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  • Mastering complexity: Integrated safety process for modern vehicle systems

    Mastering complexity: Integrated safety process for modern vehicle systems

    The relationship between functional safety (FuSa) and the safety of the intended functionality (SOTIF) can be understood as two sides of the same coin: The two together result in one valuable whole. Both sides play a decisive role in modern driver assistance systems, or ADAS (advanced driver assistance systems) for short, as well as in autonomous driving (AD). FuSa addresses the classic question: What happens if a software or hardware component fails?

    The idea of functional safety ensures that the system does not cause an unacceptable risk if internal malfunctions arise, such as a sensor failure or a software error. This is based on a process of structured analysis in which all relevant software and hardware errors are examined and evaluated for their effects. Effects rated as safety-critical are mitigated by technical and procedural measures. The functional safety methods are applied consistently, this being both during the concept phase and in the series implementation phase. SOTIF, the safety of the intended functionality, addresses another, equally important question: What happens if the system operates without failures but fails to master a real operating situation? This concerns the acceptability of risks that arise from the limitations of the function itself, for example when a vehicle camera is blinded by the sun or an algorithm does not detect a cyclist in a complex driving scene. 





    SOTIF is an exploratory discovery process in which iterations are the central tool for gradual improvement of the function design and knowledge generation. In order to achieve the overall safety of the system, FuSa and SOTIF are systemically interconnected and complement each other.

    “FuSa ensures that hardware and software work reliably. SOTIF ensures that the capabilities of these reliable components are sufficiently specified and proven to operate safely in the real world,” explains Marek Hudec, Senior Manager of System Safety at Porsche Engineering. “This is because a system can be safe from the traditional FuSa standpoint, but still not safe enough from a SOTIF standpoint due to performance limitations.”

    Iterative approach for SOTIF

    Despite the similarity, there are differences in the process steps between FuSa and SOTIF, because an iterative approach with exploratory analysis and test methods is generally preferred to achieve SOTIF (see box on page 38). “What that means is that the developers specify, test and revise the system design until an acceptable residual risk is reached,” reports Dennis Müller, Development Engineer at Porsche Engineering. Porsche Engineering offers its customers a comprehensive solution portfolio that includes both safety methods—SOTIF and FuSa—to manage the complex development and verify and validate of driver assistance systems and autonomous driving functions.

    Dennis Müller, Development Engineer at Porsche Engineering, Functional Safety, Porsche Engineering Magazine, 2025, Porsche AG




    Dennis Müller, Development Engineer at Porsche Engineering

    “Among other services, we support our customers in applying the relevant standards such as ISO 26262 (FuSa) and ISO 21448 (SOTIF). This includes their implementation in existing development processes, execution of the hazard and risk analyses, drawing up safety concepts, and supporting the entire safety lifecycle,” explains Müller. “At Porsche Engineering, we ensure safety-conformated development in accordance with FuSa and SOTIF through clearly defined, integrated processes with clearly dedicated responsibilities. This guarantees conformity to standards and provides traceability.“

    Porsche Engineering has many years of expertise throughout the entire development chain: From drawing up requirements to simulating and testing real vehicles, Porsche Engineering uses state-of-the-art simulation and test methods, including ones for developing warning functions, parking systems, and (partially) autonomous driving functions. As an example, one out of many results of this expertise is the modular software component called “Guardian”. It is designed to facilitate the transition from advanced Level 2 systems to highly automated Level 3 driving. It offers a robust, safe, and standard-conforming solution for the implementation of safety components for autonomous driving systems. By analyzing real driving data, potentially critical situations and special cases—referred to as corner cases and edge cases— are identified exploratively and used for data-driven scenario generation. As the responsibility of the system increases, the challenges the system is facing also become bigger. As far as functional safety is concerned, these challenges primarily consist of the fact that degradation and warning concepts can no longer rely solely on the driver, who bears sole responsibility for all vehicle maneuvers during assisted driving (Level 1) and semi-automated driving (Level 2).

    This will change from Level 3 on: In this case, the systems must be able to handle failures autonomously, as the driver will no longer have a constant duty of attention. Only if the systems reach their limits must it be possible to intervene after an appropriate warning period. In principle, therefore, safe operability must continue to be guaranteed when failures occur, at least for a certain period of time – this makes the leap from Level 2 to Level 3 challenging. As a side effect, the number of redundancies in vehicle electronics is increasing rapidly—and so are the associated development workload and costs. With regard to SOTIF, the challenge lies in the depth and breadth of the set of all possible operating scenarios that the function needs to be able to master.

    Marek Hudec, Senior Manager of System Safety at Porsche Engineering, Functional Safety, Porsche Engineering Magazine, 2025, Porsche AG




    Marek Hudec, Senior Manager of System Safety at Porsche Engineering

    “These include the continuously changing vehicle environment, the behavior of road users, and unforeseeable events, which are referred to as unknown unsafe scenarios,” says Hudec. To deal with this complexity, systems are initially designed for a defined operational design domain (ODD). The scenarios to be safely mastered are thus restricted to a systematically derived space, which is divided into discrete individual scenarios by means of a scenario portfolio. The system must ensure that the approach to the boundary of this space is detected at an early stage so that either control can be handed over to the driver or the vehicle can be stopped safely within the boundaries of the ODD. “This approach is extremely important for driver assistance development: The more responsibility a system assumes for the actual driving, the more critical it becomes to consider the safety aspects of FuSa and SOTIF,” explains Müller.

    Improved safety due to redundancy

    One example from practice that illustrates the different but complementary approaches of FuSa and SOTIF is an SAE Level 3 situation for automated driving on the highway in which the driver completely relinquishes responsibility. When it comes to managing hardware or software failures, FuSa is required: Suppose that the radar sensor that measures the distance to the vehicle in front has a hardware defect and is no longer providing data. This example of a fault could lead to the function relying on outdated or invalid sensor data and possibly risking a rear-end collision. That is why the experts at Porsche Engineering use deductive and inductive safety analyses to identify such failures; the analyses must be verified by safety mechanisms. In this specific case, for example, redundancy would be useful to prevent this local individual failure from leading to “global unavailability” of the sensor data, at least until the point in time when the driver again takes responsibility for driving.

    SOTIF comes into play when it is a matter of mastering performance limits for automated driving on the highway. For example, vehicle detection must be designed in such a way that all other vehicles around or approaching the vehicle, including all motorcycles, are detected. However, due to the general, technically inherent performance limits of the sensors used, the vehicle may not correctly detect certain narrow silhouettes and approach trajectories under unfavorable light or weather conditions. Although the hardware and software are working flawlessly, this could cause the function to initiate a lane change that could result in a collision risk with an overtaking motorcycle. In this case, the SOTIF processes stipulate that the design must be analyzed and validated across all operating scenarios and that the weaknesses identified are corrected with the next design iteration (specification update followed by implementation update). For example, additional cameras and lidar sensors could be installed in the rear section or the sensor fusion algorithms could be optimized.

