With 2025 seeing a surge of pensions legislation and regulatory change in the sector, Partner Sonya Fraser was interviewed by Pensions Expert on what challenges trustees and pension professionals might face in 2026. 

What is the biggest regulatory challenge facing trustees in 2026?

“The biggest regulatory challenge in 2026 will likely fall on DC schemes whose trustees will need to begin (or, for those ahead of the game, continue) preparing for multiple reforms under the Pension Schemes Bill.  The 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.  Smaller master trusts will be looking at their business plans in relation to the incoming scale requirements and we may also see consolidation in the market.

“In 2026 we will start getting into the detail of the DC reforms, with consultations on the secondary legislation being published once the Pension Schemes Bill receives Royal Assent.  While the direction of travel towards scale, consolidation and better member outcomes is clear, the journey will likely require significant operational and governance adjustments. For DC trustees and providers, 2026 (and the years that follow) will perhaps be defined by adaptation to new regulatory duties and expectations, evolving member needs and a transformed pensions ecosystem.”

What would you like to see added to the Pension Schemes Bill? Or removed?

“In context of the new DB surplus flexibilities to make payments to employers from ongoing schemes, 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 / master trust where the intention is for the surplus to be used for funding benefits / contributions in that other scheme.  There is a growing trend in this area and a clear legislative footing would be incredibly helpful for all parties involved.

“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.”

How can schemes ensure they are ready for the changes in the Pension Schemes Bill?

“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 now included in the Pension Schemes Bill.  Some schemes have started this work already but, now that we have a clear direction of travel, 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.

“For DB schemes who are considering use of surplus in context of the new surplus release flexibilities, trustees and sponsors should be starting to consider an appropriate decision-making framework and how use of surplus fits in with their end-game planning.  We are expecting further guidance from the Pensions Regulator following the enactment of the Pension Schemes Bill but the Regulator has stated that, for now, schemes should be developing a policy on surplus release including detail of how members and the employer are likely to benefit.”

Are there any significant court cases on the horizon you’re aware of that trustees should be looking out for?

“We are expecting the High Court’s judgement 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/Virgin Media, 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.  In relation to section 37, although the case pre-dates the Government announcing the statutory fix, some of the questions being considered by the High Court will remain relevant for schemes looking at retrospective actuarial confirmations.  For example, the case is expected to provide some clarity on when a section 37 confirmation was in fact required (and when it was not).”

What is top of your Christmas wishlist for the wider pensions industry?

“A genuine cross-party commitment to stop tinkering with the pensions tax regime.  Constant fiscal adjustments have eroded public trust and made saving into a pension scheme feel uncertain and opaque.  If we are serious about addressing issues around retirement adequacy, then savers need to have confidence that the rules won’t change every Budget and that the goalposts will actually stay put.  We need stability and a system that people can rely on for 30+ years, not just for the next fiscal cycle.  So a cross-party pledge of pensions tax consistency would be a very welcome Christmas gift, acknowledging we are probably more likely to see pigs fly!”

Read part of Sonya’s interview in Pensions Expert, here.