Pensions Bulletin 2026/12

Pension Schemes Bill – Lords oppose mandation

The Pension Schemes Bill has completed its Report Stage in the House of Lords with the last two sessions held on 19 and 23 March 2026 bringing defeat for Government proposals in a continuing demonstration of the Lords’ opposition to any form of mandation around pension scheme asset allocation. 

Following on from the peers, in the session held on 16 March 2026, voting to limit the scope of regulations in relation to the Local Government Pension Scheme (LGPS) so that they could not tell the LGPS to invest in particular assets, asset classes or locations of investment, on 19 March 2026 the Lords passed numerous amendments, nearly all of which, when taken together, seem to strip out the mandation requirements and references to them as they relate to certain DC occupational and group personal pension schemes. 

In a more surprising move, on 23 March 2026 the majority of Lords declined to accept into the Bill the new clause proposed (see Pensions Bulletin 2026/10) to enable statutory guidance on certain investment matters promised in December 2025 by the Pensions Minister Torsten Bell (see Pensions Bulletin 2025/50) to be delivered. The debate makes it clear that reasons for opposition to the proposal included concerns that it could operate counter to decisions about investment remaining with trustees (with their duty to act in the best interests of their members), with Baroness Stedman-Scott even positing that the amendments “risk opening the door to mandation by the back door”. 

The 23 March 2026 session also saw three other defeats for the Government in unrelated areas. 

Many other of the proposed Government amendments have been accepted into the Bill at Report Stage, including those related to the establishment of a new public sector scheme into which the current AWE scheme will be transferred, extending the default benefit solution requirement for DC schemes to also be available to deferred members, modifications to the new pre-1997 indexation requirement to clarify how these apply where pre-1997 indexation only applies for the purposes of removing GMP inequalities, and to enable the Pensions Regulator to issue a Code of Practice in relation to the scale and asset allocation (see Pensions Bulletin 2026/10) 

We now move on to the Bill’s Third Reading which is scheduled to take place on 26 March 2026, after which the Bill will return the House of Commons for it to consider the Lords’ amendments. 

Commons reject Lords’ amendments to pensions salary sacrifice Bill 

On 23 March 2026, the House of Commons rejected all the amendments to the National Insurance Contributions (Employer Pensions Contributions) Bill passed by the House of Lords (see Pensions Bulletin 2026/10). Notably, this included raising the £2,000 cap to £5,000 and excluding basic rate taxpayers from the measure. The Bill now returns to the House of Lords as the first step in “ping-pong” between the two Houses until consensus is reached. 

PPF Levy rules published 

Following the zero-levy announcement in February 2026 (see Pensions Bulletin 2026/09), the Pension Protection Fund (PPF) has now published the final levy rules for 2026/27. As expected, the PPF has decided to publish an abridged 13-page Determination (compared to the 60 plus pages in the past years), together with appendices and guidance material for alternative covenant schemes only.  

Schemes may also find the PPF’s FAQs published with the announcement in February 2026 useful, in particular the summary of information that schemes will no longer need to provide and the reminder to download from the insolvency risk portal any information they would like to keep before it closes on 1 April 2026. 

TPR updates its Master Trust capital reserving requirements 

The Pensions Regulator (TPR) has updated its guidance for Master Trust capital reserving requirements and highlighted this with an accompanying blog.

The Master Trust reserving requirements are complex and are set out in some detail within the Occupational Pension Schemes (Master Trusts) Regulations 2018 and TPR’s Code of Practice 15 on authorisation and supervision of master trusts. The requirements include guidelines around allowing schemes to use a portion of their future revenues to offset against their total reserving requirement, expectations around ensuring a Master Trust has sufficient access to liquidity and expectations around taking into account other reserving requirements imposed by other regulators.  

While reiterating the expectation that Master Trusts will be well run and well governed, the general direction of the guidance is probably best summed up by these quotes from the blog: "…we want to strip back unnecessary regulatory burden so that schemes can free up capital for productive use and focus on delivering the best possible outcomes for members" and “this guidance is an important signal of our commitment to help reduce unnecessary regulatory burdens and drive growth in the interests of savers.” 

The guidance sets out an "overview and current position" and "TPR expectations and clarifications" under three broad headings:

• Offsetting revenues: When the guidance was introduced, it noted that “for most schemes an offset above 20% of financial reserves is likely to be significant”. TPR now states that it is comfortable with schemes offsetting more than 20% of reserves. However, where schemes seek to do so, TPR expects evidence or modelling to support this. TPR also clarifies some other aspects of its expectations around this. 
• Liquidity: TPR notes that whilst the Master Trust Code of Practice indicates that a Master Trust should hold cash, or near cash, assets of at least 15% of the calculated financial reserves, TPR now accepts that in certain circumstances holding a lower level of cash may be acceptable and sets out these circumstances and associated safeguards. 
• Allowance for other regulatory regimes: TPR clarifies how reserve funding required by another regulator can be taken into account for the Master Trust requirements and gives examples of structures and arrangements it is likely to agree. This will be on a case-by-case basis and TPR encourages schemes to talk to their TPR supervisor should they wish to explore this. 

This announcement follows an update from TPR in December 2025 (see Pensions Bulletin 2025/51).

PRAG finalises pensions SORP

The Pensions Research Accountants Group (PRAG) has finalised and released its Statement of Recommended Practice, Financial Reports of Pension Schemes 2026 (2026 SORP).

The 2026 SORP is effective for all accounting periods commencing on or after 1 January 2026 and follows the consultation last year that concluded on 17 September 2025 (see Pensions Bulletin 2025/25).