    Mastering performance limits, Functional Safety, Porsche Engineering Magazine, 2025, Porsche AG





    “The biggest challenge is no longer just in the system itself, but in the almost infinite complexity of reality. It is not possible to test every conceivable scenario in advance, but it is necessary to achieve sufficient coverage of the range of operation. The development process is just as complex as one would expect. SOTIF provides the framework for understanding the limits of the system and designing them safely even when all system components are functioning perfectly,” Müller explains.

    Providing qualitative and quantitative evidence that a system is safe requires large amounts of test data, a considerable amount of which is generated through simulations. The biggest challenge is dealing with unknown unsafe scenarios—dangerous situations that were not taken into account during development due to insufficient specifications or that could occur due to changes in operating conditions. To discover and minimize these is the core objective of SOTIF and represents a great challenge when developing the systems. “At Porsche Engineering, we offer our customers not only individual test services, but also close and long-term cooperation to meet the enormous demands placed on ADAS/AD development and to put safe, robust, and reliable functions on the road,” promises Hudec.

    Methods such as AI-based recognition of corner cases or specially trained AI models will increasingly provide developers with support for this in the future. It is already clear today the use of AI in safety-critical systems will require even more complex verification procedures in the future. This topic is addressed by the new international standard draft ISO/PAS 880, which deals with the safety of AI when it is part of the end product. Another innovation is the international draft standard ISO/TS 5083, which focuses specifically on the topic of safety of autonomous driving functions of the vehicle and takes into account not only the vehicle on-board components, but considers also the off- board components and its effect on the overall safety. This is referred to as holistic safety. The safety-oriented V2X communication between vehicles and with the infrastructure not only brings with it new safety-enhancing possibilities, but also new potential sources of faults and new dependencies. These too must be safeguarded with the same consistency—a demanding process that the experts at Porsche Engineering devote themselves to on a daily basis.

    Summary

    The requirements placed on the functional safety of vehicles are significantly due to the widespread use of assistance systems. The performance of the correctly implemented system in corner cases is the main focus of SOTIF. Among other things, Porsche Engineering uses data-driven and AI-based methods to master complexity and thus bring reliable systems on the road.

    Info

    Text first published in Porsche Engineering Magazine, issue 1/2025.

    Text: Ralf Bielefeldt

    Copyright: All images, videos and audio files published in this article are subject to copyright. Reproduction in whole or in part is not permitted without the written consent of Dr. Ing. h.c. F. Porsche AG. Please contact magazin@porsche-engineering.de for further information.

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  • How corporate fleets can boost demand for Made-in-EU EVs

    How corporate fleets can boost demand for Made-in-EU EVs

    The European Commission is preparing a legislative proposal on Clean Corporate Vehicles. This is a big opportunity to boost demand for Made-in-EU electric cars.

    Our analysis shows that already today, 73% of electric cars registered by companies were produced in the EU. For the private segment this was 63%. Because the majority of new vehicle sales in the EU are company cars, this 73% translates into 403,000 Made-in-EU EVs while for the private market this was only 184,000.

    With the upcoming Clean Corporate Vehicles proposal, the European Commission can further tap into this potential. Asking the corporate market to accelerate and lead Europe’s shift to electric is legitimate:

    • In 23 out of 27 Member States, companies receive more benefits than private buyers for owning an EV. In Germany this goes up to €14.000 per car.

    • Despite such benefits, in only 3 Member States companies are really driving the uptake of electric cars.

    This means that the corporate market’s potential is far from exhausted: an EU-wide target (on Member States or companies) asking large corporations to electrify 75% of their new cars in 2030, with Made-in-EU requirements, could lead to an additional 1.2 million locally produced EVs by 2030.

    1. Why the EC should ask companies to lead on electrification

    The European Commission is preparing a legislative proposal on Clean Corporate Vehicles. This law is expected to set binding electrification targets on corporate cars – either on Member States or on large companies.

    1.1. Companies benefit from tax breaks when owning an electric car

    There are good reasons for the Commission to ask companies to lead Europe’s switch to electric: when companies buy or lease a car, they benefit from fiscal advantages that are not available to private buyers. Examples are VAT deductions, depreciation write-offs and Benefit-in-Kind.

    In 23 out of 27 Member States, companies receive more benefits than private consumers when owning an electric car. T&E analysis shows that the average EU corporate tax relief for an EV buyer is €1,508 yearly. In Germany, where corporate EV tax benefits are among the highest, this goes up to €3,505 per year, or €14,020 over a typical ownership period of four years. Companies benefit from public money when owning an electric vehicle and should therefore drive the EU’s efforts in decarbonising road transport and boost demand for electric vehicles.

    1.2. Only in three EU countries the corporate car market is clearly leading on electrification

    Despite these fiscal benefits, companies are not clearly outpacing the private market in terms of electrification. This is partly due to the tax benefits that polluting company cars continue to receive. In only three EU countries the corporate market is significantly steering the adoption of BEVs (Belgium, Luxembourg, Netherlands). In large car markets such as Germany, France, Spain or Italy, their performance is underwhelming. Countries that have introduced structural fiscal reforms have a much higher corporate car electrification share. Since 2021, Belgium progressively phased out the fiscal deductibility for fossil fuel vehicles, creating a clear and growing incentive for BEV uptake. This has resulted in corporate BEV registrations of over 54% in the first half of 2025 (compared to 9% in the private market).

    2. Electrifying corporate fleets brings more benefits for EU automotive industry

    2.1. Companies buy more Made-in-EU EVs

    Looking at the registration data of the first half year of 2025, companies tend to prefer purchasing more EVs that are made-in-EU than private households (73% against 63% for private buyers). Made-in-EU is defined as vehicles for which the final assembly line is located in the EU-27 (i.e. EVs of European brands that are produced in China and imported into the EU are not counted as Made-in-EU). Due to their high market share – 60% of new cars are corporate – and higher preference, there are 2.2 times more Made-in-EU electric cars registered by companies than private: 403,000 compared to 184,000 in just the first half of 2025.

    2.2. What are the most popular EV models in the corporate and private market?

    This trend is also reflected when zooming in on the most popular EV models for both the corporate and private segment: Made-in-EU EVs currently dominate the business segment, with 13 out of the 15 most popular models manufactured in the EU. For private buyers, these numbers are telling a different story: only 10 out of 15 top-selling models are EU made (see annex in full briefing attached on the left side of this page).

    This gap becomes even more apparent when zooming in on the market share of the top 15 models that are not Made-in-EU (see figure below): for the corporate segment, the non Made-in-EU models (Tesla Model 3 and the Kia EV3), account for only 10% of the best-selling corporate EV sales in the first half of 2025. For the private segment, this is 32%.

    3. How EU fleet targets can further boost demand for made-in-EU EVs

    As T&E analysis confirms, companies currently have a higher preference for a Made-in-EU vehicle when purchasing an EV. Nevertheless, there is still a lot of untapped potential, as companies are currently not clearly leading on electrification (see Section 1). In order to assess the additional benefits of the forthcoming EU Clean Corporate Vehicles legislation on Made-in-EU EV production, we have analysed the impact of EU fleet targets on the demand for EVs produced in the EU under two scenarios.

