Pensions Bulletin 2026/04

FRC publishes its Virgin Media guidance for scheme actuaries

As promised in October 2025 (see Pensions Bulletin 2025/40), and ahead of the finalisation of the Pension Schemes Bill (see article below), the Financial Reporting Council has published non-mandatory guidance intended to assist scheme actuaries in considering whether to provide what amounts to a retrospective confirmation for past rule changes in order to resolve any Virgin Media uncertainties. 

Under what is intended to be section 101 of the Pension Schemes Act 2026 (and section 105 for Northern Irish schemes), the scheme actuary can be invited by the scheme’s trustees to consider whether a rule change made in the past to a then contracted out scheme would not have prevented the scheme from continuing to satisfy the reference scheme test that operated at the time the rule change took place. 

The guidance includes helpful clarification of most of the key terms in the Bill clauses, including most importantly what should be interpreted by “reasonable to conclude” and “continuing to satisfy”, as a result of which the section 101 confirmation may not be as onerous as the original test, set out in Regulation 42 of the 1996 Contracting-out Regulations. 

The guidance sets out an approach to the work that encourages the scheme actuary to only do what is necessary to give the confirmation, which in some cases may be relatively straightforward. For those cases where further information may be needed, the guidance examines what information might be sought, always seeking a proportionate approach, but acknowledging that in some situations quite detailed information may be needed. It concludes with some professional and ethical considerations from the Institute and Faculty of Actuaries.  

The FRC says that the guidance has been published ahead of Royal Assent in order to “give actuaries sufficient time to prepare” and that it may be updated as the Pension Schemes Bill progresses through Parliament. 

The Pensions Regulator will also be issuing guidance in Spring 2026 which it is intended to support trustees as they navigate this issue. 

House of Lords expresses concern over implementation of IHT on unused pension funds and death benefits

The House of Lords Economic Affairs Finance Bill Sub-Committee has published its report on two aspects of the Finance Bill, one of which concerns the inheritance tax measures that are to apply to unused pension funds and death benefits for deaths on or after 6 April 2027. (The other relates to reforms to agricultural and business property reliefs). This follows the launch of the Sub-Committee’s inquiry into these two matters in September 2025 (see Pensions Bulletin 2025/38). As before, the Committee’s focus is on how the Government’s tax policy can best be implemented and administered, not whether inheritance tax should be extended to such pension benefits.

At the beginning of its lengthy report, there is a summary of conclusions and recommendations, running to 136 paragraphs. There are too many recommendations to list, but they cover the following: 

• IHT deadlines – where, amongst other things, there is a call for the six-month IHT payment deadline to be extended to 12 months for IHT on pension assets for a transitional period, so that personal representatives have a more realistic timeframe in which to meet their IHT liability while pension scheme administrators update their processes. 
• Burdens on personal representatives – in which a number of detailed recommendations are made reflecting the concern the Committee has on this new burden being faced by personal representatives. Interestingly, the Committee says that the Government should not prioritise an April 2027 start date over getting the policy and the processes right.  
• Complexity and ability to access professional advice – where there is concern about the new risks being faced by professional personal representatives, some of whom may be leaving the market as a result. 
• Awareness, preparation and need for guidance – a communication campaign is requested to make individuals aware of the change to IHT their estates will face and to assist personal representatives with step-by-step guidance. 
• Wider implications – the Committee is concerned about an unintended adverse impact on pension saving and early pension withdrawals of the IHT measure and calls on the Government to monitor any changes in member behaviour, to identify any wider impact of the IHT measure on people’s attitudes to investing in pensions to save for their retirement, consider whether further changes are needed to provide greater parity in IHT treatment of particular types of pension benefit, regardless of the status of the member at death, and consult further in 2026 on the IHT impact on pension benefits payable to financial dependants on an early or unexpected death, and consider possible mitigations to ensure that pensions continue to protect dependants in such cases. 
• Consultation – where disappointment is expressed at the narrowness of the scope of the consultations undertaken and the unwillingness to engage with alternative approaches suggested by stakeholders. It is suggested that the Government undertake a lessons learned exercise to identify what it could have done differently and what it should do in the future when announcing significant changes in tax policy. 

House of Lords dissects the Pension Schemes Bill 

The House of Lords has now tackled, in Committee, a reasonable chunk of the Pension Schemes Bill over five sittings starting on 12 January, with the most recent sitting taking place on 26 January. When this had concluded, the Committee had completed its examination of the first 39 clauses of a currently 123-clause Bill, i.e. addressing the new provisions relating to Local Government Pension Schemes, the new powers to pay DB surplus to employers and two of the six DC topics (value for money and small pot consolidation). The discussion on 26 January was solely on the scale and asset allocation provisions, the third DC topic, which took over four hours and remains to be completed. 

Across all five sittings so far, there appears to be nothing said from the Government side to suggest that any further changes are under consideration in relation to the topics discussed, or that there will be any slippage in intended implementation timescales.  

Regulator encourages trustees to engage with the value for money consultation

Following the launch of the value for money (VFM) consultation on 8 January 2026 (see Pensions Bulletin 2026/02), the Pensions Regulator (TPR) has written a blog to encourage trustees to respond to it.

TPR makes clear that it has worked closely with the FCA and the DWP in developing the VFM Framework because it will apply across both contract-based and trust-based DC schemes, regardless of size, with the intention that all DC savers benefit from strong value and robust oversight. And since it will apply to trust-based DC schemes, that is why TPR states it is important that trustees respond in order to help TPR “get it right”.

The blog goes on to summarise the main proposals of the consultation and also links to TPR’s high-level and relatively brief overview of the Framework with a focus on how it is intended to apply to trust-based schemes.

PDP writes on data preparation

The Pensions Dashboards Programme (PDP) has published guidance for pension providers and pension scheme trustees on what they need to do to prepare their data for connection to the central digital architecture. 

The guidance signposts the data standards expected and explains that there are two types of data schemes will work with: “find data” (used to match members to their records, including identifiers like name, date of birth and National Insurance number) and “view data” (the information displayed to members, including pension values and benefit status). 

The PDP emphasises that schemes need to decide which data elements to use to match people to their pension records; and that either a “definite match” or a “possible match” must be returned depending on the data matching criteria in places. There is also a reminder of the time limits for returning view data.