UK Pensions in dispute - September 2025

Trustees are not responsible for due diligence beyond statutory requirements on transfers

The Pensions Ombudsman (TPO) has published a lead determination setting out its (more scheme-friendly) approach to scam transfer cases: CAS-81940-Z2S8.

The case concerned a statutory transfer to a small, self-administered scheme in 2014, which turned out to be a scam. The member complained that the transferring trustee failed to carry out sufficient due diligence to check for scam warning signs, as set out in the Pensions Regulator’s (TPR) "Scorpion Leaflet" and Action Pack.

TPO found that there was no legislative nor regulatory obligation on the trustee to undertake due diligence beyond that required to meet the criteria for a statutory transfer, either generally or as set out in TPR’s Action Pack or Scorpion Leaflet. There was no duty of care that required trustees to conduct additional due diligence and the trustee had not voluntarily assumed a responsibility to investigate the receiving scheme, nor made any promise or implied representation that it was conducting due diligence on which the member might then have relied.

What does this ruling mean for trustees?

This suggests a shift in TPO’s approach to scam transfers: previously, TPO had held an expectation that schemes would provide members with the Scorpion Leaflet and follow TPR’s scams guidance. Here, however, TPO takes a much more restrictive view of schemes’ due diligence obligations (at least in respect of statutory transfer requests from occupational pension schemes in the period up to November 30, 2021, when the new red/amber flag framework was introduced).

The decision does not resolve all issues which might arise in relation to a transfer complaint (for example, around maladministration or failure to meet service standards), but if followed in future cases, it should significantly reduce the scope of issues around scams due diligence in the relevant period.

"Children" can include non-biological children

The High Court has found that the word "children", when used to define beneficiaries in a discretionary trust document, included a non-biological child: Marcus v Marcus.

Mr Marcus had two apparent sons, Jonathan and Edward, but (unbeknownst to him) he was not the biological father of Edward. A discretionary trust was set up in 2003, which provided for Mr Marcus’ "children". The High Court found that this included Edward. The judge reasoned that, although the starting position should be the natural meaning of the word "children", which would mean biological children, in this case the context (including that Edward was treated for practical, familial and all other purposes as a biological child) displaced the ordinary meaning.

What does this ruling mean for trustees?

The finding here is specific to the facts; however, it does highlight the need for trustees to carefully consider the meanings of definitions in scheme rules and take context into account—not just take wording at face value.

Entitlement to benefits on the basis of being unmarried is not discriminatory

TPO rejected a claim that an option in a scheme’s rules for unmarried members to receive a partial refund of contributions, on the basis that no spouse’s pension will be payable, was discriminatory: CAS-87715-D5W3.

The complainant was separated from his wife but, as a Catholic, his religious beliefs prohibit divorce, meaning he could not become "unmarried" in the legal sense required by the scheme. As a result, he was unable to access the partial refund option, and he argued that this amounted to indirect discrimination.

TPO dismissed the complaint: the provision was not indirectly discriminatory and, even if it was, it could be justified as a proportionate means of achieving a legitimate aim, namely the protection of spouses’ interests and protecting the scheme from paying partial refunds of contributions where it retains a liability to pay a spouse’s pension.

What does this ruling mean for trustees?

This is a reassuring result for schemes; had TPO found in the claimant’s favour, this could have opened schemes up to similar complaints in relation to any rights awarded to members on the basis that they are unmarried.

Scheme under duty of care to facilitate inward transfer

A scheme has been held responsible for losses following significant delays to a request to transfer into it: CAS-59303-Y0Z8.

Mr Y sought to transfer benefits from another arrangement into the scheme. The transfer was delayed for over three years due to the trustees’ failure to provide HMRC registration information. Mr Y ultimately transferred his benefits to another scheme and complained that the delays had caused him financial loss.

TPO found that the trustees, having agreed to accept the transfer, owed Mr Y a duty of care to facilitate it with reasonable skill and care. Their failure to provide the necessary documentation breached this duty and constituted negligence, causing Mr Y financial loss. TPO awarded: compensation for lost investment growth; GBP2,000 for severe distress by the trustees; and GBP500 for significant distress by the scheme administrator. The trustees were directed to complete HMRC registration and facilitate a transfer if Mr Y wishes.

What does this ruling mean for trustees?

Trustees of receiving schemes should be careful to remember that obligations don’t only rest with a transferring scheme—they are expected to facilitate a transfer with reasonable skill and care once they have agreed to receive it and could be found liable for losses if they don’t.