Here are our thoughts on the ten key pensions developments that scheme trustees and employers need to plan for in 2026. These include the deadline for connecting to pensions dashboards, the long-awaited judgment in the case of Verity Trustees Limited v Wood, and the coming into force of the "fix" provisions designed to address the issue of past scheme amendments being void due to a failure to obtain a "section 37 certificate".
Happy New Year! Here are our thoughts on the 10 key pensions developments that scheme trustees and employers need to plan for in the coming year.
The legal deadline for schemes to connect to pensions dashboards is 31 October 2026. Trustees should ensure their scheme administration agreements cover dashboards-related work. Pensions Regulator guidance notes that a failure to update service provider contracts in a timely manner risks holding up dashboard preparations.
If agreeing an addendum to an existing agreement, trustees need to be satisfied both that the new provisions are appropriate and that the addendum dovetails with the existing agreement. We have seen administrators seeking to bring dashboards liability within existing liability caps, effectively watering down existing protections. When considering liability caps, trustees should bear in mind that it’s illegal for trustees to be indemnified from scheme funds for penalties incurred for dashboards compliance breaches (or to use scheme funds to purchase insurance that covers such risks).
Some scheme administrators are telling trustees that they must do a data protection impact assessment (DPIA) in relation to dashboards. The actual position is more nuanced.
The long-awaited Verity Trustees Limited v Wood judgment is expected early in 2026. It will consider various issues of wider relevance to pension schemes, particularly in relation to scheme amendments. The judgment may also consider how pension increases should be calculated when a pension has not been in payment for a full year. This is an area where there is often a mismatch between the scheme rules and what happens in practice, and an incorrect approach can have knock-on effects. The judgment was due to consider which types of amendment required a section 37 certificate. However, there has been some discussion within the pensions legal community regarding whether there might not be a ruling on that issue, as such a ruling could legally prevent the statutory fix being used by the scheme involved in the case.
The Pension Schemes Bill provides a “fix” for past pension scheme amendments at risk of being void following the Court of Appeal’s judgment in the Virgin Media case due to the trustees not obtaining a “section 37 certificate” from the scheme actuary. To use the “fix” trustees will need to identify relevant amendments and obtain confirmation from the current actuary that the amendment would not have prevented the scheme from satisfying contracting-out requirements. We expect the “fix” provisions to come into force early in 2026. The actuarial profession is currently awaiting guidance, but trustees should be considering (and discussing with employers) which amendments they wish to use the fix for, and whether to await the Verity Trustees judgment before making a decision on this.
Following a major pensions data breach which resulted in the ICO imposing millions in fines, the ICO has spelled out some basic cyber-security principles for scheme administrators, for example granting users only the minimum system access rights required for their role, and responding fast enough to system attacks. Separately, PASA has published high level guidance for trustees on the questions they should ask of their service providers on AI tools. We are seeing increasing use of technology to record trustee meetings and produce minutes. This practice can create significant legal risks for trustees who should carefully consider whether to disallow it. Trustees need to understand how technology is being used by their service providers and may need to dig beyond initial "nothing to worry about" responses. Trustees should ensure they understand the issues so that they can ask the right questions of service providers.
From April 2029, only the first £2000 of pension contributions that an employee makes via salary sacrifice each year will be exempt from National Insurance contributions (NICs). Although the changes don’t take effect until 2029, we expect many employers to review their pension arrangements this year in anticipation of the changes.
From 6 April 2027, some death benefits will be subject to the inheritance tax regime and this represents a very significant change to trustees’ / scheme administrators’ tax duties and risks. It creates new "pain points" and increased scope for disputes with beneficiaries and PRs. Schemes may be required to partially withhold death benefits for a period or pay IHT direct to HMRC. Non-compliance could render trustees liable for IHT, interest and possibly beneficiary financial loss. Trustees must now plan for the new regime by identifying which death benefits are in scope, updating member communications, and most importantly reviewing processes and agreements with third party administrators / insurers to try to reduce / allocate risks. Trustees may also want to consider the adequacy of existing trustee protections such as insurance, scheme rules' protections and administrator SLAs and indemnities.
The trend of multiple scheme buy-ins and buy-outs is set to continue, with more high value deals likely. We have recently seen transactions where the parties have agreed that “data cleanse” work will be undertaken by the insurance company post-buy-out rather than between buy-in and buy-out. This can speed up completion of buy-outs, but requires careful consideration to ensure that trustees are compliant with their duties and that the risk of future claims is carefully managed.
The Pension Schemes Bill contains provisions, expected to come into force in 2027, which are designed to make it easier to pay surpluses from ongoing schemes to employers. 2026 may bring clarity on the funding threshold that must be met in order to do this. The Pensions Regulator has encouraged trustees to have a surplus extraction policy that includes details of how members and employers are likely to benefit from the release. This isn’t a legal requirement, but there is an increasing trend for employers to seek to agree non-binding surplus policies with trustees in a variety of situations.
Where trustees are being asked to pay all or a large proportion of a scheme’s surplus to the employer(s), some trustees may have concerns regarding how such an approach aligns with their legal duties. However, provided trustees act within the scope of their powers, follow a proper decision-making process, and manage any conflicts appropriately, the law is clear that they can do this. The Pensions Ombudsman upheld such an approach in a case involving Bristol Water plc. In November 2025 a High Court judgment was handed down in a case where the trustees had in principle concluded that the surplus should be paid to the principal employer, but before reaching a final decision considered it necessary to obtain a court declaration confirming that the terms of the scheme’s amendment power had not prevented the closure of the scheme.
HMRC's view of how tax is calculated on surplus repayments to employers is at odds with the views of many pension lawyers and consultants. We may therefore see this view being challenged in the courts where the amount at stake makes it worthwhile for an employer to do so.
The Government’s consultation on trustees and governance seeks views on some significant changes, including mandatory accreditation for professional trustees, limits to the length of trustee appointments, the creation of a directory of all trustees, and the introduction of a requirement for scheme administrators to be registered with the Pensions Regulator, with the Regulator having the power to deregister administrators. It does not specify a timescale for implementation of the changes. The consultation runs until 6 March 2026.
The Pension Schemes Bill will introduce new minimum size requirements for the default arrangements of master trusts and group personal pension schemes used for auto-enrolment. We therefore expect to see continued market consolidation, meaning that employers may see their current auto-enrolment schemes merge with others. Where an auto-enrolment scheme ceases to exist as a result of a merger, employers will need to ensure that they continue to meet their auto-enrolment obligations and that appropriate communications are issued to members.
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