What to expect for pensions in 2026?

With so much happening, we’ve summarised the key pensions developments to look out for in 2026 below.  You can keep track of how things progress throughout the year using our interactive UK Pensions Tracker.

What’s the biggest legal development?

This has got to be the Pension Schemes Bill, which lays the groundwork for a raft of major reforms.

It’s currently on track to receive Royal Assent this Spring. The Bill includes:

• changes to the rules on use of surplus for DB schemes – due to be introduced in Spring 2027
• the introduction of DC guided retirement – from Spring 2027 for DC master trusts and Spring 2028 for all other workplace DC schemes
• the new scale requirements for DC master trusts and group personal pension plans (GPPs) – from 2030, and
• the small pots solution – from around 2030

Once the Bill has completed its passage through Parliament we can expect a series of consultations on regulations which will provide further details on these various reforms.

Use of surplus

Although the changes to the rules on the use of surplus are not due to come into force until 2027, they are already prompting trustees and employers of many schemes to consider how any surplus within their scheme should be used. 

We expect these discussions to continue in 2026, with some schemes already able to make repayments to employers or to use surplus assets to fund an employer’s DC contributions based on their scheme’s rules as they currently stand. Trustees and employers will also be interested to keep tabs on the government’s proposals to enable one-off payments out of surplus to be paid to the members of their scheme.

Good news on Section 37 and the Virgin Media decision

The Bill will also introduce a legal solution which should enable DB schemes affected by the Virgin Media judgments to address most uncertainties over the validity of historical amendments arising as a result of those decisions. 

Guidance from the Financial Reporting Council and the Institute and Faculty of Actuaries is expected in the coming months – we are cautiously optimistic this will adopt the pragmatic approach we are all hoping for. 

Schemes are also awaiting the judgment in Verity Trustees v Wood, which it is anticipated will clarify important questions about the scope of the original requirement to obtain an actuarial confirmation for a scheme alteration.

Preparing for pensions tax changes

Schemes, providers and employers will need to get ready for the changes set to be introduced by the Finance (No.2) Bill and the National Insurance Contributions (Employer Pensions Contributions) Bill, both of which are currently working their way through Parliament.

The first will bring unused pensions and death benefits within the inheritance tax regime from 6 April 2027. Schemes will want to prepare early for this. The proposed regime is likely to have a significant impact on existing processes for paying benefits following a member’s death and the information that needs to be given to members, beneficiaries and personal representatives.

We suggest you also consider how to engage with members on these changes through general communications and updates during the course of 2026, so members can consider if they need to take this into account when nominating their pension beneficiaries and in their own estate planning.

The second, the National Insurance Contributions (NICs) Bill, paves the way for the government to cap the amount of employee pension contributions that are exempt from employer and employee NICs when they are made using a salary sacrifice arrangement. However, schemes and employers have more time to prepare for this change, which is not due to take effect until 6 April 2029.

More help for DC members

The government has made clear that it wants DC schemes to provide greater support for their members at retirement to help them turn their DC pots into pensions. At the heart of this is the introduction of guided retirement which promises to revolutionise the way in which DC pension schemes operate and deliver benefits to their members.

Going forwards, DC schemes will be required to provide a range of retirement solutions for their members including a default option which delivers members with an income in retirement. To achieve this, every workplace DC scheme must create or choose retirement solutions that they believe fit their members' needs, and put in place investment strategies for both approaching and living through retirement that fit with these solutions.

DC schemes will need robust and well-designed retirement solutions and investment strategies in place. DC master trusts have just over a year to develop and implement their chosen solutions.

Although GPPs and own trust schemes have a year longer (until Spring 2028) to prepare, there is no time to wait as the design, selection and implementation of appropriate solutions is likely to take considerable time and resource.

The FCA’s new rules on the provision of targeted support to savers and investors, which share similar objectives to the guided retirement reforms, are due to come into force from 6 April 2026.

Although targeted support can only be provided by authorised firms, it is likely trustees will be able to provide a similar type of support to their members in most circumstances. They also have the option of partnering with an authorised firm to deliver this if they prefer.

New rules on what is expected of trustees

Just before Christmas, the government launched a consultation on trustees and governance.

This made clear that the government wants all schemes to be overseen by highly skilled trustees operating independently, applying good governance, and focussed on delivering the best outcomes for savers.

The consultation outlined some notable proposals, including placing additional requirements on professional trustees and giving the Pensions Regulator powers to supervise pension scheme administrators. It also asked a number of probing questions on issues such as conflicts of interest and what should be included in an enhanced code of practice for sole trustees.

The government’s response will be important in shaping the future of trusteeship and how trust-based pension schemes are run.

In addition to planning for the future, most schemes must complete their first own risk assessments this year to evaluate the effectiveness of their current governance policies and compliance with the Governance Code.

A collective future

2026 promises to be a significant year in the growth of collective DC, with the new rules to allow whole life collective DC for unconnected employers due to come into force at the end of July. This is likely to lead to the first commercial CDC schemes entering the market.

The government has also signalled its support for the establishment of Retirement CDC arrangements.

Having consulted on this at the end of last year, we can expect an update in the coming months. A key question is whether the government will accelerate the timetable for permitting Retirement CDC from its current schedule of 2028, so that Retirement CDC can be included in the first wave of guided retirement solutions for DC schemes.

Preparing for the launch of pension dashboards

31 October 2026 marks the date by which all schemes are required to connect to pension dashboards. User testing is underway and will continue throughout this year. 

The big question is - will sufficient progress be made to enable the government to announce an official launch date during the course of this year?  Time will tell…

Looking to the future

Looking further ahead, the Pension Commission has been tasked with considering what the UK pension system should look like in ten to twenty years time to deliver a system that is fair, sustainable and helps people save enough to ensure they have an adequate income in retirement.

All eyes will be on the Commission’s interim report this Spring, which is due to set out the evidence base and identify the specific issues the Commission will be seeking to address in its final report next year. 

Let the journey begin

2026 promises to be an important milestone on the journey towards a pension system that is fit for the future. There is much that the government and we in the pensions industry need to do as we move forwards on this journey.

For us, a key focus is on the passage of the Pension Schemes Bill, which is likely to be followed by a flurry of consultations on various sets of implementing regulations. It will be important for the industry to engage with these to ensure we are headed in the right direction.

Preparation will be key given the major reforms that lie ahead. Whether it’s use of surplus, guided retirement, inheritance tax, dashboards or CDC, there is a lot of infrastructure to be built along the way. Amidst all this construction, it’s important to be clear on the ultimate destination – adequate retirement savings for all.

That’s something we should all be working for in 2026 and beyond – with all eyes on the government and the Pension Commission to see how the future will unfold.