UK pensions law update - August 2026

PO Cases

Mr N (CAS-120255-B8H0): incorrect benefit calculations: trustee correctly applied member's final pensionable salary at date of leaving when calculating preserved pension

Facts

Mr N left pensionable service in September 1975 and reached normal retirement date in May 2000, but deferred taking his pension until September 2019.

However, due to incomplete pension records, the Scheme’s trustees were only put his pension into payment in September 2022. The delay was caused by difficulties in establishing what benefits were payable to Mr N.

Mr N challenged the trustees’ calculations, complaining that (i) inadequate interest had been applied to the late retirement back payments and that (ii) his deferred pension should be calculated by reference to hypothetical increases in pensionable salary between leaving and NRD, rather than his actual pensionable salary at the date of leaving.

Decision

The Deputy Pensions Ombudsman (DPO) determined that the trustees had interpreted the scheme rules correctly in using his actual pensionable salary at the date of leaving service. Further, statutory revaluation of the deferred benefit (and statutory increases to pensions in payment) were not payable as the member left pensionable service in 1975.

The DPO found, however, that preservation legislation required the trustees to ensure that Mr N was not disadvantaged by late retirement. The trustees had, however, satisfied this “fair value” requirement by paying arrears back to the NRD.

The DPO found that the trustee’s offer of £1,000 as compensation for maladministration was adequate. However, she decided that the interest applied to the late retirement back payments was inadequate. She directed the trustee to recalculate the arrears using simple interest at the Bank of England base rate and to pay any shortfall.

Comment

This determination is a useful reminder that preserved pension benefits must be calculated strictly in accordance with the scheme's wording.

However, even where the core pension calculation is correct, interest on arrears can be a point of challenge, and schemes should review and record interest rates used in calculations.

It is also noteworthy that the “fair value” preservation rules may be satisfied by paying arrears back to the NRD and treating a pension as if it had started then, without need to explicitly apply an actuarial late retirement uplift (unless, of course, a pension scheme’s rules provide otherwise).

For more detail, see here.

Mr S (CAS-29019-Q6T4): recovery of overpayments: widower had Nelsonian knowledge of obligation to notify scheme of remarriage

(Mr S (CAS-14251-C1H8): recovery of overpayments: Nelsonian knowledge barred defences to recovery of duplicate pension benefits – see comment section)

Facts

Mr S became entitled to a widower's pension from the Teachers' Pension Scheme following his wife's death in 2004. Under the scheme rules, a widower's pension ceased on remarriage or cohabitation.

Although Mr S remarried in December 2007, the pension continued to be paid until 2016, resulting in an overpayment of approximately £27,570.

Mr S argued that he was unaware of the requirement to notify the scheme of his remarriage and that the administrator had failed to communicate the rules clearly.

Decision

The Pensions Ombudsman dismissed the complaint and held that the administrator was entitled to recover the full overpayment on the basis of unjust enrichment.

On the balance of probabilities, the Ombudsman found that the widower had read one or more annual newsletters which would have alerted him to the need to notify the administrator of changes in his personal circumstances, meaning he had “Nelsonian” knowledge of the requirement and could not establish the good faith element of a change of position defence.

Comment

This case reinforces that overpayments can be recovered where members (or dependants) have been put on notice of relevant conditions, even if they later claim to recall no such communications. It highlights the importance of having clear scheme rules on cessation triggers (such as remarriage) and communicating them to members regularly and clearly, and of maintaining good records of member communications to show that they were reasonably informed and to defeat change of position arguments when overpayments are identified. The case also reinforces that overpayments can be recovered under principles of unjust enrichment even where a statutory recovery power may not apply.

This decision follows the Ombudsman's approach in Mr S (CAS-14251-C1H8), where recovery of duplicate pension benefits was also permitted because the member had "Nelsonian knowledge" of circumstances suggesting an overpayment, by holding two pensions covering the same dates. The finding of Nelsonian knowledge was sufficient to defeat the member's change of position and estoppel defences, notwithstanding the administrator's own failings.

For more details, see here and here.

Mr K (CAS-102929-X3S4): pension increases: estoppel claim rejected despite 22 years of incorrect statements on increase cap

Facts

The trustees of a defined benefit (DB) pension fund had issued incorrect communications on pension increase rates over a 22-year period until 2020, when members were notified with the corrected pension increase rates.

Mr K, a deferred member, raised a complaint on two grounds: first, that there was estoppel by representation due to the incorrect communications, which he relied on when deciding not to transfer out of the fund; and secondly, that the 2020 notice to members was a breach of the requirement for trustees to check that members receive appropriate independent advice under s48 of the Pension Schemes Act 2015 when considering transferring out.

