If I were a Company Director, what would my focus be for 2026?
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For many sponsors, 2025 was characterised by rising employment costs, ongoing international trade pressures and heightened political uncertainty, particularly in the run-up to and aftermath of the 2025 Budget.
From a pensions perspective, however, 2025 also marked an important shift towards greater flexibility for sponsors and, crucially, new opportunities to deliver more meaningful retirement outcomes for valued members of the workforce – both now and over the longer term.
The Pension Schemes Bill 2025 not only sought to address the Virgin Media issue bringing welcome relief, but also introduced provisions to ease restrictions to enable sponsors to benefit from DB surpluses from ongoing DB schemes. Our 2025 Pension Priorities survey showed that, even before the Bill was published, around two-thirds of DB schemes with assets over £500m were planning to run-on, at least in the short term.
Taken together, these developments point to 2026 as a year in which pensions could move firmly to the centre of corporate strategy – influencing balance sheet and free cashflow health, the employee value proposition, and more broadly, long-term business resilience.
So once again, I put on my ‘Company Director’ hat, and consider the actions I should prioritise for 2026
With the Pension Schemes Bill further expanding the range of viable end-game options, detailed consideration of the right long-term destination for each scheme is essential
Developments around some of the key options include:
Run-on
While some sponsors are already utilising DB surplus to fund DC contributions under existing regulations, the Pension Schemes Bill 2025 aims to make surplus distributions significantly more straightforward and flexible, in ways that can benefit both sponsors and members. These will be explored further in our joint webinar with Simmons & Simmons on 27 January 2026.
Run-on with a new sponsor
Earlier this month, we saw the first-of-its-kind transaction in which Stagecoach Group Pension Scheme replaced its sponsoring employer (advised by LCP) with an asset manager (Aberdeen Group). This removed the pension liability for Stagecoach and also delivered an immediate uplift to members’ benefits. We have long spoken about pension schemes representing an asset or opportunity, and transactions like this provide compelling evidence of that shift in mindset.
Superfund transfer
We have now seen the first superfund transaction for a non-distressed sponsor completing. With upcoming easements to the superfund eligibility tests as well as more superfunds looking to enter the market, superfunds are likely to become an increasingly viable option for a wider range of schemes in future.
Insurance
For sponsors who believe that legacy pension risks are best managed within the insurance market, the continuation of attractive pricing into late 2025 means that this option could be achievable sooner than expected.
I should assess all these options to see which best fits our corporate objectives and implement a strategy to deliver the best outcome for us.
The future of pension provision
Evolution in DC and CDC offerings mean now is the right time to make sure the benefit we offer employees is delivering what is required to reward our colleagues and keep them engaged.
It’s now over a year since Royal Mail launched the UK’s first Collective Defined Contribution (CDC) scheme, covering c100,000 members. We believe this will be the first of many, particularly given that LCP’s modelling suggests that, where members are in a CDC scheme throughout, CDC schemes can deliver retirement incomes around 50% higher than traditional annuities on a like-for-like basis. With new regulations for multi-employer CDCs and an ongoing consultation for retirement-only CDCs, these innovative arrangements are likely to become increasingly mainstream.
As an employer, I would want to understand whether CDC could form part of a future-proofed pension offering for my workplace.
For most employers, DC pensions will continue to be the primary form of pension provision in the short to medium term
The Pension Schemes Bill 2025 introduced a range of reforms aimed at reshaping the DC landscape, with an emphasis on consolidation, investment in the UK and value-for-money for members. Employers may face new compliance obligations, governance requirements and potential disruption if providers cannot meet scale or value-for-money thresholds. Ensuring that DC arrangements remain robust and continue to deliver good member outcomes should therefore be a clear priority.
Finally for DB and DC, I would review whether the current trustee board composition remains fit-for-purpose in light of the sponsor’s strategic objectives and scheme’s circumstances
Doing so can support more efficient decision-making, cost savings and stronger sponsor-trustee relationships. Our latest research shows that over 50% of UK DB and DC schemes now have a professional trustee on their boards, reflecting the increasing complexity and strategic importance of pension decision-making.
In an environment marked by economic uncertainty and competing business pressures, it may be tempting to view pensions as a distraction rather than an opportunity. However, the developments of 2025 demonstrate that for sponsors willing to engage proactively, pensions schemes can meaningfully contribute to long-term corporate resilience and better outcomes for employees.
As we look ahead to 2026, the challenge (and opportunity) for company directors is to ensure pensions are not managed in isolation, but fully integrated into strategic decision making.
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