Issues Affecting All Schemes
Finance Act 2026 – Inheritance Tax Changes
The Finance Act 2026 has received Royal Assent. Its key pensions-related provisions introduce changes to the inheritance tax (IHT) treatment of lump sum death benefits paid by registered pension schemes. As previously announced, beginning 6 April 2027, almost all lump sum death benefits will form part of the member’s estate for IHT purposes, regardless of whether they are paid at the trustees’ discretion. The main exception is death-in-service benefits (whether paid at the trustees’ discretion or otherwise). Dependants’ scheme pensions will also remain outside the member’s estate for IHT purposes, including where they are commuted and paid as a lump sum.
The member’s personal representatives (PRs) will be responsible for reporting and paying any IHT payable on death benefits. However, PRs will also be able to direct schemes to withhold up to 50% of any lump sum death benefits that are potentially subject to IHT for up to 15 months. PRs and beneficiaries will also be able to direct schemes to pay the IHT due on a lump sum death benefit if certain conditions are satisfied.
New provision of information requirements will be imposed on PRs and schemes to ensure they exchange all the necessary information to enable them to comply with their respective obligations. The government has said it will consult this spring on draft regulations setting out these requirements. In addition, the government/HMRC intends to publish:
- A list of clarifications to common questions that have been raised by industry (expected in spring 2026); and
- Detailed guidance for scheme administrators (draft guidance expected in autumn/winter 2026).
The Spring Statement 2026 did not contain any pensions-related announcements.
Action
If they have not done so already, trustees and administrators should start considering what changes they will need to make to their administration and governance processes around the distribution of death benefits to reflect the IHT changes. The new provision of information requirements will be central to this, so trustees and administrators should monitor publication of the consultation on the draft provision of information regulations.
Impersonation Fraud – Scam Alert
The Pensions Regulator (TPR) has issued a scam alert to schemes calling on them to tighten their security to protect members after a rise in reports of impersonation fraud. The alert urges schemes to:
- Review their identity and verification check procedures to ensure they remain robust;
- Review data security for letters and documents that are posted to overseas addresses;
- Encourage members to strengthen online security by adopting two-step verification and using stronger passwords;
- Signpost members to resources such as Stop! Think Fraud; and
- Tell Report Fraud about any suspected fraud immediately.
Action
Trustees and administrators should consider whether any changes to their administration arrangements are required in response to the alert.
Pension Schemes Bill – Guidance on Trustee Investment Duties
The government laid an amendment to the Pension Schemes Bill that would have required the government to issue guidance explaining such aspects of the law on the statement of investment principles and choosing investments as it considers appropriate. Trustees and fund managers to whom discretion had been delegated would have been required to have regard to the guidance. However, the amendment was rejected by the House of Lords and, due to parliamentary process rules, cannot be reinstated by the House of Commons.
We understand that the government still intends to publish the proposed guidance, but it will not now be statutory guidance. The government has set up a working group comprising 13 members from across the pensions industry to help it design the guidance.
Action
Trustees should monitor publication of the guidance.
Pensions Dashboards – Reporting Standards
The Pensions Dashboards Programme (PDP) has published an updated draft of the revised dashboards drafting standards on which it has been consulting and has extended the consultation period until 30 April 2026. The updated version incorporates proposals for the implementation of daily reporting via application programming interfaces.
The PDP has also published a blog post on the three different pension status categories that will appear on the dashboard:
- Confirmed pensions: Those where a successful match has been made and all the required pension information has been provided;
- Pending pensions: Those where a successful match has been made, but not all the required pension information has been provided yet; and
- Pensions that need action: Those where either (a) a possible match has been made and additional information is needed to verify it, or (b) the scheme has returned a code to indicate there has been a match, but the user needs to contact the scheme before it provides any (or all) of the user’s pensions information.
Action
Trustees and administrators should continue to monitor the progress of the consultation.
Data Protection – Information Commissioner’s Office Guidance
The Information Commissioner’s Office (ICO) has published new/updated guidance on:
- The new “recognised legitimate interest” basis for data processing that was introduced by the Data (Use and Access) Act 2025. The guidance explains what the new basis is and when it can be used;
- The existing “legitimate interests” basis for data processing. The guidance explains what the legitimate interests basis is and when it can be relied upon; and
- The “purpose limitation principle”. The guidance explains how to assess whether use of personal data for a new purpose is compatible with the original purpose and the circumstances where reuse is permitted.
Action
No action required.
Administration – Trustee/Administrator Relationship
The Pensions Administration Standards Association has published a four-part trustee-administrator engagement series. The series is designed to strengthen trustee-administrator relationships and promotes clear engagement, strong governance frameworks, and collaborative working practices between trustees and administrators. The instalments cover:
- The strategic context;
- Appointing a new administrator and preparing for market review;
- Managing installation of, and transition to, a new administrator; and
- Building, measuring, and maintaining an effective partnership.
Action
No action required.