    • Business as usual: without any obligations on corporate vehicles and under today’s market conditions and CO2 standards (Regulation 2019/631), we expect 13.1 million Made-in-EU electric vehicle sales between 2026 and 2030.

    • Binding electrification targets on Member States (only affecting large companies): in this scenario, the European Commission proposes binding ZEV-purchasing targets on large companies (+250 employees) as part of the Clean Corporate Vehicles legislation: 50% of new large company registrations by 2028, and 75% by 2030 have to be zero emission vehicles, with a requirement that at least 90% of the targeted corporate cars must be Made-in-EU. These targets would increase the demand for additional made-in-EU electric cars by 1.2 million, bringing total production to 14.3 million vehicles. For illustration: the total production of the VW Wolfsburg plant in 2024 (all powertrain types) reached 521,000 units.

    Being Europe’s largest manufacturing country, the benefits for electric car production in Germany are particularly big. Results for Germany can be found in the annex.

    This potential increase is crucial for Europe. It proves the CCV initiative is essential for growing the European manufacturing scale and keeping our domestic EV supply chain competitive. It achieves this industrial boost without needing to raise the ambition of current CO2 emission standards.

    4. Policy recommendations

    To fully unlock the potential of the corporate car market to drive both the clean transition and the competitiveness of European car manufacturers, the European Commission should:

    • 1

      Propose a Regulation on Clean Corporate Vehicles: corporate fleets make up 60% of new cars and therefore have a lot of potential for both decarbonisation and European car manufacturing. Today, however, the corporate segment is not really leading on electrification in most Member States, despite existing tax benefits and incentives.

    • 2

      Include ambitious, binding ZEV-targets: the Regulation must set ambitious, binding Zero-Emission Vehicle (ZEV) targets on Member States. When designing national policies, SMEs should be exempted from any requirements to obtain the targets. Instead, Member States should aim their measures at large companies (+250 employees) in order to tap into the industrial potential of corporate vehicles while limiting the impact on European businesses.

    • 3

      Introduce local content requirements: this legislation should also include Made-in-EU requirements to further boost domestic EV production. By doing so, the Commission should clearly define what Made-in-EU EVs and batteries are and set up a transparent methodology rewarding Made-in-EU EVs, batteries, key components and materials.

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  • Ingka Group spotlights co-workers on International Day of Persons with Disabilities

    Ingka Group spotlights co-workers on International Day of Persons with Disabilities

    To mark UN International Day of Persons with Disabilities, five Ingka Group co-workers across its retail operations, from Portugal to the Netherlands and China shared their experiences, why inclusion matters and why accessibility is essential. Their reflections help Ingka Group listen, learn and continue improving on its journey to be disability inclusive.

    “At Ingka Group, we believe every co-worker is a talent and we want every co-worker to feel they can be their full selves at work. These stories from our colleagues around the world, remind us that disability is part of the human experience, visible or invisible, temporary or permanent, and that inclusion is something we build together every day,” says Buks Akinseye, Global Equality, Diversity & Inclusion Manager, Ingka Group.

    “We are on the way and continue to take steps to strengthen accessibility and disability inclusion. This includes developing and piloting global accessibility standards in our workplaces, offering workplace adjustments so people can work at their best, and working with organisations such as the Valuable 500 and the Business Disability Forum to further strengthen our approach. We are also improving customer experiences and embedding accessibility into our digital and product range across markets. Our journey continues, and we remain committed to creating a better everyday life that includes everyone,” he adds.

    Monique in the Netherlands, rebuilding her life after a brain haemorrhage; Madalena in Portugal, challenging assumptions about blindness in the workplace; Liu in China, thriving with hearing loss thanks to redesigned workflows. Their stories reflect Ingka Group’s belief that every co-worker is a talent and the company’s ambition to create a place where everyone feels a sense of belonging.

    Monique, Sales Co-worker, IKEA Netherlands

    After a brain haemorrhage paralysed my right side, I spent two years in rehabilitation before returning to IKEA. My old role had physical demands I could no longer meet, and I became more sensitive to noise and stimuli. My colleagues, with the best intentions, tried to protect me by taking over my tasks. They were afraid I wouldn’t be able to handle them.

    I appreciated their support, but I also wanted the chance to discover my own limits and strengths again. Once we started having those conversations, everything changed. My team learned when to step in and when to not, and their support is everything. Some days are tough, but my willpower is tougher.

    Liu, Fulfilment Operations Co-worker, IKEA China

    Living with hearing loss, communication used to be a barrier in other workplaces. Losing my hearing gradually from childhood meant adapting constantly, and it shaped how I understood myself and what I thought I could do. Joining IKEA in 2024 was a turning point, because my team welcomed me warmly and made sure I never faced tasks or communication alone. Having a buddy to guide me, a manager who checked in, and colleagues who cared gave me confidence I hadn’t felt in other workplaces.

    At IKEA, my team redesigned walkways, created a digital handover tool and made sure I always felt included. The redesigned walkways and the digital handover tool weren’t just practical solutions; they showed me that accessibility was taken seriously. Over time, I grew more independent, took on new responsibilities, earned my forklift licence, and even began helping customers at the pickup counter. I worried people thought I couldn’t handle the job, but with the right support and tools, I’m as capable as everybody else.

    Sherry, Resolutions Generalist, IKEA China

    After facing discrimination in past jobs due to scoliosis and chronic pain, joining IKEA changed everything, from accessible facilities to a caring team that believed in me. I grew up in the countryside, and after a serious fall as a child, the long-term pain and visible impact on my posture affected how people treated me in previous workplaces. One manager even stopped me from meeting customers because of how I looked, and that broke my spirit.

    But at IKEA, from my very first interview, I felt respect and fairness, no assumptions, just care. On day one, I noticed barrier-free restrooms, adjustable desks, and a team that truly supported me. My buddy checked in, my manager cared, and I began to thrive. Today, my productivity matches my colleagues’, customers praise my work and speaking on stage at our annual kick-off for the new financial year, filled me with pride. To anyone facing struggles: don’t give up. Keep a positive mindset, and you’ll find your path.

    Florence, Product Specialist, IKEA France

    I’m passionate about disability inclusion. In 2012–2013, I was diagnosed with Crohn’s disease, arthritis, and later, autism. It was a difficult period, and I took nearly a year of sick leave to focus on my health. When I was ready to return, IKEA supported my transition into a role that better suited my needs. Today, I work mostly remotely, thanks to flexible arrangements and a caring team.

    Living with invisible conditions can be challenging. People don’t always understand what they can’t see, and assumptions can quickly take hold. That is why I advocate for more awareness around neurodivergence and accessibility. I’ve heard comments suggesting that people with disabilities are less productive or receive unfair advantages and we need to challenge that thinking. Try to let go of the idea that people with disabilities are less productive or need help with everything. Let’s all uphold values of compassion, whether with colleagues or customers.