Decision

The Pensions Ombudsman did not accept the estoppel by representation argument. First, Mr K had not suffered financial loss, as decades of incorrect communications did not make Mr K entitled to the incorrect pension increase rate. Secondly, Mr K did not have sufficient nor contemporaneous evidence to prove his reliance on the incorrect communications in his decision not to transfer out. However, the Ombudsman awarded £500 to MR K for non-financial loss (distress and inconvenience arising from maladministration).

Mr K’s complaint regarding the breach of s48 Pension Schemes Act 2015 also failed, as this section only applies when a transfer is actually being made, not when a member is merely contemplating a transfer.

Comment

The key takeaway from this case is that estoppel by representation remains a difficult legal argument to prove evidentially: contemporaneous written evidence of reliance and proof of financial loss would be required.

For more detail, see here.

Mr S (CAS-90942-R3V4): transfers: no duty to consult deferred members on DC bulk transfer to authorised master trust

Facts

A deferred member of a defined contribution (DC) scheme complained that the trustee had carried out a bulk transfer of assets to an authorised master trust without consulting deferred members or obtaining their consent.

Members were notified in a letter dated 6 May 2022 that the transfer would take place in the week commencing 20 June 2022, and the complainant argued that this gave insufficient time to make alternative arrangements and was procedurally unfair.

Decision

The Pensions Ombudsman dismissed the complaint, finding no breach of law or maladministration. The trustee was entitled under the scheme rules to make a bulk transfer without consent in circumstances permitted by the Preservation Regulations and had met the requirement to give at least one month’s notice.

The Ombudsman also held there was no statutory duty to consult deferred members, and that the trustee had properly exercised its bulk transfer power for its intended purpose, even though the May 2022 letter lacked detail about transfer options and gave limited time.

Comment

This case confirms that, where scheme rules and legislation allow, trustees can lawfully make bulk transfers of DC benefits to an authorised master trust without member consent, provided minimum notice requirements are met.

It also illustrates that the trustees’ duty to act in the best interests of beneficiaries is applied by reference to the scheme’s purpose rather than necessarily constituting an obligation to consult on every change. However, trustees should be alert that only providing the statutory minimum notice period with limited practical details in member communications may generate IDRP complaints and reputational issues.

For more detail, see here.

Cases

Pension scheme deeds rectified to remove unintended Courage-type fetter on amendment power High Court

Facts

This case concerned a final salary pension scheme that closed to future accrual on 31 March 2010 and had been administered on the basis that members’ pensionable earnings were fixed at that date.

Many years later it was discovered that deeds executed in 2004 and 2012 contained a clause preventing any amendment that would “affect or prejudice in any way any benefits already accrued or secured” without individual consent, which (following Re Courage) amounted to “Courage type” fetters on the amendment power.

These “Courage-type” fetters would have meant that active members at the point of closure to future accrual would have to receive a final salary link underpin to their accrued pension for so long as they remained in pensionable service. This would have added £8m to the scheme’s liabilities.

The parties therefore applied for a Court order for rectification – on the basis that the new “Courage-type” fetter was added in error.

Decision

Applying the rectification test seen in Mitchells & Butlers, the High Court found convincing evidence of a continuing common intention that no new fetter (i.e. legal restriction) should be introduced into the scheme’s power of amendment and that it was only due to a mistake that the deeds failed to reflect that intention.

Explanatory guides to successive drafts of the 2004 deed said existing restrictions on the amendment power were being carried forward and did not mention any new fetter. The Courage type wording appeared to have been carried across mechanically from a precedent.

Additionally, post execution conduct showed the employer and trustee still treated preservation of the final salary link as negotiable; the 2012 deed was only intended to restate existing provisions and simply repeated the mistaken wording.

The Court therefore ordered rectification by deleting the passages referring to “benefits already accrued or secured” from both deeds.

Comment

It is important to ensure that due care is taken in rules consolidations, and it is often helpful to include overriding wording in the adopting provisions for new rules to the effect that the balance of powers is intended to be maintained (and any unintended changes are void).

This case demonstrates that is also helpful to maintain fulsome contemporaneous evidence of the parties’ intentions in relation to rule amendments – as this can support actions for rectification in the (hopefully unlikely) event of errors in the documentation.

For more detail, see here.

