Issues Affecting All Schemes
Pension Schemes Act 2026
The Pension Schemes Act 2026 received Royal Assent on 29 April 2026. It provides for:
- New powers for trustees to release surplus from ongoing DB schemes;
- A remedy for potentially invalid past amendments to contracted-out rights (following the Virgin Media case);
- An authorisation and supervision regime for DB superfunds;
- A new DC value for money (VFM) framework;
- Creation of DC "megafunds" by the imposition of scale (and potentially asset allocation) requirements for default arrangements in authorised DC master trusts and group personal pension schemes;
- A system for automatic consolidation of small, deferred DC pots;
- A requirement for DC schemes to offer default retirement solutions;
- Enabling the Pensions Ombudsman to make enforceable determinations in pensions overpayment recoupment cases;
- Removal of the restrictions that prevent the Pension Protection Fund (PPF) from reducing the PPF levy below £100 million;
- Abolition of the PPF administration levy;
- Indexation of PPF compensation in respect of pre-1997 benefits where the member's original scheme provided for indexation of such benefits; and
- Reforms to investment management in the Local Government Pension Scheme in England and Wales.
With the exception of the Virgin Media remedy, which is now in force, the other provisions will be brought into force over the next four years according to the Government's indicative timeline.
Action
Trustees and employers should assess how the Act will affect their scheme and start preparations now. While the government's indicative timeline suggests that most of the reforms will not come into force immediately, the scale of the changes means early preparation is essential. We have prepared a guide for trustees and employers to the Act – to obtain a copy, please speak to your usual Mayer Brown contact.
National Insurance Contributions (Employer Pensions Contributions) Act 2026
The National Insurance Contributions (Employer Pensions Contributions) Act 2026 received Royal Assent on 29 April 2026. It gives the government power to limit the National Insurance contributions exemption for employee pension contributions made via salary sacrifice arrangements. The government intends to exercise this power to limit the exemption to the first £2,000 of contributions per annum from 6 April 2029.
Action
While the limit will not come into force until 2029, employers who operate salary sacrifice arrangements for employee pension contributions should consider the impact of the limit on their payroll arrangements and the changes that will need to be made.
Pension Scams: Webinar and Updated Leaflet
Speaking at a Pension Scams Action Group (PSAG) webinar on fighting pension fraud, the Fraud Minister has urged trustees and administrators to use "every touchpoint" with members to reinforce scam warning messaging. The webinar brought together more than 550 pension trustees, advisers, and administrators to hear from experts on the latest intelligence, advice, and tools to keep their members safe. Attendees were urged to:
- Commit to the Pensions Regulator (TPR)'s industry "Pledge to Combat Pension Scams" campaign;
- Get up to date on the latest scam warnings;
- Educate their members on the risks and how they can keep themselves safe; and
- Tell Report Fraud about any suspicions.
The PSAG has also updated its "Steps to stay scam safe" leaflet to include a new Financial Conduct Authority (FCA) "Firm Checker" tool which allows individuals to check whether a person offering them advice or services is authorised by the FCA and has permission to provide the services the individual wants.
Action
Trustees and administrators should ensure that when sending the PSAG leaflet to members, they send the updated version. Trustees and administrators may also find it helpful to watch the webinar recording and should bear the Fraud Minister's comments in mind.
Pensions Dashboards: TPR Report and Updated Guidance
TPR has published a market oversight report on preparations for dashboards connection. The main findings are:
- Most large schemes have already connected and have increased their focus on data.
- Personal data work is ongoing – many schemes are still improving the quality of the data used to identify dashboard users and putting in place processes to resolve "possible" matches and to review and refine their matching criteria.
- Value data preparations lag behind personal data, with significant work still required to ensure information sent to members is accurate, up‑to‑date and dashboard‑ready.
- Data quality controls exist but must mature, with schemes needing to embed data improvement, monitoring, and assurance into business‑as‑usual activity rather than treating it as a one‑off exercise.
