March 27, 2026

HL UK Pensions Law Digest 27 March 2026

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A bite-sized summary of recent UK pension news

Welcome to our latest update, in which we cover:

Pension Schemes Bill: disruption from the Lords

• Amendments contrary to government policy made by the House of Lords;
  Inheritance tax (IHT) and pensions: Finance Act 2026

• With primary legislation now passed, the next step is draft regulations;
  Salary sacrifice and pension contributions: threshold increased

• More disruption from the House of Lords;
  Pension Protection Fund (PPF): levy policy statement and final levy rules for 2026/27

• The PPF has published its policy statement and final levy rules for 2026/27, confirming earlier announcements of a zero conventional levy;
  Pensions Regulator (TPR): innovation in pensions

• TPR’s CEO outlines its priorities for a “new pensions era”;
  Pensions Regulator (TPR): occupational DC landscape

• TPR’s annual facts and figures about the occupational defined contribution (DC) market;
  Pensions Regulator (TPR): updates to master trust capital reserving requirements

• TPR has updated its master trust capital reserving requirements, which may allow master trusts to release some capital reserves;
  Pensions Administration Standards Association (PASA): Parts 2 and 3 of its Trustee-Administrator Lifecycle Series

• PASA has published Parts 2 and 3 of its Trustee-Administrator Lifecycle Series;
  Pensions Dashboards Programme (PDP): extends deadline for responding to consultation

• PDP has extended the deadline for responding to its consultation on reporting standards;
  Pensions Dashboards Programme (PDP): blog announces the commencement of "phase 2" testing

• PDP has published a blog, confirming that the second phase of consumer testing for the MoneyHelper Pensions Dashboard (MPD) is now underway;
  Financial Conduct Authority (FCA): simplified pension and investment advice

• Consultation on allowing the provision of simplified regulated advice.

Pension Schemes Bill: disruption from the lords

The Pension Schemes Bill is nearing the end of its passage through the House of Lords. At Report stage in the Lords, the government lost votes on several significant matters, in particular:

• Statutory guidance on investment duties: the Lords rejected a government amendment which would have required the Secretary of State to issue statutory guidance on investment duties. (For more details of the proposed amendment, please see our Digest of 13 March 2026.)
• DC scale and asset allocation requirements for Master Trusts and group personal pensions: the Lords passed a non-government amendment to remove the asset allocation condition, which would have enabled the government to mandate investment in particular asset classes by schemes subject to the defined contribution (DC) scale requirements. (For more details of the proposed scale and asset allocation requirements please see our Digest of 2 June 2025.)
• Restrictions on creation of new non-scale default arrangements: as part of the DC scale provisions, regulations may prohibit the creation of new default arrangements unless the arrangement is approved by the Pensions Regulator or the Financial Conduct Authority. The Lords passed a non-government amendment which will require the regulations to have regard to encouraging innovation and the benefits of competition among pension providers.
• Consolidation of small pots: the Lords passed a non-government amendment with the effect that an unused pension pot will only be classified as “dormant” for the purposes of the consolidation provisions if no contributions have been made to the pot for three years, rather than one year as intended by the government. (For a reminder of the proposals for consolidation of small pots, please see our Briefing.) The latest version of the Bill, incorporating the Lords’ amendments made on Report, is available here.

The next step for the Bill is Third Reading in the Lords, scheduled for 26 March. As is usual, only a few, minor consequential amendments have been tabled for Third Reading.

The Bill will then return to the House of Commons for consideration of the Lords’ amendments. Assuming that the government seeks to reverse the Lords’ adverse amendments, the Bill will then enter the process of “Ping Pong”, when it will shuttle back and forth between the Commons and the Lords until it is agreed.

Inheritance tax and pensions: Finance Bill now an Act

The Finance (No 2) Bill received Royal Assent on 18 March 2026 and became the Finance Act 2026.

