On your marks for a marathon year: Key actions for DB pension schemes in 2026

Action one: Review your endgame and keep up to date with developing options

2025 saw a burst of activity, with the government setting out its views on surplus release, DWP replying to the consultation on Options for DB schemes, TPR launching their DB options (endgame) guidance and a shiny new Pensions Schemes Bill which completed its passage through the Commons. The landmark Stagecoach transaction also provides further food for thought and demonstrates the pace of innovation in the endgame space. Options include:

Secure benefits with an insurer

We expect the market to remain intensely competitive. Insurers are putting a strong focus on enhancing member experience and are growing their post-transaction teams to ensure a smooth move to any future buy-out and wind-up. Our pension risk transfer report provides more detail.

Secure benefits with a superfund

Over 2025, we’ve seen momentum in the superfund market grow, with strong support from DWP and TPR, and three very different superfund transfers to Clara-Pensions totalling £1.4bn. TPT’s potential 2026 market entry will provide increased choice and we anticipate further market entrants over 2026.

Run on and surplus generation

The 2025 Pension Schemes Bill provides increased flexibility for well-funded DB schemes to release surplus on an ongoing basis to support sponsors’ investment plans and to benefit scheme members. Many are considering what this might mean for their schemes in preparation for the arrival of the secondary legislation (expected in 2027). This LCP analysis explored the financial case for running-on a DB pension scheme beyond buy-out affordability which could include use of a run-on framework, such as LCP Elevate.

Action two: Evolve your strategic journey plan to achieve your endgame objective

A clear, up-to-date journey plan helps navigate the route, making informed investment and funding decisions to anticipate challenges and capitalise on opportunities. We encourage trustees to check their strategic journey plan to capture the latest developments:

Funding and investment strategy

We are now over a year into valuations under the new funding regime, with several having submitted a valuation. Many more will have valuations over 2026, providing an excellent opportunity for trustees to engage with sponsors on their “funding and investment strategy” which needs to be set out in the new Statement of Strategy.

Covenant

We expect schemes that rely heavily on the covenant to support risk in their strategy will need to provide stronger evidence. This will include clearer conclusions on cash flows and future prospects. Trustees seeking independent specialist advice where covenant risk is lower will also need help, but in a proportionate and pragmatic way – our Streamlined Covenant Service can help.

Longevity assumptions

Understanding the longevity of your membership is key in making informed decisions about securing benefits or running on, particularly if sharing surplus. Our popular podcast series provides lots of food for thought on the development of longevity as well as broader demographics.

Virgin Media (Section 37)

The 2025 Pension Schemes Bill introduced legislation to give the ability to obtain retrospective actuarial confirmation that historical benefit changes met the necessary standards. The detail to be set out in guidance due in 2026 will be key to understand how this process will really work but we are hopeful that 2026 is the year that this issue can finally cross the finish line for many.

Action three: Assess your scheme governance

Good governance is the steady pacing that keeps a scheme moving forward. It is essential for effective decision-making and delivering the best possible outcomes for members. We anticipate the following key focus areas for 2026:

Own Risk Assessment (ORA)

This year, most will need to complete their first ORA which can be a powerful opportunity to reflect: Does your governance genuinely support your long-term objectives? Are we prioritising the risks that could derail those objectives?

An ORA done well goes beyond compliance. For practical insights, see our Made Simple Guide to Own Risk Assessments co-authored with Pensions UK.

Evolving trusteeship

Sole Trusteeship has continued its rapid rise, and 2026 looks set to be another defining year. With the DWP’s long-awaited consultation on trusteeship released just before Christmas, we expect the policy direction to accelerate several trends already highlighted in LCP’s Sole Mates 2025 report. As regulatory focus intensifies, the trustee model will be judged on its ability to deliver efficiency, accountability and diversity of thought.

Cyber risk

We expect to see cyber risk and the increasing use of AI to remain as a top priority for trustees to get to grips with, not least because 2025 saw a number of high-profile incidents making front page news and reinforcing the need to think “when”, not “if”. In our 2025 DB pension priorities survey, our clients told us that this remains the risk that worries them the most. You can use our helpful checklist to see how your scheme compares to TPR’s expectations.

Action four: Review your admin

Administrators serve as the primary day-to-day interface with members – the engine room that keeps the race going. High quality administration is essential to ensure members receive accurate, timely benefits and compliance with regulatory requirements. We expect the following to be key areas of consideration for 2026:

TPR oversight of administration

Following at least 12 months of engagement with 15 administrators, TPR has completed its market oversight review and is now actively encouraging the administration industry to lift overall standards. TPR has also been working with DWP on potential future models for the regulatory “supervision” of administrators.

TPR’s refreshed guidance published before Christmas increases the emphasis on being able to evidence that the right benefits are being paid to the right members, elevating data quality and benefit accuracy from an operational concern to a core governance requirement.

Data cleansing and GMP equalisation

Confidence in underlying scheme data and benefit calculations is fundamental. As a result, 2026 is likely to be another busy year for specialist pensions data and GMP equalisation teams, reinforcing the need for projects to be planned earlier and more deliberately to support your strategy – whether that is to insure, make use of a superfund or to run on, potentially sharing surplus.

Pensions Dashboards

Connection to the Pensions Dashboards ecosystem continues at pace, with over 80 million entitlements now connected. The statutory 31 October 2026 deadline is looming for those in scope, creating particular pressure for schemes that had expected to complete buyout beforehand that may now need to rethink their connection plans. With high entitlement coverage, a 2026 launch to the public is possible, but depends on testing progress. We expect a 2027 launch to be more realistic.

Action five: Consider member experience

At the end of the day, it’s all about the members and delivering their benefits. A positive member experience supports better understanding and engagement, reduces complaints and disputes, and helps ensure members can make informed decisions. It needs to be kept under review as the course evolves:

Artificial Intelligence

The use of AI in member communications has been gathering pace. What started with straightforward personalised videos to explain pension benefit statements is evolving rapidly. Hyper-personalised messaging and AI-generated avatars can present complex information in a way that feels intuitive and immediate, significantly strengthening member engagement. Tools such as LCP Transpose empower your audience to tailor their content experience to their needs. This technology is becoming increasingly accessible, and we expect to see the benefits of AI being delivered to members over the years ahead.

Collective Defined Contribution (CDC) schemes

We hope for real momentum behind CDC schemes over 2026. After years of discussion and phased legislation, the industry is ready for CDC to move from concept to more of a reality. This would mark a major step forward in offering members an alternative which could deliver more stable, predictable retirement outcomes without the greater cost risks of DB or the individual risk of traditional DC.

Inheritance Tax

Recent Budget and Finance Bill publications confirm important changes to how IHT will apply to unused pensions and death benefits from April 2027, placing additional burdens on administrators, trustees, and personal representatives, as more estates trigger IHT-related processes. We expect schemes will need to check administrators’ systems and processes; refresh death-benefit and executor communications; and update governance documents to capture the new IHT-related risks.