Legislation, guidance and consultation

Pension Schemes Act updates

Outline

As discussed in our previous update, the Pension Schemes Bill 2025 has now received Royal Assent, becoming the Pension Schemes Act 2026. The main area of contention in parliamentary debates was the government’s new “reserve power” over asset allocation – a back up power allowing ministers, via regulations, to require certain pension schemes to invest a set proportion of their assets in particular “qualifying assets” (broadly private assets), and how far this would cut across trustees’ duties to act in members’ best interests. In response to these concerns, the reserve power has been significantly narrowed. It cannot be used before 1 January 2028 and, before it can be exercised, the Financial Conduct Authority (FCA) and Pensions Regulator (TPR) must prepare a joint assessment of the extent to which there is evidence of competitive conditions restricting relevant Master Trusts and group personal pension schemes from investing in qualifying assets, including where those investments may be in members’ best interests.

In addition, the “savers’ interest test ”, a statutory safeguard allowing trustees to ask for any asset allocation requirement to be switched off for their scheme, has been made more scheme friendly. Now, instead of having to show that complying with the requirement “would cause material financial detriment to members”, trustees need only demonstrate that meeting the requirement would not be in the members' best interests, and the Pensions Regulator must consider this a reasonable conclusion to have reached. In addition, both direct and indirect holdings in the six Mansion House asset classes count towards any targets, addressing concerns about differential treatment of particular investment vehicles.

Separately, the first commencement regulations under the Act have been made, coming into force on 29 June 2026. These reform the Pension Protection Fund’s (PPF) levy framework by: replacing its current duty to impose both risk based and scheme based levies with a discretion to impose a risk based levy (and a scheme based levy only if a risk based levy is imposed); relaxing the existing cap that limits annual levy increases to 25%; enabling the PPF Board to take appropriate risk factors into account when setting the levy for authorised defined benefit superfunds; and adjusting the associated consultation requirements regarding the levy in the Pensions Act 2004.

Comment

Taken together, these provisions of the Act confirm a clear but relatively contained policy direction towards greater investment in the Mansion House asset classes in default funds, with a defined timetable and safeguards, whilst also materially reshaping the PPF’s framework.

In regard to scheme investments, schemes now have a medium term planning horizon to review default investment strategies, governance frameworks and product design in light of potential future asset allocation requirements, while giving trustees comfort that member best interests remain the overriding test and that they retain tools to challenge any requirements that do not align with those interests.

In regard to the PPF, the commencement of section 123 moves the levy regime from a mandatory to a discretionary basis and relaxes the previous cap on annual levy increases, giving the Board significantly greater flexibility to vary levy levels over time, including potentially reducing them to nil and increasing them again if funding pressures or risk assessments change.

For more details, see here and here.

National Insurance Contributions (Employer Pensions Contributions) Bill receives Royal Assent

Outline

The National Insurance Contributions (Employer Pensions Contributions) Bill has received Royal Assent and is now the National Insurance Contributions (Employer Pensions Contributions) Act 2026.

Once brought into effect, the Act will allow HM Treasury to introduce regulations so that Class 1 national insurance contributions (NICs) (both employee and employer) are charged on salary sacrificed for employer pension contributions above a prescribed limit, from the 2029/30 tax year onwards. In other words, higher levels of pension salary sacrifice may no longer be fully NIC efficient.

Comment

The detail of the policy will depend on future regulations, but the direction of travel is clear: the NIC advantages of pension salary sacrifice above £2,000 per year will be largely removed from April 2029.

Employers should now focus on understanding the financial impact of losing the around 15% employer NIC saving on higher salary sacrifice contributions and decide whether salary sacrifice remains preferable to standard payroll deduction once that benefit is curtailed.

In parallel, they will need to assess whether payroll systems can monitor the £2,000 cap, whether contribution structures or employment contracts and policies need to be amended (including any consultation/consent requirements), and how any changes will affect overall reward for employees currently making higher contributions via salary sacrifice. Early, clear communications and advance planning will be important to manage employee expectations and ensure a smooth transition to the new regime.

For more detail, see here.

Collective Defined Contribution schemes: Pensions Regulator finalises extended collective defined contribution code of practice

Outline

The Pensions Regulator (TPR) has now laid a new code of practice before Parliament on the authorisation and supervision of collective defined contribution (CDC) schemes, expanded to cover unconnected multi employer arrangements. The code will replace the August 2022 single/connected employer CDC code and supports the extension of the CDC regime to unconnected multiple employer schemes under the 2025 Regulations, which took effect on 31 July 2026.