    Related links:

    • Better lives | Ingka Group – People are at the heart of everything we do. From gender equal pay to inclusive workplaces. We want to take a leading role in creating a fairer and more equal society and to improve the lives of the millions of people that interact with, or are impacted by, our company.

     

    *World Health Organization – World Health Organization

     

    About Ingka Group 

    With IKEA retail operations in 31 markets, Ingka Group is the largest IKEA retailer and represents 87% of IKEA retail sales. It is a strategic partner to develop and innovate the IKEA business and help define common IKEA strategies. Ingka Group owns and operates IKEA sales channels under franchise agreements with Inter IKEA Systems B.V. It has three business areas: IKEA Retail, Ingka Investments and Ingka Centres. Read more on Ingka.com.

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  • An eco obscenity: Norman Foster’s steroidal new skyscraper is an affront to the New York skyline | Architecture

    An eco obscenity: Norman Foster’s steroidal new skyscraper is an affront to the New York skyline | Architecture

    Among the slender needles and elegant spires of the Manhattan skyline, a mountainous lump has reared into view. It galumphs its way up above the others, climbing in bulky steps with the look of several towers strapped together, forming a dark, looming mass. From some angles it forms the silhouette of a hulking bar chart. From others, it glowers like a coffin, ready to swallow the dainty Chrysler building that trembles in its shadow. It is New York’s final boss, a brawny, bronzed behemoth that now lords it over the city with a brutish swagger.

    Fittingly, this is the new global headquarters of JP Morgan, the world’s biggest bank. The firm enjoys a market capitalisation of $855bn (£645bn), more than Bank of America, Wells Fargo and Citigroup’s combined, and it looks as if it might have swallowed all three inside its tinted glass envelope. Last year, for the first time, it made more than $1bn a week in profits. Chairman and chief executive Jamie Dimon likes to boast of its “fortress balance sheet”, and he now has an actual fortress to go with it – built at a cost, he revealed at the opening, of around $4bn. He has certainly made his mark. It would be hard to design a more menacing building if you tried.

    The Brobdingnagian pile is the work of Foster+Partners, led by the 90-year-old Norman Foster, who is no stranger to penning extravagant bank headquarters. His HSBC tower in Hong Kong was the world’s most expensive building when it opened in 1986, standing as a costly essay in structural redundancy, with a stack of steel suspension bridges bolted to its facade. It was described by one former partner as “a sledgehammer to crack a nut”. In comparison, the JP Morgan tower is like using a bronze-plated bulldozer to puree a pea.

    Exploding … steel columns at street level. Photograph: Nigel Young/Nigel Young, courtesy of Foster + Partners.

    The sheer amount of structural steel – 95,000 tonnes in total – is obscene for a building that contains just 60 storeys in its 423-metre height, half the number of floors you might expect in such a colossus. It uses 60% more steel than the Empire State Building, which is taller and has more square footage. One leading engineer calculated that if the steel was flattened into a belt (30mm wide by 5mm thick), it would wrap the world twice – an apt symbol of the bank’s throttling global domination.

    If the building is a bullying affront to the skyline, it is just as domineering at street level. It erupts from the sidewalk with gargantuan bunches of steel columns that fan out at each corner, clutching the base of the tower like Nosferatu fingers. Positioned to dodge train tracks below, the columns splay out to hold the building’s swollen mass ominously above new strips of privately owned “public space”, where shallow steps and planters look designed to deter lingering. To the west, on Madison Avenue, the building greets the street with an incongruous cliff face of carved granite boulders. This, it turns out, is an artwork by Maya Lin, who has achieved the impressive feat of making real stone look like fibreglass scenery from Disney’s Frontierland, complete with morsels of mossy garnish clinging to the cracks.

    On the other side of the block, along Park Avenue, the security guards will let you peer through the windows to admire a US flag hanging from a 12-metre high bronze flagpole at the top of a staircase in the lobby, which, in another surreal twist, flutters in an artificial indoor breeze. It is a rare artwork by Lord Foster himself, who intended the flag’s movement to reflect the wind conditions outside. On the calm, still day of my visit, it was billowing at a stiff clip. In this “city within a city”, JP Morgan gets to dictate the weather it wants.

    Inside, everything is colossal. Great walls of fluted travertine, sourced from a single quarry in Italy, rise up through the 24-metre-high lobby, flanking a grand travertine staircase framed by a pair of huge Gerhard Richter paintings. Banks of elevators shuttle the 10,000 workers up into a vertical office-wellness universe, complete with a 19-restaurant food court (with kitchen-to-desk delivery), a hair salon, meditation rooms, fitness centre, medical clinic and a pub. The column-free office floors are fitted with circadian rhythm lighting, creating a carefully calibrated environment, detached from the outside world in the manner of a Las Vegas casino, in the hope that employees might never leave their desks. Dimon is serious about getting everyone back to the office full-time, despite the pleas of his staff. This is his machine to crush the hybrid-working movement once and for all.

    Surreal twist … the lobby flag that blows in an artificial breeze. Photograph: Nigel Young/Nigel Young, courtesy of Foster + Partners.

    The ceiling heights may be lofty (adding many more cubic metres of air to heat and cool), but when an image of the new trading floors was posted on social media, condemnation was swift. Comparisons were made to factory-farmed chickens, Chinese sweatshops, and the very 1950s cellular office space that open-plan layouts are intended to avoid. A conspicuous steel truss zigzagging through the space somewhat undermines the “column-free” claims, and raises questions over the building’s structural logic. One engineer who has studied the plans notes that adding a few more columns and reducing the spans by a couple of metres could have reduced the building’s carbon footprint by 20-30%. But then Foster and Dimon wouldn’t have got the heroic, protein-fuelled steelwork they so desired, slicing its way through the building in monumental Vs.

    Beyond the structural braggadocio, they were also keen to dial up the theatrics by night. Every evening, for miles around, New Yorkers can now gaze in wonder and horror as the tower’s summit transforms into a glittering crown, bubbling with twinkling lights that rise up the facade like a supersized flute of champagne. It is the work of Leo Villareal, who recently illuminated the Thames bridges. Sometimes, the throbbing diamond shape adds an inescapable Eye of Sauron vibe. At other moments, it appears to shift into a pulsating yonic void.

    Vajazzled steeple aside, what makes the tower’s pumped-up extravagance so galling is that it saw a perfectly good office building needlessly bulldozed. The 52-storey Union Carbide headquarters, built in 1960 as the celebrated work of Natalie de Bois at SOM, stood as a sleek, Miesian monolith. It had even undergone a full refurbishment and environmental upgrade in 2012 – trumpeted by JP Morgan at the time as “the largest green renovation of a headquarters building in the world”. Just seven years later, at the hands of the same ruthless bank, it became the tallest building ever to be intentionally demolished. To be replaced by something almost twice the height, but with just eight extra floors.

    A touch of Vegas casino … a carefully calibrated enviroment detaches employees from the outside world. Photograph: Nigel Young/Nigel Young, courtesy of Foster + Partners.