The provisions, bringing many unused pension funds within the scope of inheritance tax (IHT), will apply for deaths on or after 6 April 2027, as expected.

We now await consultation on draft information-sharing regulations, giving more detail of how personal representatives (PRs) and pension scheme administrators (PSA) must liaise with each other, beneficiaries and HMRC. Updated guidance from HMRC is also expected.

It would be particularly helpful for the regulations or guidance to explain what evidence a relative of a deceased member should provide to the PSA to be treated as a “prospective PR”, with power to require the PSA to withhold 50% of benefits pending payment of any IHT.

For more detail on the changes to pensions and IHT, please see our Digest of 11 December 2025.

Salary sacrifice and pensions contributions

The House of Lords has amended the National Insurance Contributions (Employer Pensions Contributions) Bill so that it now no longer reflects government policy. As amended, National Insurance Contributions (NICs) would only be payable on pension contributions made by salary sacrifice where:

• The annual sacrificed contributions exceed £5,000 (increased from the government’s intended threshold of £2,000); and
• The member is a higher or additional rate taxpayer, or would be so if the sacrificed pension contributions were treated as income (government policy is for the threshold also to apply to basic rate taxpayers). The Bill is now in “Ping Pong” stage, passing between the House of Commons and the Lords until agreed by both Houses.

For a reminder of the government's intentions for salary sacrifice and pension contributions, please see our Digest of 26 November 2026.

Return to Contents.

The Pension Protection Fund publishes its levy policy statement and final levy rules for 2026/27

On 18 March, the Pension Protection Fund (PPF) published its levy policy statement and final rules for 2026/27.

The policy statement confirms the decision to set a zero levy for conventional defined benefit (DB) schemes while maintaining a proportionate risk-based charge for Alternative Covenant Schemes (ACSs) for 2026/27.

For more details on the PPF's earlier announcements, including its amended information requirements, please see our Digest of 6 March.

Pensions Regulator: "innovation in the new pensions era"

The Pensions Regulator (TPR) has issued a speech by its Chief Executive, Nausicaa Delfas, calling on the pensions industry to unite behind a “shared vision of generating a sustainable income for retirement savers”. TPR sees the pensions landscape as moving from one era to another and encourages innovation across the marketplace.

Points to note include the following.

• In early May, TPR will publish guidance for trustees on the factors they should consider when releasing surplus.
• In advance of the value for money (VFM) framework’s introduction (expected in 2028), TPR is considering self-reported asset allocation data from Master Trusts to help identify emerging trends.
• Later this Spring, TPR plans to publish a report of its work on pension scheme investment in long-term growth assets.
• In preparation for the new guided retirement obligations, the pension industry is encouraged to consider whether defined cohorts of savers could be supported by modest differentiation of default pathways. An example is given of women who take a career break to care for children early in their working lives.
• TPR believes that administration should be put on an equal footing with investment and funding. Governance, administration and data standards will increasingly be the focus of its regulatory approach.
• In May, TPR will publish an action plan outlining its regulatory approach to artificial intelligence (AI). It will continue to work with the Financial Conduct Authority (FCA) to ensure consistency across workplace and personal pensions.

Pensions Regulator: occupational defined contribution landscape

The Pensions Regulator (TPR) has published its annual overview of the defined contribution (DC) landscape for 2025.

The report includes a comparison with defined benefit (DB) schemes, showing total active memberships last year:

• Trust-based DC schemes: 10.8 million;
• Hybrid schemes: 751,000;
• DB private sector schemes: 662,000; and
• DB public sector schemes: 7.4 million.

The Pensions Regulator updates its master trust capital reserving guidance

On 20 March, the Pensions Regulator (TPR) announced, via a blog by Kim Goodall-Brown, Director of DC and Master Trust Supervision, that it has updated its master trust capital reserving requirements guidance.

