Statutory duty to establish an effective system of governance including internal controls (ESOG) Before 13 January 2019, trustees of occupational pension schemes were under a narrow statutory duty to establish and operate internal controls which were ‘adequate’ for the purpose of ensuring compliance with the scheme rules and legal requirements. This duty was set out under section 249A of the Pensions Act 2004 (PeA 2004). The scope of PeA 2004, s 249A was extended with effect from 13 January 2019 to impose a statutory duty on trustees of occupational pension scheme to establish and operate an effective system of governance (ESOG) which includes internal controls. That system must be proportionate to the size, nature, scale and complexity of the scheme’s activities. This change was achieved through the Occupational Pension Schemes (Governance) (Amendment) Regulations 2018, SI 2018/1103, which served to implement some of the governance requirements of Archived Directive (EU) 2016/2341 on the activities and supervision of institutions for occupational retirement provision (commonly known as ‘IORP II’), as it had effect immediately

THIS PRACTICE NOTE APPLIES TO OCCUPATIONAL PENSION SCHEMES This Practice Note explores the pension rights of opposite-sex and same-sex spouses and civil partners (including the impact of the cases Walker v Innospec and Goodwin v Secretary of State for Education) on a member’s death and the extension of civil partnership legislation to opposite-sex couples. For a discussion of the pension rights of partners who are neither married nor in a civil relationship (ie cohabitants), see Practice Note: Pension rights of unmarried cohabitants on members’ death. This Practice Note contains references to case law of the Court of Justice of the European Union (CJEU). For guidance on whether EU judgments are binding on UK courts, see Practice Note: Assimilated law — Assimilated case law. In October 2020, the Pensions Minister expressly confirmed that the Supreme Court case Walker v Innospec, whose ruling relied on the supremacy of Archived Directive 2000/78/EC (Archived Equal Treatment Framework Directive), would continue to apply post-IP completion day. Furthermore, to remedy the impact of

In this Practice Note, the term ‘cohabitant’ is used to refer to an unmarried partner (other than a civil partner) of a member. This Practice Note also refers to the European Convention on Human Rights (ECHR). The ECHR is an international treaty which the UK ratified in 1951. It became binding in UK law with the introduction of the Human Rights Act 1998, which gives effect to the rights contained in the ECHR. Decisions of the ECtHR as not binding, but the Human Rights Act 1998 states that UK courts 'must take into account' any judgment, decision, declaration or advisory opinion of the ECtHR. With the ECHR incorporated into UK law through the Human Rights Act 1998, neither Brexit nor the Retained EU Law (Revocation and Reform) Act 2023 affects the UK’s position in relation to the ECHR. For information on the pension rights of same-sex spouses and civil partners of a member’s death, see Practice Note: Pension rights of spouses and civil partners on member’s death. Pensions tax treatment of cohabitants Pensions

Law360: The Association of British Insurers (ABI) and the Pensions and Lifetime Savings Association (PLSA) urged pension savers on 24 October 2024 to trace their pension funds forming part of the industry’s push surrounding National Pension Tracing Day on 27 October 2024, as almost 3.3 million pension pots totaling £31.1bn are still remaining unclaimed, inactive or considered lost.

A statement which must by law be given by a pension scheme to a member whose benefits exceed the annual allowance or any other member on request within three months; the reason is that members need to know if their pension accrual from all sources will exceed their annual allowance.

Law360: A voluntary body that works against pensions scams said on 1 May 2024 that it is considering winding up its operations and is concerned that a fall in volunteer numbers might jeopardise its effectiveness.

This Practice Note covers the limits placed on the statutory right to transfer by the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021, SI 2021/1237, so as to protect members from pension scams. This Practice Note examines: • the First Condition and Second Condition, one of which must be satisfied for a statutory transfer to go ahead. In brief, the First Condition applies to transfers to certain prescribed low-risk schemes, while the Second Condition applies to all other transfers and requires trustees or managers to carry out scam-risk checks and satisfy any relevant employment or residency requirements before the transfer can proceed. For further information, see First Condition and Second Condition, below • the due diligence checks that trustees should carry out to determine whether the First or Second Condition applies and the additional checks, processes and safeguards required where the Second Condition applies (including the circumstances where an employment link or residency link must be established). For further information, see Due diligence requirements of the Conditions for Transfer Regs and Establishing

A pension scheme is a scheme or other arrangement which is comprised in one or more instruments or agreements, having or capable of having effect so as to provide benefits to or in respect of persons on retirement, on death, on having reached a particular age, on the onset of serious ill-health or incapacity or in similar circumstances.

A funded scheme sponsored by a company, or any of its subsidiaries, which provides pension benefits, some or all of which are on a defined benefit basis, and which has trustees (or, in the case of a non-UK scheme, managers).

Pensions analysis: The Pensions Ombudsman has rejected a complaint about a return of contributions. Martin Scott of gunnercooke LLP looks at the decision.

Good administration is essential to the effective running of a pension scheme and to achieving positive member outcomes, especially as scheme administrators are often the primary point of contact for members and their performance therefore directly shapes member experience and outcomes. Put differently, administration matters because it is where pension governance is usually delivered, ensuring accurate data, compliance, and correct member outcomes. What is a scheme administrator? In this Practice Note, the term ‘scheme administrator’ refers to the person or organisation responsible for supporting the day-to-day operation of the scheme by carrying out its administrative functions. This may be a third party service provider, a dedicated in-house team with the employer and/or the employer’s human resources or finance departments. This meaning is to be distinguished from the scheme administrator referred to in Part 4 of the Finance Act 2004 (FA 2004), which refers to the person or persons responsible for ensuring the scheme complies with the requirements of FA 2004. In practice, this statutory role is usually fulfilled by the scheme trustees, although trustees commonly delegate some of

STOP PRESS: The Pensions Research Accountants Group (PRAG) has published the Statement of Recommended Practice, Financial Reports of Pension Schemes 2026 (SORP) following extensive pre-consultations across stakeholder groups and detailed consideration of the responses to the formal consultation process which closed in Q4 2025. The updated SORP 2026 applies to periods beginning on or after 1 January 2026. The SORP was last reviewed and updated in 2018 and the updates to the SORP have been made to ensure consistency with Financial Reporting Standard 102 and current pensions legislation and regulations. Respondents to the consultation process generally supported the proposals to amend the SORP that were raised in the three key questions (with respect to fair value determination, investment risk disclosures and sole investor pooled arrangements) as being reasonable and proportionate. This Practice Note is being updated to reflect this. THIS PRACTICE NOTE APPLIES TO UK OCCUPATIONAL PENSION SCHEMES This Practice Note on pension scheme annual reports and accounts is based on: • the latest Financial Reports of Pension Schemes: A Statement of Recommended Practice (2018) (SORP 2018) issued in March 2018 by