    The reason this happened, beyond ego and greed, can be traced to a 2017 zoning change. There had been a growing fear among landlords in East Midtown that the area was losing its lustre as the world’s pre-eminent business address. Office tenants were flocking west, to the glistening new shafts of Hudson Yards, in what is known, in real estate lingo, as the “flight to quality”. The city’s solution, in a shortsighted act of self-sabotage, was to allow Midtown to shape itself after the soulless corporate wasteland of Hudson Yards. Incentives were introduced to encourage demolition, including allowing the sale of unused “air rights” from landmarked buildings within the 78-block area. This means that historical structures that didn’t fill the maximum bulk allowed on their plots could sell their unused potential to others. JP Morgan acquired 65,000 square metres of air rights from Grand Central station, and 5,000 square metres from St Bartholomew’s church nearby, allowing it to inflate its size far beyond the usual limits.

    What few might have predicted is the cumulative effect that unleashing this scale of development might have. The JP Morgan tower is not a one-off, but merely the first of a whole new breed of steroidal supertalls. An even bigger 487-metre high, 62-storey tower was recently granted permission at 350 Park Avenue nearby, also designed by Foster+Partners as another bunch of towers strapped together, with the look of a discount bulk-buy. SOM won permission for a similarly sized monster at 175 Park Avenue, set to pierce the ground with more fans of columns converging to a point. This part of Midtown will soon resemble a huddle of bloated bankers squeezed into stilettos, casting ever longer shadows down the canyons of Manhattan and obliterating views of the city’s cherished peaks, while crushing a generation of handsome, usable buildings beneath them.

    From a distance, across the pond, you might care little about the fate of New York. It is a place long shaped by the forces of unbridled capital, where form follows finance and landowners get to build “as of right”, citizens be damned. But Foster’s bronze goliath is a prelude of what might soon come to London, on an even bigger scale. Last week, JP Morgan announced that it will begin work on a 280,000 square metre European headquarters in Canary Wharf – by far the biggest office building in the capital, containing more space than the Shard, Gherkin and Walkie-Talkie combined. The design, also by Foster+Partners, has only been teased with a glimpse of a ground-level corner, showing some curved bronze fins wrapping a bulging glass drum. Brace yourselves for what’s out of shot.

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  • Regional Cyber Center Malaysia 03122025

    Regional Cyber Center Malaysia 03122025

    The opening of the Regional Cyber Center not only strengthens Leonardo’s positioning as a leader in global security, but also consolidates Malaysia’s role as a strategic hub for the Southeast Asia

    The Global CyberSec Center based in Kuala Lumpur joins Leonardo’s global network, which already includes the federated centers in Chieti, Bristol, Brussels and Riyadh

     

    The opening of the new Regional Cyber Center strengthens Leonardo’s positioning as a leader in technologies for global security. The inauguration, which took place today in the presence of the Malaysian Minister of Communications, Yang Berhormat Datuk Fahami Fadzil, underlines the company’s commitment to ensuring global security, responding proactively to today’s increasingly complex and rapidly evolving cyber threats. 

    The strategic choice of Malaysia reflects the country’s leading role in cybersecurity. Malaysia stands out in the region for its advanced legislation on the subject and its protection of critical national infrastructure. Leveraging the integration of Leonardo’s proprietary technologies in the field of cyber security, physical security and mission-critical communications and its experience in strategic sectors in Italy and abroad, the new Center will make a substantial contribution to global protection against new hybrid threats, strengthening the digital autonomy and supporting the sustainable development of Malaysia and the entire region.

    The new center in Kuala Lumpur is part of the Global CyberSec Center (GCC), Leonardo’s trusted and mission-critical cybersecurity service provider headquartered in Chieti (Italy), and joins the already operational federated Regional Cyber Centers in Brussels (European Union), Bristol (United Kingdom) and Riyadh (Saudi Arabia). The GCC’s global network is designed to ensure cyber mission assurance for strategic customers – including defence organisations and critical national infrastructures – by pooling processes, information on threats, and cutting-edge technologies. This federated model ensures both the ability to operate on a global scale in preventing, countering and responding to new threats, and the control of strategic data, fully respecting individual national sovereignty.

    “This initiative is a long-term investment reflecting Leonardo’s major commitment to building a strong industrial and technological partnership with Malaysia while contributing to the development of high specialised local human capital. In a world where cyber self-reliance has become the new currency of stability, we enable National Strategic Organizations to assure security and continuity of their operations leveraging our Global CyberSec Platform. Through this investment in Malaysia, our objective is to support the transformation of critical infrastructures, such as National Cloud and National Security Operation Centers, into autonomous strategic assets”. States Andrea Campora, Leonardo’s Managing Director Cyber & Security Solutions Division.

    The inauguration of the new regional Cyber Center in Malaysia represents a key milestone in Leonardo’s long-term strategy of expanding its international presence in the country and throughout the region. The initiative, combined with recent acquisitions in Zero Trust architecture, further strengthens Leonardo’s leading role in ensuring global security, and consolidates Malaysia as a crucial and strategic hub for the Southeast Asia and, in perspective, for the Far East.

    Leonardo has had an established presence in Malaysia for over forty years, making a significant contribution to its defence and aerospace sectors. Over the decades, the company has supported the country with a comprehensive portfolio of advanced solutions, including helicopters for military and commercial operations, military aircraft, integrated defence systems – such as radar and both naval and electronic warfare capabilities – and security solutions for critical infrastructure and mission-critical communications.

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  • CVC announces the acquisition of Smiths Detection for £2bn

    CVC announces the acquisition of Smiths Detection for £2bn

    CVC, one of the world’s leading private markets investment firms, today announced that it has entered into an agreement to acquire Smiths Detection, a global leader in threat-detection and security-screening technologies for airports and critical infrastructure, from Smiths Group plc. Leveraging CVC’s extensive experience in executing corporate carve-outs and history of scaling newly independent companies, Smiths Detection is well placed to build on its strong market positions and unlock substantial long-term value.

    Headquartered in the UK, Smiths Detection employs 3,400 people, including over 1,100 field service engineers and over 500 R&D professionals and operates from facilities across Europe, the US and Asia. The business has a global #1 position in aviation security – i.e. screening technology for carry-on bags, hold luggage, and air cargo at airports – where it serves 47 of the world’s top 50 airports, with both industry-leading hardware and sector-leading digital capabilities, including automated detection algorithms. Smiths Detection also serves other critical infrastructure end markets such as urban security (screening systems for government and commercial buildings, public venues and spaces ) and ports and borders (cargo and vehicle inspection) and the business has a leading niche chemical threat identification capability for defense end markets.

    Dominic Murphy, a Managing Partner and Co-Head of the UK private equity team at CVC and Conor Keogh, Managing Director at CVC, said: “Smiths Detection’s industry-leading threat detection and security screening technologies play a crucial role in helping protect people and critical infrastructure worldwide. We look forward to supporting the business during the next phase of its growth and development through continued investment in technology innovation, high-quality engineering and best-in-class aftermarket service.”

