Pensions Expert quizzes lawyers to find out what they expect to be the key issues that trustees and pension professionals should look out for in 2026.
After a whirlwind year of legislative change, with multiple major bills and other policy and regulatory developments, those expecting a let-up in the new year may be disappointed.
We put four questions to lawyers about the challenges and opportunities of 2026, and several themes emerged. Surplus release from defined benefit (DB) pension schemes is of particular interest, as rules yet to be finalised will play a key role in deciding how excess capital can and cannot be used.
Other key topics are the infamous ‘mandation’ clause in the Pension Schemes Bill, the pathway to defined contribution (DC) ‘megafunds’, and the implementation of a ‘fix’ for the section 37 issue, also known as the Virgin Media case.
Click the questions to jump ahead in the article.
- What is the biggest regulatory challenge facing trustees in 2026?
- What would you like to see added to – or removed from – the Pension Schemes Bill?
- How can schemes ensure they are ready for the changes in the Pension Schemes Bill?
- What court cases should trustees be looking out for next year?
What is the biggest regulatory challenge facing trustees in 2026?
Sonya Fraser, partner at Arc Pensions Law: “The Pension Schemes Bill marks a significant shift in the DC landscape, and consolidation will likely be one of the key themes of 2026. Smaller DC schemes and trust‑based arrangements without sufficient governance strength will face growing pressure to move into master trusts or wind up…
“While the direction of travel towards scale, consolidation and better member outcomes is clear, the journey will likely require significant operational and governance adjustments.”
David Saunders, senior partner at Sackers: “The biggest challenge for trustees in 2026 is likely to be keeping pace with the consultations on measures being introduced under the Pension Schemes Bill, while simultaneously juggling significant business-as-usual items, such as connecting to and complying with pensions dashboards and completing their first own risk assessments.
“Consultations are expected on superfunds and surplus flexibilities, and possibly guided retirement regulations, Financial Conduct Authority rules, and value for money regulations.”
Amie Bain, pensions partner at Pinsent Masons: “On the DB side, we’re anticipating greater clarity from the government and the Pensions Regulator (TPR) around surplus sharing from ongoing schemes, which should allow sponsors and trustees to start to crystallise their plans around run-on versus buyout.
“Trustees will be challenging their lawyers and actuaries to find a way to implement the new Virgin Media ‘fix’ expected to come into force on 6 April 2026 in a way that provides trustees with the legal certainty they need, but also the pragmatic, proportionate and cost-effective solutions they want.”
“Trustees need to be alive to the risks AI poses, both in terms of investment and covenant, as well as the opportunities.”
Richard Knight, Burges Salmon
Richard Knight, partner and head of pensions at Burges Salmon: “Data protection and cybersecurity continue to be a significant area of focus and a key area on the regulator’s radar. Dashboards also present a cyber risk. With the connection deadline in October, many schemes have yet to put in place the Data Protection Impact Assessment that the regulator has made clear they need.
“The new Data (Use and Access) Act 2025 should be a prompt to schemes to review and update their existing data protection processes to ensure compliance with the new regime, including updating their complaints processes.”
“Artificial intelligence (AI) and the impact on employer covenant in the short to medium term are other challenges… Trustees need to be alive to the risks AI poses, both in terms of investment and covenant, as well as the opportunities.”
What would you like to see added to – or removed from – the Pension Schemes Bill?
Richard Knight (Burges Salmon): “With the looming pensions adequacy crisis for younger savers, giving employers a tax incentive to top up the pots of DC members using DB surplus could go some way towards addressing inter-generational unfairness in the DB-DC divide. Or perhaps a reduced rate could apply where sponsors use the released surplus to reinvest in the sponsor’s UK-based business, or in local infrastructure or start-up projects?
“Steps [to improve adequacy] could be taken in this bill – for example, to bring self-employed individuals within the scope of auto-enrolment requirements or to increase minimum contribution rates. We already have legislation on the statute books to lower the age and earnings thresholds for auto-enrolment – this could be brought into force.”
Sonya Fraser (Arc Pensions Law): “It would be helpful to have clarity on the ability to transfer DB surplus from one pension scheme to another. This might be to another DB scheme in the corporate group or to a DC scheme or master trust where the intention is for the surplus to be used for funding benefits or contributions in the other scheme…
“I (along with the vast majority of the pensions industry) would like to see the reserve power to mandate specific investment allocations removed from the bill. The industry understands the government’s growth agenda, but the power risks cutting across fiduciary duties and could ultimately compromise trustees’ ability to act in the interests of members.”
Mark Baker, pensions partner at Pinsent Masons: “The magic wand in the bill would be to align the timeframe for DC guided retirement with the introduction of collective DC in retirement. But this might not happen, so DC schemes and pension providers need to be planning for guided retirement now.
