THIS PRACTICE NOTE APPLIES IN RELATION TO PRIVATE SECTOR DEFINED CONTRIBUTION PENSION ARRANGEMENTS This Practice Note considers the due diligence issues to look out for in a share sale, where the target company participates in, or contributes to, a defined contribution (DC) scheme. In this Practice Note, references to the 'target company' include the subsidiaries of the target company (since they also transfer to the buyer's group on a share sale). For an overview of the pensions aspects of due diligence in a share sale, see Practice Note: Pensions due diligence in share sales—an introduction. For a detailed review of the due diligence issues which arise where the target company participates in a defined benefit (DB) pension scheme, see Practice Note: Pensions due diligence in share sales—issues specific to DB schemes. Due diligence and DC arrangements—key issues Where the target company participates in, or contributes to, a DC pension arrangement, the buyer and its solicitors should look out for various pension issues. Those issues will differ to some extent, depending

This document contains a link to a glossary of pensions and

This Practice Note explains the rulings of the Virgin Media case law (Virgin Media Ltd v NTL Pension Trustees II Ltd) in relation to past amendments of Section 9(2B) rights, the implications of these rulings, the remediation provisions of the Pension Schemes Act 2026 (PSA 2026) and guidance relating to it. Restrictions to amendments of Section 9(2B) rights Before the abolition of salary-related contracting out (also known as DB contracting-out) on 6 April 2016, there were legislative restrictions on the trustees' and/or employers' ability to amend the rules of: • a contracted-out salary-related (COSR) scheme, ie a scheme offering COSR benefits. Note that between 6 April 1997 and 5 April 2016, the only type of contracted-out benefits a member could accrue were ‘Section 9(2B) rights’ (named after the provision of the Pension Schemes Act 1993 (PSA 1993) which introduced them), and • a former COSR scheme (ie a scheme that had ceased to be contracted-out) which still has members with accrued contracted-out benefits (including Section 9(2B) rights) or who were receiving such benefits For amendments

Corporate Crime analysis: R v Asplin and others was a rare case in which the Court of Appeal revisited matters upon which it had already ruled. The appeal concerned confiscation proceedings under the Criminal Justice Act 1988 (CJA 1988). The court was asked to address (i) whether the appellants’ occupational pensions formed part of their ‘realisable assets’ for the purposes of confiscation and (ii) if so, whether the pension figures to be included should be calculated gross or net of tax. The defendants were convicted of conspiring to defraud their employer, DAS Legal Expenses Insurance Company Ltd (DAS), an insurance company, which brought a private prosecution. The defendants were entitled to benefits under the company pension scheme. The trustees of the scheme had a power to forfeit (in whole or part) a member’s pension where they owed money to DAS ‘as a result of their criminal, negligent or fraudulent act or omission’. Where the trustees had not yet decided whether to exercise powers to forfeit, the court considered that the defendants retained a beneficial interest in the scheme. It followed that the pensions formed part of their ‘realisable assets’ as defined by CJA 1988, s 74(1). The value of the pension rights (CJA 1988, s 74(4)) was the gross ‘cash equivalent transfer value’ (CETV). Written by Rachel Clark, barrister at 33 Chancery Lane.

Law360: The UK's pension watchdog is facing mounting pressure from retirement industry trade bodies to back down from its new reporting obligations for schemes.

Law360: The government is likely to fail in its application to oblige pension funds to invest in the UK without ensuring that there is a sufficient pipeline of viable assets, a panel of experts warned MPs on 14 May 2025.

Law360: The government should urgently move forward with delayed plans to bring investment consultants under the supervision of the Financial Conduct Authority (FCA), pension bodies and climate groups warned.

Law360: The government has appointed Torsten Bell MP, the former boss of the Resolution Foundation, as the new Minister for Pensions, replacing Emma Reynolds MP, who now becomes Economic Secretary to the Treasury following the resignation of Tulip Siddiq MP.

The statutory framework Generally, the legislative framework which applies to private sector occupational pension schemes governed by Scots law is the same as the regime which applies to the rest of the UK. The core trust law on which most private sector pension schemes are based is different, with Scotland having its own separate trust legislation and case law. The Scottish judicial system is completely separate to the English system and while English decisions on pension issues provide assistance in dealing with certain issues, they are not binding on Scottish courts. Differences in a number of other areas of law can also impact on pensions law and practice. Application of legislation, guidance and other policy in Scotland When giving advice in respect of pension schemes governed by Scots Law, care must be taken to check that any legislation actually applies in Scotland. A similar position applies in relation to guidance and policy, and there will be times where it is unclear, or at least questionable,

Pension Schemes Act 2015 The Pension Schemes Act 2015 (PSA 2015) covers three main areas: • the new ‘defined ambition’ pensions • the provision of the ‘guidance guarantee’, and • amendments to the cash equivalent transfer provisions of the Pension Schemes Act 1993 (PSA 1993) Defined ambition schemes are able to be set up as schemes that offer targets of benefits, but where the right is only to the funds in the pot. This allows the sharing of risk and return between members, but without schemes being subject to most of the defined benefit rules in the rest of pensions legislation. The guidance guarantee is the free pensions ‘guidance’ offered at retirement for all members of a defined contribution pension scheme, effectively to explain the options there are on decumulation—particularly following the changes announced in the 2014 Budget coming into force from 6 April 2015 under the Taxation of Pensions Act 2014 (TPA 2014). The provision of the guidance is being regulated by the Financial Conduct Authority

Contracting-out From 6 April 2016, defined benefit (DB) contracting-out will cease to exist. The intention was initially for the reforms to be introduced on April 2017—however, a written ministerial statement dated 19 March 2013 brought forward these plans by a year. The legislation below results from the end of contracting-out for salary-related occupational pension schemes from 6 April 2016. Legislative changes necessary to implement the abolition of DB contracting-out The legislative changes necessary to implement the abolition of DB contracting-out are being made through: • the Pensions Act 2014, PA 2014, s 24, Schs 13–14. PA 2014 received Royal Assent on 14 May 2014 and among other things: ◦ provides for the repeal of certain contracting-out provisions contained in the Pension Schemes Act 1993 (PSA 1993) with effect from 6 April 2016, and ◦ introduces a statutory amendment power for employers which enables them to amend occupational scheme rules without trustee approval solely to reflect increases in employer national insurance costs arising from the abolition of DB contracting-out by

Prescription The starting point for any legal advisor in considering raising an action is ascertaining the timeframe within which any claim(s) must be brought. In Scotland, this is covered by the Prescription and Limitation (Scotland) Act 1973, which deals with the ‘prescription of obligations’ (as opposed to the ‘limitation of actions’ in England and Wales). General principles Before considering any timeframe within which a claim in respect of an obligation ought to be brought, it is necessary first to consider the type of obligation in question and consequently, the section of the 1973 Act to which such an obligation relates. In general terms, claims relating to the administration of pension schemes may well fall within the Prescription and Limitation (Scotland) Act 1973, s 6 although of course, potential issues can range from professional negligence claims against scheme administrators to liability for contingent debt. The types of obligations covered by section 6 are found in Schedule 1 of the Prescription and Limitation (Scotland) Act 1973. For present purposes, they include ‘any obligation arising from, or by