Following a broadly positive consultation response, TPR has made changes to improve signposting and to set out its expectations for not for profit schemes. Further standalone guidance is expected later in 2026 on promotion/marketing, IT systems assessment and authorisation fee calculations. The revised code is due to come into force in mid October 2026, with the first multi employer CDC schemes potentially operating as early as 2027.

Comment

This means that from around 2027, CDC pension schemes will be available to groups of unconnected employers, not just single employers or corporate groups. TPR has set out how these schemes will be authorised and supervised and will issue further guidance later this year on key practical points such as marketing, IT system requirements and fees.

For more detail, see here.

Pension Dashboards update

Outline

Pensions dashboards are moving rapidly from design and implementation into live regulatory practice. The emphasis is now on being able to deliver accurate, timely value data, support reporting to the Money and Pensions Service (MaPS) and embed dashboards into mainstream governance.

The Pensions Regulator has updated its pensions dashboards guidance and published a blog ahead of the 31 October 2026 connection deadline, confirming that around three quarters of records are now connected to the MaPS digital architecture. It has also issued a market oversight report focusing on large schemes, which notes good progress on personal data and matching, but slower preparation on value data, particularly for defined benefit and hybrid schemes. TPR is urging schemes to embed data quality into day to day operations, learn from MaPS user testing and agree on demand value calculation processes with their administrators to ensure they are ready to meet their dashboards duties.

TPR has also launched a regulatory initiative focussed on how DB and hybrid schemes are preparing value data. Of the approximately 2,600 schemes that must connect, around 2,000 are private sector DB and hybrid schemes, of which 240 will be reviewed. These schemes are more exposed as they are not required to issue annual benefit statements, and therefore values may be out of date. TPR expects value data to be recent (calculated within the last 12-13 months), accurate and capable of being returned within statutory timescales (seconds for pre calculated values, three days for DC benefits and ten days for other benefits where a fresh calculation is needed).

The Pensions Dashboard Programme (PDP) has finalised updated reporting standards (version 2.2). This moves the regime away from ad-hoc provision of records to daily automated reporting of data by schemes and providers to MaPS. Under the current standards (version 2.0), schemes must generate and retain records, making them available on request. Under version 2.2 there will be mandatory daily reporting, with an implementation date of 1 March 2027. PDP still expects most directly connected organisations to be capable of daily reporting by late 2026, whereby organisations that have not implemented daily reporting must submit data manually and provide coverage data on request. Subject to Secretary of State approval, the updated standards will formally come into force on 1 March 2027.

PASA has issued practical guidance to help schemes run pensions dashboards properly on an ongoing basis. It explains how schemes should match savers to their pensions when a dashboard sends a “find request”, how they should provide up to date value information when a saver makes a “view request”, and how they should meet MaPS’ standards on how they stay connected to the dashboards system. The guidance highlights key metrics to monitor, where to get the data and examples of common problems, and reminds schemes that some issues may be serious enough to report to TPR under its General Code and dashboards enforcement policy. PASA has also published a short note on how to use the “survivor benefit” flag in dashboard data, so that pensions which provide benefits to spouses or dependants after a member’s death are identified and treated consistently across schemes.

Comment

Dashboards are now clearly being treated by regulators and industry bodies as a permanent feature of pensions governance, with 31 October 2026 seen as the starting point rather than the finish line. Trustees, providers and administrators in scope of the programme should therefore treat value data readiness as a core governance priority, particularly for DB and hybrid schemes, and test that they can consistently meet statutory turnaround times with robust, on demand calculation processes agreed with administrators.

They also need to plan and invest for daily reporting to MaPS by March 2027, ensuring systems, controls and security can support automated data flows and any interim manual reporting, while embedding PASA’s suggested indicators and breach escalation processes into routine management information and aligning breach reporting with TPR’s General Code, including consistent use of survivor benefit flags. Overall, dashboards should be seen as part of a broader shift to a more data driven, outcomes focused pensions environment, requiring sustained investment in data, systems and governance rather than one off compliance projects.

For more details, see here, here, here and here.

Surplus release updates

Outline

On 10 June 2026, the DWP published a consultation on the draft Occupational Pension Schemes (Payments to Employer) Regulations 2027, which set out new conditions for trustees of well funded DB schemes to release surplus to sponsoring employers and, in some cases, directly to members.

