Justin McGilloway
- Partner
- Pensions & Employee Benefits
Pension Schemes Act 2026 – what’s in force and what’s coming up?
Pension Schemes Bill 2026 was finally passed by Parliament on 28 April 2026 and Royal Assent is expected shortly. The Government has had to accept a watered-down investment reserve mandation power. Pension Schemes Act 2026 (PSA 2026), as it will become on Royal Assent, covers two distinct types of scheme namely DB (defined benefit) and DC (Defined Contribution). This Bulletin briefly covers the main changes affecting these private sector schemes and does not relate to changes to the Local Government Pension Scheme. PSA 2026 is notable for the numerous powers it gives the Secretary of State to make Regulations before many of the PSA 2026’s key provisions can come into force.
Timescale for making Regulations:
An Act of Parliament such as the PSA 2026 is scrutinised as it passes through its Parliamentary Stages in the House of Commons and House of Lords. In contrast, Regulations are made by, in effect, the Secretary of State and are laid in Parliament and will usually automatically come into effect after a specified period.
This is not an easy process:
- By their nature, Regulations specify in great detail how provisions in the primary legislation (the Act) are to work; and
- As a preliminary step, there will often be a Consultation by the Government to seek views on how the proposed Regulations should best be drafted.
This process often take 6 months or more, typically as follows:
- Consultation on Regulations – cannot start before an Act has received Royal Assent.
- Consultation period – sometimes 2 months or more.
- Government considers Consultation replies – two months or more.
- Regulations finalised and laid in Parliament – 2 months.
The likelihood is that the first Regulations under the PA 2026 will not be made until 2027 and some not until 2028 or 2029.
Regulations are usually brought into force only in April or October each year.
Main DB changes under the PSA 2026:
Changes with Immediate effect from PSA 2026 Royal Assent:
Virgin Media: the 2026 Act contains “remediation provisions” so that in appropriate cases, schemes can seek retrospective actuarial confirmation.
Changes dependent on Regulations being made:
For example:
Scheme surplus – power to amend scheme rules to facilitate using surplus in on-going DB schemes for benefit of relevant employers and members. These Regulations are likely to be controversial and are not expected to come into force until end of 2027. Several sets of Regulations will be needed setting the conditions for exercise of the trustees’ new power and the tax treatment of surplus received by members. Guidance from TPR will also need to be drafted and finalised.
Superfunds – establishing a permanent market for superfunds via an authorisation process. Many sets of Regulations and TPR Guidance will be needed. The Regulations are not expected to come into force until 2028.
Trustees’ Investment duties – obligation to have regard to statutory Guidance. The guidance has first to be consulted on. The Consultation is likely to be issued within the next 6 months.
DC changes under PSA 2026:
The DC market will eventually be substantially recast as and when the relevant Regulations listed below take effect, unlikely to be before 2028:
- Value for Money (VFM) Regulations will introduce new VFM requirements for default arrangements in trust – based DC schemes. These will include the publication of VFM data metrics and details on how trustees and scheme managers are to make VFM assessments.
- Under new DC Consolidation provisions, group personal pensions and master trusts will be required to have £25bn in assets managed by at least one “main scale default arrangement” (MSDA) by 2030. This requirement will be subject to Regulations providing for certain exemptions and to a transitional pathway for Schemes that have at least £10bn in assets by 2030.
- PSA 2026 provides for consolidation of DC small pots Regulations ensuring that small dormant pension pots with a value of £1,000 or less will automatically be held by consolidator schemes, where no contributions have been received for at least 12 months.
- The reserve power to direct investments is more restricted than the Government wished.
Concluding remarks
As always, the challenge for scheme employers, trustees, administrators and members is to keep up to date.
Against the background of parallel new legislation in other areas e.g. extension of Inheritance Tax to certain pension benefits from 6 April 2027 (see below for our 19 March 2026 bulletin) and Dashboards availability perhaps from early 2028, there is much to keep pace with and we will assist you wherever we can. If you have any queries, please contact your usual WB pensions Team member.
This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.
Meet the team:
Paul Ashcroft
- Partner
- Pensions & Employee Benefits
James Newcome
- Senior Associate
- Pensions & Employee Benefits
