HL UK Pensions Law Digest 19 February 2026

Welcome to our latest update, in which we cover: 

The Pensions Ombudsman: trustees able to recover overpayment

• The Pensions Ombudsman (TPO) determination allows trustees to recoup pension overpayment;

The Pensions Regulator: issues order vesting scheme assets in an independent trustee

• The Pensions Regulator (TPR) has issued an order under section 9 of the Pensions Act 1995 to vest scheme assets in an independent trustee;

The High Court rejects application to strike out Capita cyber-attack litigation

• The High Court has rejected an attempt by Capita PLC to strike out a multi-claimant damages claim in relation to the 2023 cyber-attack;

The Pensions Regulator: updated guidance on DB superfunds

• The Pensions Regulator (TPR) has published updated guidance on DB superfunds;

The Society of Pension Professionals: response to consultation on a new combined code of practice for collective defined contribution schemes

• The Society of Pension Professionals (SPP) has published its response to the Pensions Regulator's consultation on a unified code of practice, which will cover both single and multi-employer collective defined contribution schemes.

The Pensions Ombudsman allows trustees to recoup pension overpayments

In a recent determination (Mr M), the Pensions Ombudsman (TPO) permitted the BIC UK Pension Scheme (the Scheme) to recover certain pension overpayments.

The determination is the most recent in which TPO has considered the recovery of overpayments made by the Scheme, following a Court of Appeal decision which held that certain pre-1997 pension increases awarded to Scheme members had been invalid. Our July 2024 briefing looked in detail at the "lead case" of Mr E and its implications for the approach of trustees to recovering overpayments. A subsequent determination is summarised in our July 2025 Digest.

In contrast to the determination in Mr M, these earlier determinations largely prohibited the recovery of the overpaid pension. A key difference in Mr M's case is, broadly, that TPO was not persuaded, on the facts, that Mr M had suffered financial detriment as a result of relying on the overpayments.

The determination is a useful summary of TPO's approach to overpayment cases and the underlying legal principles which may apply.

Background

Mr M brought his pension into payment from the Scheme in January 1999, following redundancy. He ultimately retired from work in 2017 at age 69.

On 30 March 2020, the trustees notified Mr M that, as a result of the Court of Appeal ruling (i) from 6 July 2020, his monthly pension would be reduced to the correct level (a reduction from £373.48 to £308.09 (gross)); and (ii) from 6 October 2020, the full overpayment of £12,620 would be recouped at the rate of £48.54 per month over a period of 21 years and six months (reducing his monthly gross pension by a further £48.54).

Mr M argued that no reduction should be applied to his pension in respect of either (i) or (ii) above – broadly, on the grounds of financial hardship and that it would change the terms of his redundancy agreement with his employer.

It should be noted that the trustees had confirmed that they would not seek to recover any outstanding overpayments on Mr M's death.

TPO's determination

TPO noted that, if an overpayment is made, trustees should generally reduce future payments to the correct level. It would be "highly unusual" for the courts/TPO to determine that the member has a right to the continuation of the higher pension. The "very limited" circumstances in which this may be appropriate did not apply in Mr M's case.

Turning to recovery of past overpayments, TPO concluded that it would not be inequitable to allow the trustees to recover the full overpayment from Mr M.

Broadly, when considering whether recoupment would be equitable, one of the matters TPO needed to decide was whether Mr M had changed his position to his detriment as a consequence of receiving the overpayments (for example, by spending money irreversibly on household expenditure in circumstances where he would not have spent the money "but for" the overpayment). TPO noted that Mr M had other sources of income until 2019 and evidence suggested that Mr M had sufficient means from other sources to maintain his standard of living, without the "inflated increases" to his pension from the Scheme. TPO also noted that Mr M had been saving some of his income during retirement.

TPO did not consider Mr M's arguments about his redundancy agreement, because his employer was not a party to the complaint. However, TPO dismissed Mr M's argument that he would either (i) have not taken his Scheme pension early; or (ii) taken a different redundancy option, had he been given the correct information about his pension (essentially, a negligent misstatement claim). TPO acknowledged that the trustees owed Mr M a duty to provide accurate information, but concluded there was insufficient evidence of a breach. In any event, any negligent misstatement claim arising from information given in 1998 would be time barred.

TPO endorsed the recovery period proposed by the trustees. TPO's "rule of thumb" on recoupment is that the period of recovery should be at least equal to the period over which the overpayments arose. However, a longer period may be appropriate if the proposed period would cause hardship.