The draft Regulations would replace the current buy out funding test, which only allows surplus to be paid out once the scheme is funded to the level needed to secure all benefits in full with an insurer, with a low dependency test. This replacement test is based on the scheme being securely funded on a long-term, low-risk run-on basis with limited reliance on the employer. Trustees would have to certify that the scheme is expected to remain at or above that low-dependency funding level for at least three years and comply with a clear member notification policy (at least three months before payment), tight payment timing (within five working days of final actuarial certification) and notification to TPR within one week of payment. The draft Regulations also include amendments to DWP legislation in anticipation of Finance Bill 2026 27 tax changes that will permit direct surplus payments to members. The consultation runs until 2 September 2026, with the Regulations intended to come into force in April 2027; until then, surplus releases remain subject to the existing 2006 regime.

In parallel, TPR published a statement on the new surplus release flexibilities introduced by the Pension Schemes Act 2026, which creates a statutory override allowing trustees to distribute surplus even where scheme rules do not currently permit this and amends the Pensions Act 1995 so trustees can change scheme rules by resolution to pay surplus to the employer, while removing the specific statutory requirement that surplus release must be in members’ interests (overarching fiduciary duties still apply). HMRC’s draft Finance Bill 2027 legislation would then allow authorised surplus payments to be made directly to members or their dependants from 6 April 2027, taxed as pension income at the member’s marginal rate but outside annual allowance pension input amounts and without affecting lump sum and death benefit allowances, with the existing authorised surplus payment regime rebranded as authorised employer surplus payments.

Comment

From April 2027, well funded DB schemes are expected to have a more accessible but tightly controlled route to share surplus with employers and, in some cases, members, subject to meeting low dependency funding and three year forward looking tests and complying with clear member notification requirements.

Trustees and sponsors should now start developing a surplus sharing policy, aligning funding and investment strategy with it, and engaging constructively but independently with employers, with robust governance and documentation to satisfy TPR’s expectations. From the same date at the earliest, schemes may also be able to make tax authorised surplus payments directly to members, so sponsors and trustees should review their surplus position, endgame plans and scheme rules, and take tax, actuarial and legal advice while monitoring the Finance Bill 2027 and final Regulations.

For more details, see here and here.

Inheritance tax reforms for unused pension funds

Outline

As discussed in our previous update, HMRC has introduced new information-sharing rules to support the Finance Act 2026 changes that will bring most unused pensions funds and pension death benefits into a deceased member’s estate for inheritance tax (IHT) from April 2027. HMRC has also published a technical note on how these reforms will work in practice, confirming that the new treatment will apply to deaths on or after 6 April 2027 while preserving the current rules for earlier deaths. The note explains how “notional pension property” will be identified, valued, reported and taxed, and sets out an implementation timetable, including draft information sharing regulations in spring/summer 2026 and formal guidance and tools for personal representatives by April 2027.

The Registered Pension Schemes (Provision of Information) (Miscellaneous Amendments) Regulations 2026 (SI 2026/818), replacing earlier draft regulations consulted on in May 2026, update the Registered Pension Schemes (Provision of Information) Regulations 2006 to require closer integration between pension administration, probate and tax processes. Under the finalised regime, scheme administrators and insurers must provide personal representatives with timely information on the value and allocation of “notional pension property”, respond within 14 days to any withholding notices, confirm where IHT has been paid on beneficiaries’ behalf, and send all reportable event information to HMRC electronically. A previously proposed duty for scheme administrators to report all death in service payments has been dropped; instead, personal representatives only need to report those payments where an IHT account is required. The regulations will apply from 6 April 2027 and are intended to ensure that pension assets and death benefits are properly reflected in IHT calculations and tax administration for the deceased’s estate.

Comment

Bringing unused pension funds and most pension death benefits within the scope of IHT from April 2027 represents a significant change to the current view of pensions as a relatively IHT favoured wealth transfer vehicle, particularly for larger estates.

For schemes, sponsors, providers and administrators, the new regulations and HMRC technical note mean that pension death benefits and residual funds will be more closely tied into inheritance tax and probate, with additional duties to share information rapidly and accurately when a member dies.

In practical terms, schemes should ensure they can supply clear, up to date data on death benefits and beneficiaries to personal representatives, respond to withholding notices within 14 days, confirm any IHT paid on beneficiaries’ behalf and meet the requirement to report relevant events electronically to HMRC. Ahead of the April 2027 start date, processes, systems and member/beneficiary communications around death benefits should be reviewed and updated so that the new IHT treatment and information flows are well understood and can be delivered within the statutory timescales, helping families and advisers to manage the tax implications of pension wealth more effectively.

For more details, see here, and here.

Regulator publishes draft corporate strategy on plans for 2026 to 2031

Outline

TPR has published a draft corporate strategy for 2026–2031 which marks a shift from focusing mainly on individual savers to looking at how the pensions system works as a whole – from the point people join a scheme through to taking their retirement income, and across both DB and DC schemes.