The updated guidance allows for a more scheme-specific approach and removes, or further clarifies, thresholds introduced at authorisation, including minimum liquidity levels and allowance for revenue offsetting. This should enable trustees and scheme strategists to review their approach to calculating their reserves, ensuring they are using the most effective asset mix – and may allow master trusts to release some capital reserves to invest in their business and deliver better value for savers.
Return to Contents. The Pensions Administration Standards Association publishes Parts 2 and 3 of its Trustee-Administrator lifecycle series

The Pensions Administration Standards Association (PASA) has published Part 2 and Part 3 of its Trustee-Administrator Lifecycle Series.

Part 1, covered in our Digest of 6 March, provides context for the series.

Part 2 focuses on considerations trustees should address before, during and after a market review for administrator services. Before going to market, PASA suggests that trustees should "reflect honestly" on their position. The guidance encourages a review of the scheme's legal documentation and benefit structure; as well as its data and administrative practice. The guidance sets out a detailed "deep dive" checklist for trustee self-assessment.

The guidance also sets out questions trustees may wish to ask current and prospective administrators, covering a range of issues including service capability and technology strategy.

Part 3 deals with the installation phase following the appointment of a new administrator, including transition planning, data migration, governance arrangements and member communications.

The upcoming Part 4 of the series will explore how trustees can build and maintain a strong and productive relationship with their administrator.

The Pensions Dashboards Programme extends the deadline for responding to its consultation on reporting standards

The Pensions Dashboards Programme (PDP) has extended the deadline for responding to its consultation on draft version 2.2 of its reporting standards from 25 March to 30 April 2026.

As noted in our Digest of 6 February, the new standards will require routine daily reporting of data to the Money and Pensions Service (MaPS).

The Pensions Dashboards Programme publishes a blog on the second phase of consumer testing for the MoneyHelper Pensions Dashboard

The Pensions Dashboards Programme (PDP) has published a blog on the second phase of consumer testing for the MoneyHelper Pensions Dashboard (MPD).

The blog confirmed that the testing programme's first phase is now complete. The PDP will publish insights from the first testing phase shortly.

Impact on pension schemes

The blog warns pension providers and schemes to be prepared for increasing activity as testing scales up. Higher participant volumes will mean more "find requests" being received. There may also be an increase in enquiries from participants seeking to resolve potential matches. The blog advises operations teams to be ready to manage a gradual rise in demand as testing progresses.

Objectives

Phase 2 will comprise two stages.

The first stage will focus on establishing a stable baseline for the service, to ensure the dashboard is working reliably and meeting users' needs in a live testing environment. There will be a gradual scaling up of participants, starting in the hundreds each month and ramping up to the low thousands per month over time. This stage is expected to last five months.

The second stage will focus on iterating and improving the service based on feedback and insights from testing. Phase 2 will allow the PDP to evaluate the MPD and pension finder service. The PDP will assess whether users can find and understand their pension information and get further support where they need it.

Alongside consumer testing, the PDP is also planning social research with around 3,000 users. This is planned for later in the phase.

Approach

Testing will include a mix of moderated and unmoderated sessions. It will also include testers with a range of access needs, including those with low digital skills or confidence, and people who use assistive technology.

Phase 2 will follow an iterative approach, allowing the PDP to work in an agile way and make incremental improvements as they learn from testing.

The blog concludes with a request for volunteers to participate in the testing. It suggests that schemes could invite members to take part; and that those who work in the industry could join the separate expert testing panel.

Financial Conduct Authority: simplifying pensions and investment advice rules

The Financial Conduct Authority (FCA) has issued a consultation paper (CP26/10) on simplifying the rules for providing pension and investment advice.

The FCA recognises the introduction of targeted support as an “important step forward” and now intends to enable regulated firms to offer simplified advice, to complement both existing advice and guidance and future targeted support. (For more details on targeted support, please see our Digest of 12 February 2026.)

Under the proposals, there will be three categories of regulated investment advice: basic, limited scope (simplified), and full scope.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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