However, TPO noted the overpayments had arisen through a failure by the trustees to document the increase rule and/or apply it correctly. This was compounded by a failure to explain the position adequately and to resolve the uncertainty around the rule within a reasonable timeframe. TPO concluded these failures caused Mr M severe distress and inconvenience over a prolonged period, and awarded £2000 in respect of non-financial injustice.

Return to Contents.

The Pensions Regulator makes an order to vest scheme assets in an Independent Trustee

The Determinations Panel of the Pensions Regulator (TPR) has made an order under section 9 of the Pensions Act 1995 to vest the assets of the Vedius Pension Trust (the Scheme) in its independent trustee, Vidett Governance Services Limited (the Independent Trustee). The decision is outlined in TPR's determination notice, dated 22 October 2025, but only recently published.

The Scheme is an HMRC-registered occupational defined contribution (DC) pension scheme with 468 members. The Independent Trustee was appointed on 9 April 2024, in light of concerns that there was no current trustee with the requisite knowledge and understanding who could act without a conflict of interest. The Scheme's assets were not vested in the Independent Trustee on appointment, due to the fact that the vesting power is a so-called "reserved function", only exercisable by TPR's Determinations Panel.

The vesting order was made in response to difficulties that the Independent Trustee was experiencing in identifying and securing the transfer of Scheme assets into its control. In particular, it was apparent that there was considerable uncertainty around the ownership and documentation of those assets (including real estate).

The Determinations Panel noted that there was an alternative route to a vesting order, under section 44 of the Trustee Act 1925, but that this would cause "unnecessary expense" which would ultimately need to be reimbursed from the Scheme's resources.

Return to Contents.

High Court has rejected an application to strike out cyber-attack claims

The High Court has rejected applications by Capita PLC (Capita) to strike out (or obtain reverse summary judgement) in relation to claims brought by 3,973 individuals following the 2023 cyber-attack on Capita. The claimants are seeking damages including, in particular, for mental distress suffered as a result of the cyber-attack.

Capita argued that the claims were an abuse of process; for example, because the questionnaire used by the claimants' solicitors contained leading questions and that this had "tainted" the claimants' beliefs. The Judge rejected Capita's arguments.

The judgement explores issues around the appropriate procedures to be used in multiple claimant claims, especially in the context of alleged breaches of data protection law.

Return to Contents.

The Pensions Regulator publishes updated guidance on DB superfunds

The Pensions Regulator (TPR) has updated its DB Superfunds Guidance to reflect a change to the discount rate; and to make minor clarificatory changes concerning the impact of the longevity risk reserve and the mortality assumptions for the minimum technical provisions.

This guidance is for those setting up and running a "DB superfund", including directors, senior managers and trustees. TPR also notes that this guidance may be relevant to other alternative arrangements developing in the market.

Return to Contents.

The Society of Pension Professionals publishes its response to the Pensions Regulator's consultation on a combined code of practice for collective defined contribution schemes

The Society of Pension Professionals (SPP) has published its response to the Pensions Regulator's (TPR) consultation on a proposed new code of practice which will cover both single employer and multiple employer collective defined contribution schemes (CDC schemes). More background on the proposed changes to the CDC regime can be found in our Digests of January 2026 and November 2025.

The SPP supports TPR’s move towards a single, consolidated code of practice, and believes that consolidating guidance will assist prospective entrants and avoid parallel regulatory regimes that could otherwise confuse trustees, advisers, and employers.

Given the intention to expand legislation further to include retirement-CDC, the SPP's response encourages TPR to consider how retirement-CDC could also fit within the consolidated code.

The SPP’s key points include:

• New entrants should not face undue barriers. It comments that measures perceived as disproportionate or overly prescriptive may limit uptake, especially for emerging providers.
• TPR should consider whether it has the capabilities to fully assess a scheme's internal controls during the authorisation process or whether they will need to seek independent assurance.
• TPR should consider providing additional guidance to support consistent implementation of the code.
• The current level of detail provided by TPR on its expectations regarding systems and processes may be insufficient. Given the complexity and sensitivity of CDC operations, the SPP argues that the framework should at least require scenarios, stress testing outputs, and functionality walkthroughs before authorisation, rather than relying on high level descriptions.
• Broadly, the promotion and marketing expectations for multi-employer CDC schemes are comprehensive and workable. However, it also believes that clearer, more proportionate guidance will be needed.
• Explicit checks and safeguards should be included in the code to ensure that any material change in scheme membership does not unduly affect existing members.

Return to Contents.

Please click here to subscribe to our mailing list if you do not currently receive our digests directly to your mailbox.

Authored by Susanne Wilkins.