allowance (LTA) protections and enhancements for members between 16 September 2025 and 23 October 2025 are invited to take part in a research session to test HMRC’s new authenticated look up service.
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State Pension age review: call for evidence
The DWP has issued a call for evidence to feed in to the independent report to be prepared by Dr Suzy Morrissey ahead of the government’s statutory review of State Pension age (SPA).
Areas on which evidence is sought include:
- The advantages and disadvantages of linking SPA to life expectancy;
- Using SPA to manage the cost of the State Pension;
- Deciding changes to SPA by using an automatic adjustment mechanism; and
- Any other factors which should be considered when setting SPA.
The deadline for responses is 24 October 2025.
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