TPR expects DC to grow rapidly (overtaking DB and reaching around £2 trillion within 20 years) and more schemes to merge into a smaller number of large, commercially run arrangements, with collective defined contribution schemes forming part of that future landscape. The strategy is built around six outcomes: three for members (savings are secure, members get better value, pensions are fair) and three for the market (schemes are well run, the market is sustainable and resilient, and the system works smoothly end to end). It is a response to evidence of unfairness and poor outcomes, such as gender and ethnicity pensions gaps and weak support when people come to retire.

TPR is signalling that it will be more demanding and more interventionist where schemes are not delivering good value or good governance. In practice, it plans to use the Value for Money framework to put pressure on weaker DC schemes that cannot show they are delivering value, pushing them either to improve, consolidate with better run schemes or leave the market altogether. It will also place greater emphasis on oversight of DB superfunds, strengthening cyber security, tackling scams and improving the help members receive when making retirement decisions. To support this, TPR intends to modernise how it supervises schemes by collecting more data through APIs, using data analytics and AI more actively, and issuing clearer public statements on its expectations around governance, enforcement, data, AI and climate or other systemic risks.

Comment

TPR’s draft strategy signals that schemes, sponsors and providers should expect closer, more data driven scrutiny of value for money, governance, cyber resilience and member outcomes, with weaker or sub scale arrangements under growing pressure to improve, consolidate or exit.

In practice, they should be reviewing whether they can evidence good value and robust governance against TPR’s emerging expectations, strengthening controls around cyber and scams, and preparing for more continuous engagement with TPR through improved data, systems and reporting.

For more detail, see here.

DWP publishes guiding principles for guided retirement default pensions

Outline

From around Q3 2028, trustees and providers of workplace DC pension schemes will be required to offer well designed “default pensions” under the new guided retirement framework, with matching FCA rules for contract based schemes to ensure a consistent approach across the market.

The DWP’s policy paper confirms that default pensions must minimise complex decision making for most members, protect against longevity risk by providing income that lasts throughout retirement, preserve existing pension freedoms for those who want to make their own choices, and be entered into only with the member’s consent at the point they access their benefits.

Although the paper does not prescribe specific products (such as a drawdown pension or annuity), trustees and managers will need to put in place robust governance to design, review and communicate suitable default pensions that meet members’ needs.

Comment

This development will require trustees and providers to move towards carefully designed, well governed default pensions that can deliver a sustainable income throughout retirement while preserving member choice. It is likely to reshape retirement product design and communications strategies, particularly for schemes with large DC memberships, and reinforces the need for clear consent processes and ongoing information where defaults operate in different phases.

For more detail, see here.

At a glance updates

HMRC publishes pension schemes newsletter 180

HMRC’s latest pension schemes newsletter gives an early steer on transitional regulations to support the increase in normal minimum pension age from 55 to 57 on 6 April 2028. The proposals are designed to ensure that members aged 55 or 56 who have already taken steps to access their pensions (including certain lump sums) can continue to receive authorised payments after that date, but confirm that UFPLS payments made on or after 6 April 2028 will only be authorised where the member has actually reached age 57. Draft regulations will be issued for technical consultation, with more detail to follow in a future newsletter.

For more detail, see here.

Regulator's 2026 annual funding statement focusses on funding improvement and future surplus release

TPR 2026 annual funding statement confirms a markedly improved DB landscape, with around 90% of schemes in surplus on technical provisions, 82% on a low dependency basis and about 60% on a buy out basis, backed by an aggregate surplus of £218 billion. Valuations are now framed as endgame planning tools rather than purely deficit recovery exercises, with surplus a key focus: trustees may, but do not have to, factor surplus into supportable risk under the new funding code, must exclude surplus earmarked for other uses, maintain a margin of safety and should not let a strong funding position alone justify a material increase in investment risk.

For more detail, see here.

Regulator report examines benefits of scale from small consolidation of DC schemes into master Trusts

The Pensions Regulator’s May 2026 report on DC consolidation confirms that assets in occupational DC and hybrid schemes have risen sharply to £249 billion while scheme numbers have fallen, with master trusts now holding 83% of DC assets and 92% of memberships in non micro schemes. Emerging evidence shows larger master trusts generally deliver lower costs per member and potentially higher pots (around £3,000 more for a median earner), but there is currently little clear UK evidence that greater scale improves investment performance, and the Regulator notes it will take time for UK DC pensions to build the size and systems needed to realise the full benefits of consolidation, ahead of planned minimum £25 billion default fund AUM (asset under management) thresholds by 2030.