    James Mahoney, Partner and Head of CVC’s private equity activities in the Aviation, Defence & Space sectors added: “We are excited to partner with Jérôme de Chassey and his team. Smiths Detection’s strong market positions, anchored by its global leadership in aviation, create a compelling platform for long-term value creation.”

    The transaction is subject to customary regulatory approvals and is expected to close in the second half of 2026. Barclays acted as financial advisor and Latham & Watkins acted as legal counsel to CVC. 

    The investment will be made through CVC Capital Partners IX.

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  • Asian shares are mixed as steady bond yields, rebound for bitcoin push US stocks higher

    Asian shares are mixed as steady bond yields, rebound for bitcoin push US stocks higher

    BANGKOK — Asian shares were mixed Wednesday after stocks on Wall Street held steadier as both bond yields and bitcoin stabilized.

    U.S. futures rose and oil prices edged higher.

    Tokyo’s Nikkei 225 jumped 1.6% to 50,063.65 on big gains for technology shares like Tokyo Electron, which jumped 5.6%. Adventest, a maker of computer chip testing equipment, surged 6.9%.

    Technology and telecoms giant SoftBank Group Corp. surged more than 8% following reports that its founder, Masayoshi Son, regretted having to sell shares in computer chip maker Nvidia to help pay for other investments. The company’s share price sank after it announced last month that it had sold the shares for $5.8 billion.

    South Korea’s Kospi also got a lift from tech shares, gaining 1.2% to 4,042.40. Shares in Samsung Electronics, the country’s biggest company, rose 1.8%.

    But Chinese markets declined following the release of data showing weaker factory activity.

    Hong Kong’s Hang Seng fell 1.1% to 25,797.24, while the Shanghai Composite index shed 0.3% to 3,885.36.

    Australia’s S&P/ASX 200 edged 0.2% higher, to 8,595.20.

    On Tuesday, the S&P 500 rose 0.2% to 6,829.37. The Dow Jones Industrial Average added 0.4% to 47,474.46, and the Nasdaq composite gained 0.6% to 23,413.67.

    Boeing soared 10.1% and was one of the strongest forces lifting the S&P 500. Chief Financial Officer Jay Malave said the plane maker expects growth next year in an underlying measure of how much cash it produces.

    Database company MongoDB also helped lead the market, jumping 22.2% after it delivered stronger results for the latest quarter than analysts expected.

    They helped offset a 6.8% drop for Signet Jewelers, which gave a forecast for revenue in the holiday shopping season that fell short of analysts’ expectations. The jeweler said it’s expecting “a measured consumer environment.”

    Another potential warning about U.S. shoppers’ strength came from the chief financial officer of Procter & Gamble, the giant behind Tide detergent and Ivory soap, whose shares slipped 1.1%.

    The U.S. economy has been holding up overall, but that’s masking sharp divisions beneath the surface. Lower-income households are struggling with higher prices while richer households are benefiting from a stock market that’s within 1% of its all-time high set in late October.

    In the bond market, Treasury yields calmed following their jumps the day before. The 10-year yield edged down to 4.08% from 4.09% late Monday, while the two-year yield eased to 3.51% from 3.54%.

    Higher yields can drag prices lower for all kinds of investments, and those seen as the most expensive can take the biggest hit.

    Monday’s climb in Treasury yields came after the governor of the Bank of Japan hinted that it may raise interest rates there soon. But hopes are still high that the Federal Reserve will cut its main interest rate when it meets in Washington next week.

    The Japanese central bank is likely to raise its benchmark rate at its Dec. 19 meeting, Tan Boon Heng of Mizuho Bank in Singapore, because failing to do so could lead investors to sell off Japanese yen.

    “Yet, delivering a ‘done deal’ hike may perversely deny any appreciable JPY (Japanese yen) gains, whilst boosting long-end yields,” he said in a report.

    The Fed has already cut its overnight interest rate twice this year in hopes of shoring up a slowing job market. But lower rates can fan inflation, which has stubbornly remained above its 2% target.

    Complicating things is the U.S. government’s earlier shutdown, which delayed reports on the job market and other areas of the economy.

    In other dealings early Wednesday, bitcoin, which tumbled below $85,000 on Monday as bond yields worldwide marched higher, rose to $94,000.

    U.S. benchmark crude oil edged 3 cents higher to $58.67 per barrel. Brent crude, the international standard, gained 4 cents to $62.49 per barrel.

    The U.S. dollar slipped to 155.68 Japanese yen from 155.87 yen. The euro rose to $1.1645 from $1.1626.

    ___

    AP Business Writers Matt Ott and Stan Choe contributed.

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  • Chop and change: pork is ‘new beef’ for money-saving Britons, report finds | UK cost of living crisis

    Chop and change: pork is ‘new beef’ for money-saving Britons, report finds | UK cost of living crisis

    Pork is the “new beef”, with Britons increasingly making the money-saving meat swap for dishes such as spaghetti bolognese or T-bone steak, according to a new report.

    With the latest official figures showing beef price inflation running at 27%, customers are looking to buy pork cuts that you would typically associate with beef. That list runs to free-range fillets and short ribs as well as T-bone and rib-eye steaks, Waitrose says in its annual food and drink report.

    Recipe searches for “lasagne with pork mince” have doubled on its website, while searches for “pulled pork nachos” are up 45%. Its sales of pork mince are up 16% on last year, as home cooks adapt favourite recipes.

    Pork is making a “massive comeback but in a premium way”, according to Matthew Penfold, a senior buyer for Waitrose. Shoppers can buy pork for a fraction of the cost, with a fillet costing about £20 a kg, while beef is £80 a kg or more.

    The annual exercise by the upmarket retailer highlights the food trends that will shape what is being sold on supermarket shelves. Ones to watch include new portmanteau flavours “spour” (spicy and sour) and “fricy” (fruity and spicy). It also flags the rise of the “fibremaxxing” movement, which involves going to town with linseeds and dried fruit.

    But while much of this excitement is driven by TikTok, the increased demand for pork is down to cold, hard economics as shoppers make tight household budgets stretch further.

    This cost consciousness is also behind the renaissance of the baked potato – if it ever went away. Sales of large potatoes are up by more than third in Waitrose stores but bog-standard toppings such as beans and cheese will no longer do. The alternatives dreamed up by food influencers include kimchi, and chicken shawarma with tahini.

    The impact of high food prices on shopping habits is writ large in separate figures prepared by the Agriculture and Horticulture Development Board (AHDB).

    With the average price for a kilogram of beef mince in the shops up by 37% year on year in the 12 weeks to 2 November, the quantity sold tumbled nearly 11%. Consumers were opting to buy smaller 250g packs (saving £1.77 on average compared with a 500g pack) and frozen mince instead, it said.

    The financial squeeze meant consumers were seeking out cheaper proteins such as chicken, pork sausages and fish, AHDB said. Its data showed pork mince sales volumes surging 36.6% year on year, and chicken mince by 65.6%. “Some consumers are looking for cheaper substitutes for cooking their family favourites such as spaghetti bolognese or chilli con carne,” it said.