Issues affecting DB Schemes
Virgin Media – TPR Guidance
TPR has published guidance on remediation for trustees of schemes affected by the Virgin Media judgments. The guidance explains how the legislative remedy in the Pension Schemes Bill works and sets out the trustees’ role and responsibilities, as well as some practical tips. Key areas covered include:
- Deciding whether to use the legislative remedy;
- Instructing the actuary;
- Timescales;
- Information-gathering;
- What to do if retrospective confirmation cannot be provided;
- Reporting to TPR; and
- Member communications.
For more information, please see our Legal Update, Virgin Media – Pensions Regulator Guidance for Trustees on Remediation.
Action
Trustees of schemes that are affected by the Virgin Media judgments should speak to their usual Mayer Brown contact to discuss next steps.
Pension Protection Fund – 2026/27 levy
The Pension Protection Fund (PPF) has published its 2026/27 levy policy statement and final rules. These set out the details of its earlier announcement that it will not charge conventional schemes a PPF levy in 2026/27 and will maintain a proportionate, risk-based levy for “alternative covenant schemes” such as superfunds. The PPF has also published FAQs for levy payers on the zero levy.
All DB schemes will still be required to submit a scheme return including valuation information, asset-backed contribution (ABC) information, and block transfer information. However, schemes will no longer need to provide information that was previously submitted voluntarily solely to obtain a levy saving, including:
- ABC, deficit reduction contribution, contingent asset, and block transfer certificates;
- Contingent asset documents; and
- Special category employer and exempt transfer applications.
Action
No action required.
Future of DB Schemes – Report
TPR has published a report setting out the conclusions from detailed modelling that it has undertaken to investigate how the DB universe may evolve over the next 10 years. Key findings include:
- The insurance market has capacity to absorb all schemes that may wish to buy out over the next decade, although there may be some short-term pressures. Over half of all schemes are expected to buy out;
- There is space in the market for both insurers and superfunds to operate; and
- Over the next 10 years, the aggregate buy-out surplus across DB schemes is expected to increase to around £120 billion.
The report urges trustees of DB schemes to act now to understand all the available options and to plan the future of their scheme over the next 10 years.
Action
No action required, but trustees may wish to bear TPR’s comments in mind when considering the future of their scheme.
Issues Affecting DC Schemes
DC Decumulation Options – TPR Report
TPR has published a report setting out the findings from its analysis of data relating to the decumulation options offered by DC occupational schemes. Key findings include:
- An uncrystallised funds pension lump sum is the most prevalent decumulation product, followed by drawdown;
- Over half of schemes offer at least one decumulation product to members, but these are concentrated in larger schemes. Forty-three percent of schemes offer no decumulation products at all, representing 1% of total membership; and
- Regular income in-scheme products are less widely available.
In light of the report and the forthcoming guided retirement duty, TPR has urged trustees of DC schemes to review their decumulation offering and to start to design their default decumulation products. If schemes cannot offer members the right retirement options, they should consider consolidation into a scheme that can offer value for money solutions.
TPR has also called on DC schemes to consider more than just age when creating member cohorts for the purposes of designing default strategies for retirement. Default strategies have historically been designed around the “typical” member with continuous employment, steady (and usually increasing) earnings, and a clear retirement date around state pension age. While this remains true for many members, for many others it does not. In particular, career breaks are common, predictable, economically significant, and create long-lasting inequities. TPR therefore believes that trustees should consider the impact of career breaks when designing default strategies. TPR is not suggesting individual tailoring at scale but rather considering the scheme’s membership and seeing if there are one or two defined cohorts where modest differentiation could make a difference.
Action
No action required, but trustees may wish to bear TPR’s comments in mind when designing their default decumulation option(s) when the guided retirement duty comes into force.
Consolidation – TPR Guidance
In light of research showing continued consolidation of DC schemes and the increased legal duties that will be introduced by the Pension Schemes Bill, TPR has called on trustees of smaller DC schemes to consider carefully whether they can continue to meet the rising compliance burden or whether members would be better served through consolidation or wind-up.
In addition, TPR has published guidance on the considerations and preparation required to assess whether to transfer to a master trust. While targeted at trustees of “smaller” DC schemes (those with fewer than 5,000 members), trustees of larger DC schemes may also find it helpful. The guidance covers:
- Why trustees should consider whether to transfer to a master trust and the factors they should take into account;
- What a master trust could offer members;
- Approaching and selecting a master trust;
- Other factors to be considered for hybrid schemes; and
- Preparing to transfer members to a master trust.
TPR has also refreshed its DC winding-up guidance to support trustees considering this route.
Action
No action required, but trustees of smaller DC schemes may wish to bear TPR’s comments in mind when considering the future of their scheme. Trustees of any scheme that is considering consolidation or wind-up may find TPR’s guidance helpful.
Mayer Brown News
Insights
- Virgin Media – Pensions Regulator Guidance for Trustees on Remediation | Insights | Mayer Brown
- United Kingdom: The Shifting Landscape of DB Pension Scheme Endgames | Insights | Mayer Brown
- Insights: Employment | Benefits | Mobility – Q1 2026 | Insights | Mayer Brown
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