For more detail, see here.

AI: Pensions Regulator guidance clarifies expectations for responsible use of AI in workplace pensions

The Pensions Regulator’s AI plan, published on 20 May 2026, confirms that while AI can improve administration, decisions and member engagement, trustees and scheme managers remain fully accountable for outcomes and must put robust governance, testing, data quality and fraud prevention controls around any AI use. Detailed guidance will follow later in 2026, and the Regulator will report annually on AI in pensions and work with the FCA to ensure a consistent regulatory approach, while also expanding its own use of AI (including tools to detect pension scams) under the oversight of a new AI Advisory Council.

For more detail, see here.

Flexible apportionment arrangements: Government to tighten framework and TPR signals interim stance

The government has announced that it will consult “in due course” on strengthening the legislative framework for flexible apportionment arrangements (FAAs), following a novel December 2025 transaction in which an asset manager became the sponsoring employer of another company’s DB scheme in return for a share of future surplus. While confirming that the deal complied with existing law, the government is concerned that FAAs are being used in commercially innovative ways outside their original policy intent and will consider additional safeguards so that FAA based restructurings are subject to protections comparable to those applying to DB superfunds. In parallel, TPR has published a blog explaining its oversight of the Stagecoach FAA transaction, stressing that FAAs are notifiable events and that it reviewed trustee advice, due diligence and risk assessment before the transfer, with the scheme remaining regulated as a standard DB trust. TPR supports the planned consultation as a way to develop a proportionate and effective approach and has signalled that it will consider an interim stance on FAA transactions with similar characteristics, to provide clarity and maintain market confidence pending any legislative change.

DC Updates

DWP discussion paper on scale policy requirements for DC pension schemes

Outline

The DWP has issued a discussion paper on how the new “scale policy” under the Pension Schemes Act 2026 will operate, ahead of draft regulations in 2027.

From April 2030, all authorised master trusts and group personal pension schemes (GPPs) used for automatic enrolment must hold at least £25 billion in a single main scale default arrangement (MSDA). Schemes with at least £10 billion may instead rely on an approved transition pathway, provided they have a credible plan to reach £25 billion by 2035. Schemes that do not meet one of these tests will no longer be able to receive automatic enrolment contributions.

The paper focuses on what can be included in an MSDA (only assets of connected schemes), the requirement for a common investment strategy (with variance permitted only by age), and when schemes within the same corporate group can share an MSDA. Trustees, operators and advisers should now test whether they will meet the threshold or need to consolidate and prepare a “credible plan” under the transition pathway, with responses to the DWP due by 7 September 2026.

Comment

This update represents a major regulatory shift in how large defined contribution (DC) pension schemes are expected to operate and be structured for automatic enrolment purposes. The proposed £25 billion scale threshold, and the tighter rules around what can sit in a single MSDA and common investment strategy, are likely to drive significant consolidation among master trusts and GPPs and could affect which providers employers can use for automatic enrolment in future.

Trustees, providers, employers and advisers should now be thinking about: (i) whether their current automatic enrolment arrangements are likely to meet the £25 billion threshold or need to use the transition pathway; (ii) what a credible plan to reach the threshold by 2035 would look like in practice, including potential mergers or transfers; and (iii) how any move to a larger-scale MSDA and a tighter common investment strategy might impact member outcomes, investment governance and employer choice of scheme. They should also consider engaging with the DWP’s discussion paper process so that industry views shape the detailed regulations due to follow.

For more detail, see here.

DWP and Financial Conduct Authority consult on pensions value for money framework

Outline

On 13 July 2026, the DWP and FCA issued joint consultation CP26/25 on a new Value for Money (VFM) framework for workplace pension schemes, together with draft DWP Regulations (intended to come into force on 6 April 2027) and a draft FCA instrument to amend the FCA’s Handbook.

The proposals aim to create a broadly consistent VFM regime for both trust based and contract based schemes, with final rules and Regulations expected around early 2027 and TPR to consult on any supporting codes or guidance. The plan is for the requirements to start applying at the same time across contract and trust based arrangements, with larger schemes carrying out VFM assessments from 2028 and all in scope schemes brought into the regime from 2029.

Comment

The proposals signal a significant step towards a more prescriptive, outcomes focused approach to assessing value across both trust based and contract based workplace schemes, which could drive greater transparency and comparability between providers. They are likely to increase regulatory and governance expectations on schemes (particularly larger ones from 2028), requiring more structured VFM assessments, data gathering and potential changes to charging structures and investment design ahead of the regime being rolled out to all in scope schemes from 2029.