    Katharina Erfort, the principal at the supply chain experts Inverto, said higher feed and labour costs were among the factors driving beef prices higher. “That has led to a reduction in the raising of beef cattle in the UK, impacting the overall supply. Pork has traditionally been cheaper to produce because pigs need far less feed than cattle – around four times less for every kilo of meat,” she said, adding that they also required less space and reached full size in about six months.

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  • HUGO BOSS PROVIDES STRATEGIC UPDATE TO PAVE THE WAY FOR PROFITABLE GROWTH

    HUGO BOSS PROVIDES STRATEGIC UPDATE TO PAVE THE WAY FOR PROFITABLE GROWTH

    • Next strategic phase to realign, simplify, and strengthen the business 
    • Clear execution focus: brand, distribution, and operational excellence through 2028
    • Strong free cash flow of around EUR 300 million annually targeted until 20281
    • 2026 as year of brand and channel realignment for long-term efficiency improvements
    • Currency-adjusted Group sales expected to decline mid- to high-single digits in 2026
    • EBIT expected between EUR 300 million and EUR 350 million in 2026 as top-line development will outweigh targeted gross margin improvements and cost efficiency
    • Return to profitable growth expected from 2027 onward
    • Long-term potential: Outgrow the market and drive EBIT margin to a level of around 12%

    “Since 2021, we have repositioned our Company with CLAIM 5, creating a strong foundation for the future. We have refreshed our two brands and invested extensively in our organizational platform,” says Daniel Grieder, Chief Executive Officer of HUGO BOSS. “Following the successes of recent years, we are now deliberately taking a step back to prepare for tomorrow’s growth. Our focus in the coming years will be on the ongoing optimization in the areas of brand, distribution, and operations with the clear ambition to transform them from great to excellent. Next to strong cash generation, this will drive sustainable profitable growth and long-term value for our shareholders. Our vision is clear: to be the premium, tech-driven, customer-centric global fashion platform.” 

    Today, HUGO BOSS launches CLAIM 5 TOUCHDOWN, setting the course through 2028 and paving the way for sustainable, profitable growth. Amid a challenging market environment, this strategy builds on the successes of CLAIM 5 since 2021. Both brands, BOSS and HUGO, delivered strong growth (CAGR 2020-2024: +22%) and global market share gains, while structural investments have created a robust business platform for the future. 

    Moving forward, HUGO BOSS’ strategic direction remains unchanged, but the focus sharpens. 2026 will serve as a year of realignment, strengthening the business by streamlining processes, refining assortments, and optimizing the distribution network. At the same time, HUGO BOSS will significantly accelerate free cash flow generation, forming the foundation for continued shareholder returns. To deliver against this, execution will center on three key fields of excellence: brand, distribution, and operations. These priorities will boost efficiency and set the stage for renewed top- and bottom-line growth from 2027 onward.

    Brand Excellence
    HUGO BOSS is committed to driving Brand Excellence by further elevating BOSS and HUGO, strengthening brand relevance, and deepening customer loyalty. While BOSS Menswear will continue to leverage its strong 24/7 lifestyle positioning, the Company is improving the long-term performance of BOSS Womenswear and HUGO. BOSS Womenswear will focus on a refined product assortment built around essential products, to strengthen resonance with female consumers. HUGO will sharpen its identity with a refined positioning and a more accessible product range centered even more on contemporary tailoring. A new organizational setup with two dedicated powerhouses for menswear and womenswear will unlock synergies across the two brands. Marketing spendings are targeted at around 7% of Group sales, with priority on high-return initiatives, including key partnerships like Beckham x BOSS and product-led campaigns that drive conversion.

    Distribution Excellence 
    A clear focus on Distribution Excellence will elevate the brand experience across all touch-points, with a more targeted, higher-quality distribution footprint. HUGO BOSS will continue to optimize its own store portfolio for an even better customer experience while enhancing sales productivity and retail efficiency. In brick-and-mortar wholesale, the Company will foster strategic partnerships, adopt a more selective assortment approach, and expand its franchise business. HUGO BOSS will strengthen its digital business by further advancing seamless brand and customer experiences across platforms. From a regional perspective, the Company will further build on its position in the U.S. and China, with a particular focus on optimizing its distribution and tailoring brand activities to local needs. HUGO BOSS will leverage its strong presence in Europe for further market share gains and it will also capture new business opportunities in emerging markets.

    Operational Excellence 
    HUGO BOSS will elevate Operational Excellence across the value chain by leveraging its past investments to fuel long-term growth, profitability, and cash generation. Key priorities include driving further sourcing efficiency through ongoing vendor optimization, a sea-freight-first approach, and shorter lead times. In parallel, the Company will enhance its planning capabilities and enable faster, smarter decisions through technology and artificial intelligence. HUGO BOSS will also maximize the benefits of its expanded automated logistics network and strengthen back-end efficiency through streamlined processes and automation.

    Financial ambition centered on profitability and cash generation 
    CLAIM 5 TOUCHDOWN builds on past successes and centers on efficiency for future sustainable growth. Over the medium to long term, the Company aims to outgrow the market and achieve an EBIT margin of around 12%. Against this ambition, the next years will mark a phase of deliberate refocus and realignment, as HUGO BOSS further strengthens its operational and financial base. Free cash flow is targeted at around EUR 300 million annually, nearly tripling as compared to recent years2. This will be supported by lower capital expenditure (3% to 4% of Group sales) and strict trade net working capital management (18% to 20% of Group sales). Inventory levels are expected to be reduced steadily, approaching 20% of sales by 2028. 

    “2026 will be a year of consolidation and realignment and an important step toward positioning HUGO BOSS for long-term profitable growth,” says Yves Müller, Chief Financial Officer and Chief Operating Officer of HUGO BOSS. “While we expect a temporary decline in sales, we will continue to drive our efficiency agenda along the value chain to safeguard margins and strongly accelerate cash flow generation. With this stronger financial foundation, we are well positioned to return to top- and bottom-line growth from 2027 onward and progress toward our long-term EBIT margin ambition of around 12%, reinforcing our commitment to delivering value to all shareholders.” 

    Refocus in 2026 to pave the way for renewed profitable growth in 2027
    Against the backdrop of deliberate brand and channel realignment, currency-adjusted sales are expected to decline mid- to high-single digits in 2026, before returning to growth in 2027, and accelerating in 2028. Gross margin improvements are expected in 2026 and beyond, supported by sourcing efficiencies, selective price adjustments, and even stronger full-price sell-through. Against the backdrop of ongoing cost discipline, EBIT is expected between EUR 300 million and EUR 350 million in 2026, with profitability improving from 2027 onward. 

    Capital allocation framework with firm commitment to shareholder returns
    As part of CLAIM 5 TOUCHDOWN, the Company’s capital allocation framework is designed to balance investment, value creation, and resilience. The framework emphasizes continued investments into the business to support long-term profitable growth, while also including a firm commitment to delivering continued shareholder returns via dividends and/or share buybacks. At the same time, HUGO BOSS will continue to further strengthen its balance sheet over the coming years, aiming to reduce financial leverage while remaining within its target corridor and maintaining strong investment-grade ratings from S&P (“BBB”) and Moody’s (“Baa2”). The Company will also preserve the strategic flexibility needed to pursue future M&A opportunities.