TPR has urged schemes to take the report's findings into account, in particular the need to focus on value data. TPR has also updated its dashboards guidance to incorporate best practice insights coming out of the report and to provide clarity on areas TPR is often asked about. The guidance now includes two checklists to help schemes prepare for dashboards: one for schemes which are still working to connect, and one for schemes which are already connected.
In addition, the Pensions Dashboards Programme has published guidance for schemes and independent service providers setting out clear expectations for operational failure scenarios and error handling. The guidance builds on the dashboards technical standards and introduces clearer definitions, extended error scenarios and recommended retry patterns that schemes should adopt.
Lastly, the Pensions Management Institute has published a guide to pensions dashboards. The guide is designed to help schemes understand what dashboards will require, how they will shape future expectations around data and governance, and where they create opportunities to improve engagement and transparency.
Action
No action required, but trustees and administrators of schemes that are subject to the dashboards duties may find the recommendations in TPR's report and the various pieces of guidance helpful.
Investment Consultants: Climate Competency
The Investment Consultants Sustainability Working Group has updated its guidance on assessing the climate competency of investment consultants. The guidance sets out the following five themes against which asset owners should expect their investment consultants to demonstrate their climate competency:
- Firmwide climate expertise and commitment;
- Individual consultant climate expertise;
- Tools and software;
- Thought leadership and policy advocacy; and
- Assessment of investment managers and engagement with them
Action
No action required, but trustees may find the guidance helpful when appointing or reviewing investment consultants.
Collective DC Schemes: Revised Code of Practice
TPR's revised code of practice for collective DC (CDC) schemes has been laid before Parliament for approval. The code has been updated to reflect the extension of the CDC regime to unconnected multi-employer schemes from July 2026. It is expected to come into force in mid-October 2026.
Action
No action required.
Issues Affecting DB Schemes
Funded Reinsurance: Proposed New Rules
The Prudential Regulation Authority (PRA) is consulting on proposed changes to the rules governing funded reinsurance. Funded reinsurance is where an insurer who has entered into a bulk annuity transaction with a pension scheme transfers some or all of the investment and/or longevity risk associated with that transaction to a reinsurer. The insurer pays a large upfront premium to the reinsurer which then invests assets to cover the insurer's liability to pay future pensions.
The PRA's proposals are designed to address the most significant risks arising from the continued growth of funded reinsurance and to support the long-term resilience of the UK life insurance market. The changes are expected to result in materially higher capital requirements for funded reinsurance. The PRA is proposing that the new requirements would come into force on 1 July 2027 but would apply to any business transacted from 1 October 2026. The consultation closes on 31 July 2026.
For more information, please see our Legal Update.
Action
No immediate action required but, if introduced, trustees of DB schemes should consider whether the proposed requirements are likely to affect pricing of future bulk annuity transactions.
Contingent Spouse Pensions: Calculation
The Pensions Administration Standards Association (PASA) has published guidance on contingent spouse pension calculation approaches. The guidance is intended to give schemes a practical framework for assessing, calculating, and maintaining contingent spouse pension values. It explores key data considerations, governance requirements, and a range of calculation approaches.
Action
No action required, but trustees and administrators of DB schemes may find the guidance helpful.
Issues Affecting DC Schemes
Default Retirement Solutions: Operational Challenges
PASA has published guidance on the operational challenges facing administrators as default retirement solutions are introduced. The guidance focuses on the practical realities of delivery, highlighting the scale of change required across systems, processes, and governance frameworks. The guidance also identifies several key risks, including system strain, data challenges, increased complexity, and the need to support vulnerable or disengaged members more effectively.
Action
Trustees of DC schemes should check that their administrators are aware of the guidance.
Mayer Brown news
Events
Mayer Brown is hosting the Pensions Management Institute's Trustee Workbench on 13 May 2026. The Workbench is designed exclusively for pension scheme trustees and offers a series of focused training sessions on the topics that matter most to their role. Beverly Cox and Gareth Davies will be presenting a session on protecting member outcomes in the current regulatory environment.
Insights
- Finance Act 2026: Inheritance Tax Treatment of Pension Death Benefits
- Funded Reinsurance: The PRA's Proposed Changes to Capital Treatment – the Final Landing Place?
View all our Insights.