For more detail, please see here.

DWP updates workplace pensions roadmap for DC, CDC and DB reform implementation timelines

Outline

On 13 July 2026, the DWP published an updated roadmap setting out how workplace pension reform will roll out across DC, CDC and DB schemes through to 2035.

Key milestones include the new value for money (VFM) regime (with larger schemes undertaking full assessments from 2028 and smaller schemes from 2029), new “scale” requirements for DC multi employer automatic enrolment schemes to hold at least £25 billion in their main default by around April 2030 (as discussed above), and a contractual override to move members out of non VFM contract based arrangements from spring 2028. The roadmap also confirms the timetable for guided retirement and retirement CDC consultations in 2026–2028, DB surplus regulations expected to take effect on 6 April 2027, and CPI linked indexation (capped at 2.5%) of PPF and Financial Assistance Scheme (FAS) compensation for pre 1997 rights from January 2027, with further changes possible after the Pensions Commission’s final report in early 2027.

Comment

The updated roadmap underlines the scale and pace of change facing workplace pension arrangements, requiring trustees, providers and sponsors to plan for multiple overlapping reforms across DC, CDC and DB schemes over the next decade. It is likely to drive consolidation and more intensive governance, as schemes adapt to new VFM assessments, scale thresholds and guided retirement/CDC offerings while also implementing DB surplus changes and enhanced PPF/FAS indexation. Taken together, these milestones reinforce the need for long term strategic planning, data and systems investment, and proactive member communication to ensure schemes remain compliant and competitive as the programme of reforms unfolds.

For more detail, see here.

Pension Schemes Act 2026: Pensions Regulator launches communications campaign for DC schemes

Outline

The Pensions Regulator has launched a defined contribution (DC) communications campaign, including a new webpage and regular email updates, to help schemes prepare for the higher standards and new requirements introduced by the Pension Schemes Act 2026, with further detail to follow in forthcoming DWP/Regulator roadmaps. Trustees are urged to assess whether they can meet these enhanced legislative standards or whether members would be better served by consolidation into larger schemes, and to be ready to demonstrate how continuing to run their scheme is in members’ best interests.

For more detail, see here.

HMRC's Pension Schemes Newsletter

Outline

HMRC’s Pension Schemes Newsletter 183 provides key updates ahead of the new IHT on pensions regime from 6 April 2027. Other updates include consultation on defined benefit surplus payments, relief at source reporting, and new IHT information requirements (including for sub schemes and excepted estates). The Newsletter also covers changes to HMRC contact routes, closure of the Pension Schemes Online service, and pension flexibility statistics.

For more detail, see here.

UK Pensions Horizon Scanning

A reminder of key upcoming developments in the UK pensions space

2026 developments

2026 onwards

31 October 2026

Pension dashboards

Mandatory final connection deadline for all in-scope schemes

2026/27

DWP and FCA consultations on draft guided retirement regulations and rules likely to be published; final regulations and rules likely to come into force

6 April 2027

Inheritance Tax changes for pensions

Payment of DB surplus direct to members permitted

Official launch of MoneyHelper Pensions Dashboard expected during 2027/28 financial year

DB - 2027

Surplus flexibilities to come into force, with DWP to consult on draft regulations in late 2026

DC - 2027/28

Default decumulation duties to apply, with DWP to consult on draft regulations in 2026/27

6 April 2028

Increase in Normal Minimum Pension Age

The minimum age at which most people can access their pension will increase from age 55 to age 57

DC - 2028

First VfM assessments will be required, with DWP to consult on draft VfM regulations in 2026/27

DB - 2028

Superfunds regulations to come into force, with DWP to consult on draft regulations in early 2026

5 April 2029

Expiration of Lifetime Allowance Statutory Override

The override facilitates the retention of limits under scheme rules which have been drafted by reference to the Lifetime Allowance

6 April 2029

Salary sacrifice changes come into effect

Amount that is exempt from National Insurance contributions (NICs) will be capped at £2,000 a year for employee contributions made via salary sacrifice

2029

Master trusts likely to become subject to guided retirement duties

DC - 2030

Small pots transfer duties to come into force, with DWP to consult on draft regulations in 2027/28

DC Master Trusts and Group Personal Pension Schemes - 2030

Scale requirements to come into effect

RPI alignment with CPIH – 2030

Mansion House Accord – 2030

Seventeen defined contribution pension scheme providers express their intent to invest at least 10% of their DC default funds in private markets by 2030, with 5% of the total allocated to UK private markets