    From Great to Excellent 
    CLAIM 5 TOUCHDOWN serves to sharpen focus, discipline, and execution across the business. With clear priorities, a performance-driven culture, and fully committed teams, HUGO BOSS is ready to navigate today’s challenges, by turning strategic focus into tangible results for tomorrow. Backed by its strong cash flow profile and a clear trajectory toward sustainable, profitable growth, HUGO BOSS is firmly committed to driving long-term shareholder value.

    HUGO BOSS will present its detailed outlook for fiscal year 2026 including details on shareholder returns on March 10, 2026, as part of its full-year 2025 results release. 

    1Average annual free cash flow target stated excluding the impact of IFRS 16. Including IFRS 16, this corresponds to around EUR 500 million.
    2Average annual free cash flow target stated excluding the impact of IFRS 16. Including IFRS 16, this corresponds to around EUR 500 million.

    For further information, please contact:  
    Media Relations 
    Carolin Westermann 
    Senior Vice President Global Corporate Communications 
    Phone: +49 7123 94-86321 
    E-mail: carolin_westermann(at)hugoboss.com 

    Investor Relations 
    Christian Stöhr 
    Senior Vice President Investor Relations 
    Phone: +49 7123 94-87563 
    E-mail: christian_stoehr(at)hugoboss.com

    GROUP.HUGOBOSS.COM
    YOUTUBE: @HUGOBOSSCorporate
    LINKEDIN: HUGO BOSS

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  • Pensions Weekly Update – 3 December 2025

    Pensions Weekly Update – 3 December 2025

    Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

    • HM Revenue and Customs (HMRC) has published pension schemes newsletter 175. This includes an overview of the pensions tax measures in the Autumn Budget, which we summarised in our 26 November weekly update. More information is provided about the measure to allow direct payment of surplus assets to members and beneficiaries. Such payments will be treated as authorised payments and will be taxed as pension income at the individual’s marginal rate of tax. Schemes will have to be in surplus on the same funding basis as applies to payments to employers. This is currently the full buyout basis, although the government has indicated its intention to relax this. The member will have to be above their normal minimum pension age. The newsletter also contains more information about the inheritance tax changes that will come into effect in April 2027. If personal representatives reasonably expect that inheritance tax will be due, legislation will give them the power to direct pension scheme administrators to withhold 50% of the taxable benefits for up to 15 months from the date of a member’s death. They can then direct pension scheme administrators to pay inheritance tax due to HMRC from the withheld benefits before releasing the balance to the beneficiaries. There will be some limited exceptions. Personal representatives will also be discharged from liability for any pensions that are discovered after they have received clearance from HMRC.
    • The House of Commons has published an updated briefing paper on pensions tax, following on from the budget. This includes a summary of the way that salary sacrifice currently operates, as well as the impact of the budget announcement. There have been reports in the media that the government has said that it will reassure markets that the £2,000 salary sacrifice cap will proceed, by legislating in the next few weeks, although the cap will not be effective until April 2029.
    • The government has tabled amendments to the Pension Schemes Bill, in advance of the report stage being held today (3 December). These include:
    • An amendment so that the costs of the Pension Protection Fund (PPF) Ombudsman will be met out of The Pensions Regulator’s (TPR) general levy. This will be treated as having come into force from 1 April 2007, in line with what has happened in practice.
    • Amendments to provide for the indexation of PPF and Financial Assistance Scheme (FAS) compensation in relation to pre-1997 accruals. Increases would be by reference to the consumer prices index capped at 2.5% and are estimated to cost £1.2 billion. They will commence on 1 January 2027, for those members whose scheme rules provided for such indexation. The PPF assesses that around 165,000 PPF and 91,000 current FAS members have some pre-97 benefits where their former schemes provided mandatory indexation and so would benefit from this amendment.
    • Amendments so that administration expenses of the PPF and Fraud Compensation Fund will be payable out of those funds, instead of through a separate administration levy. This will be effective from 1 April 2026.
    • Amendments to asset pooling provisions in the Local Government Pension Scheme.
    • Refinements to the way in which small pot consolidation will operate.
    • An amendment to the asset scaling requirements that will ensure that, when determining whether a relevant master trust (or group personal pension plan (GPP)) has sufficient assets (£25 billion) to be approved under the new sections of the Pensions Act 2008, the assets of connected relevant master trusts/ GPPs will be included, along with an amendment that regulations would specify the types of relationships that would constitute being “connected”.
    • Amendments in relation to the Virgin Media remedy, which include minor clarifications, along with a few more significant changes. The first amendment of substance is in relation to what action would constitute “positive action” that would exclude a scheme from being able to take advantage of the Virgin Media remedy. Clause 100(7)(b) is amended to clarify that “taking any other step in relation to the administration of the scheme” actually means notifying any members of the scheme in writing to the effect that the trustees or managers are taking (or have taken) “any other step in relation to the administration of the scheme”. The second amendment of substance is in relation to the types of legal proceedings that would exclude a scheme from benefitting from the Virgin Media remedy. The government amendment clarifies that legal proceedings relate to court proceedings, and not proceedings of a tribunal or The Pensions Ombudsman and that there must be a dispute as to the rules of the scheme, where the parties are or include both the trustees or managers of the scheme and beneficiaries or their representative. The third amendment of substance is to clarify that so far as the Virgin Media remedy applies in relation to a scheme that has transferred to the PPF, it also applies to a section of a scheme if the whole scheme did not transfer to the PPF. A final amendment changes the commencement provision for the Virgin Media remedy so that it would come into force on the day on which the bill receives royal assent, rather than two months later, which is perhaps an indication that the timetable for royal assent has slipped by a couple of months.
    • It is five years since the pledge to combat pension scams campaign was launched. Paul Sweeney, The Pension Scams Action Group Intelligence Business Lead, encourages more organisations to sign up to the pledge and for existing signatories to self-certify that they are turning their commitment into action. He reminds trustees and administrators that they play a crucial role in protecting pension savers.
    • The Pensions Administration Standards Association (PASA) has published the first in a new three-part practical guidance series on delivering digital transformation. It outlines how pension schemes can establish the right frameworks, technologies and cultural mindset to ensure successful and sustainable digital change.
    • For those directors of corporate trustees who have not yet verified their identity with Companies House, there is new guidance on how to verify your identity at the post office. Note, however, that the first stage still requires an individual to start the verification process on GOV.UK One Login. You can still complete the whole process online if you prefer. You can now check your own personal deadline for verifying your identity by searching against your own name at Companies House.
    • Have you seen our Winter Hot Topics in pensions? It is packed with festive fun as well as topical items for your trustee and corporate agenda.

    If you would like specific advice on any of these issues or anything else, please contact a member of our Pensions team.

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