“It would be great if DC trustees could delegate some of their guided retirement responsibilities to a regulated provider: for example, the requirement to monitor the needs of their membership based on detailed data – similar to the way that trustees can delegate some investment decisions under the Pensions Act 1995.”
“The magic wand in the bill would be to align the timeframe for DC guided retirement with the introduction of collective DC in retirement.”
Mark Baker, Pinsent Masons
David Saunders (Sackers): “I wouldn’t add anything, but I would remove the reserve power that would allow the government to set quantitative baseline asset allocation targets for some pension scheme investments – so-called ‘mandation’.
“By definition, this power will override trustees’ investment duties under trust and common law, as well as any conflicting provisions in a scheme’s trust deed and rules.
“While no doubt a measure of last resort, and procedural safeguards are planned, the underlying message to relevant schemes seems to be ‘increase your investments in UK private markets, or we will force your hand’. It goes without saying that trustees’ duty is to invest scheme assets primarily in members’ interest, and that this might well be at odds with the government’s wider purpose.”
How can schemes ensure they are ready for the changes in the Pension Schemes Bill?
David Saunders (Sackers): “With the measures still in their infancy, there’s not much schemes can do now, other than to keep a watchful eye on developments. Trustees should lean on their advisers to help with this.
“Once the bill receives Royal Assent, trustees will need to brace themselves for the inevitable torrent of consultations, ready to engage with those likely to have the most significant impact on their scheme.”
Sonya Fraser (Arc Pensions Law): “DB scheme trustees facing potential issues around section 37 and the Virgin Media case should start considering what historic rule amendments would benefit from the new statutory ‘fix’ that the government has included in the Pension Schemes Bill.
“Some schemes have started this work already, but it would be sensible for trustees and sponsors to take steps to establish what ‘potentially remediable alterations’ they have so that they can take action to request actuarial confirmation under the new framework once it is in force.”
Amie Bain (Pinsent Masons): “We’re seeing many DB schemes engaging with their sponsors and advisers to explore if and how the expected surplus sharing provisions may feed into the longer-term strategy for the scheme. We’re already seeing new and innovative ideas coming to the fore, such as the recent deal announced by Aberdeen and the Stagecoach trustees, which we were delighted to support Aberdeen on.”
Richard Knight (Burges Salmon): “Prior planning and preparation is key. The schemes best placed to meet the challenges of the Pension Schemes Bill changes will be those that already have their basics in tip-top shape. Think data, dashboards, administration, cyber security – it’s no coincidence these are all key areas of focus for the Pensions Regulator.
Mark Baker (Pinsent Masons): “On the DC side, it’s essential that schemes plan for the guided retirement duties. Some employers will need to judge whether to transfer their scheme into a master trust, or whether to keep it running with the trustees adapting to the duties.
“Master trusts will also need to do the same planning, which is an important phase for the industry. Most DC schemes’ trust deeds contain only brief wording about the trustees’ retirement duties, and we think now is the time to amend trust deeds and set out those duties more fully.”
What court cases should trustees be looking out for next year?
Hayley Goldstone, pensions partner at Pinsent Masons: “The Pensions Ombudsman (TPO) has recently published two determinations concerning trustees’ duty of care when considering member transfer requests around the time of TPR’s awareness campaign regarding pension liberation scams…
“While each similar complaint will turn on its own facts, this detailed assessment of the law is likely to inform TPO’s position in future cases. It will be helpful for trustees to consider the analysis and approach in this determination if they receive complaints about transfers made during this period.
“More broadly, the style of TPO’s response to these complaints is reflective of the organisation’s recent push to support the pensions industry.”
“The [Verity Trustees v Wood] judgment will be of significant interest when it lands and there are likely to be points of relevance to most schemes.”
Sonya Fraser, Arc Pensions Law
Sonya Fraser (Arc Pensions Law): “We are expecting the High Court’s judgment on Verity Trustees v Wood to arrive before Christmas. This case took place over 32 days in the High Court earlier this year and considers a wide range of different issues, including section 37, amendment power restrictions, and pension increases.
“Given the breadth of pensions law issues being considered, the judgment will be of significant interest when it lands, and there are likely to be points of relevance to most schemes.”
Richard Knight (Burges Salmon): “It has to be the Pensions Trust case – Verity Trustees v Wood – a record-breaking six-week hearing on pure legal argument earlier this year means judgment is eagerly anticipated.
“With decisions expected on key pensions law fundamentals such as amending amendment powers and the doctrine of severance, not to mention the small matter of the scope and application of section 37 requirements, this looks set to be the most significant pensions decision for at least a decade.”
