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Pensions law update: August 2025

12 Aug 2025 5 min read
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Welcome to our August pensions law update.

As Parliament rose for the summer recess towards the end of July, it made sure to clear its desk first! In the final two days of this session, the long-awaited Pensions adequacy review was launched and a response to the consultation regarding imposing inheritance tax on unused pension pots and death benefits was published.

In this newsletter as well as covering these developments we have articles focusing on a number of the key changes proposed in the Pension Schemes Bill, including the controversial investment mandation “backstop” power, changes to the PPF’s levy setting powers, and new requirements for DC schemes in relation to value for money and providing default pension benefit solutions. There are also updates on the FCA’s targeted support proposals, a recent Court of Appeal decision on enforcing debts against pension scheme rights, the latest on pensions dashboards and some practical pointers for DC trustees on integrating ESG considerations.

Policy update

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IHT on unused pension pots and death benefits

Also on 21 July, HMRC published a summary of responses to its consultation on introducing inheritance tax on unused pension pots and death benefits, alongside a policy paper and draft Finance Bill clauses.

Broadly, the government is proceeding with the reforms as originally proposed – the policy paper confirms that “this measure will bring most unused pension funds and death benefits within the value of a person’s estate for Inheritance Tax purposes from 6 April 2027”.

However, there are two important changes to highlight – one an amendment and one a “clarification”:

In light of consultation feedback, it will now be the deceased’s personal representatives who are responsible for reporting on and paying IHT due on unused funds and death benefits. In the consultation the government had originally proposed this would be done by pension scheme administrators; and

It has been confirmed that death in service benefits from a registered pension scheme are excluded from the changes and are out of scope for IHT purposes, as are dependant’s scheme pensions from DB or CDC arrangements. This has been welcomed by the industry, which had raised concerns about the impact of imposing IHT on death in service benefits on bereaved families.

This is a significant change to the current tax position – look out for further updates from us in the coming weeks and months as we consider the practical implications of the new regime in more detail, and what this means for schemes and their members.

DB in the spotlight

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Focus on DC

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Governance

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Other key articles

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Shortlisted for trio of awards at PMI Pinnacle Awards

Burges Salmon’s Pensions team has been named as a finalist at the PMI Pinnacle Awards 2025 in the Team of the Year, Impact on Climate and Innovation in New Product or Service categories.

The Pensions Management Institute (PMI) Pinnacle Awards are designed to celebrate the highest of pensions excellence across three vital areas: People, Innovation and Impact. The Awards recognise the best of the pensions profession and celebrate people and new ideas that contribute in making a real impact in the pensions world.

These nominations reflect our continued commitment to delivering forward-thinking, client-focused pensions solutions for trustees and employers. 

Find out more

Events

Buy out and the New Alternatives – Exploring the options from Insurance to Clara and Capital Back Journeys

Date: Wednesday 12 Nov, 2025
Time: 5.30pm – 6.45pm
Location: Burges Salmon London office

We will be holding an interactive seminar and Q&A on pensions Buy Outs and emerging market alternatives. We’ll discuss the recent Clara transaction – an industry first – advised by our team, and be joined by leading experts for the Q&A.

Stay tuned for more details, including our panellists, after the summer break.

A networking session will also follow the seminar for those who would like to stick around. We look forward to welcoming you.

Save the date
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Team news

Earlier this summer, we completed our ’25 for 25’ challenge – a 25-hour continuous canoe relay to celebrate the 25th anniversary of Young Bristol’s outdoor activity centre. We raised over £33,000 to support Young Bristol’s vital work and their plans for future development. We are so grateful for the support and donations we received – thank you!

Read more

We hope you find the above helpful but, as always, please do get in touch if you have any questions or you would like to discuss anything further.

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