Pensions Bulletin 2026/20

Pensions Commission fires a warning shot 

The second Pensions Commission, set up in 2025 (see Pensions Bulletin 2025/29), has published its interim report Pensions 2050: Evidence and Future Priorities.

The report does not make recommendations. Instead, it sets out the evidence gathered so far and identifies the main areas the Commission expects to examine before making final recommendations to the government in Spring 2027.

The central theme is that auto-enrolment has been successful in increasing pension participation, but that current saving levels and coverage are unlikely to deliver adequate retirement incomes for many future retirees. We set out some of the key issues explored below. 

Undersaving remains the central concern 

43% of the working age population (15 million people) are undersaving, rising to 46% for ‘Generation X’, compared to slightly lower shares among earlier and later cohorts.  

The position could be worse under less favourable assumptions about future state pension uprating, with the proportion undersaving rising to 45% of those retiring in the 2020s and 54% for those retiring in the 2050s. 

The Commission also looks at adequacy through minimum income measures. On the Pensions UK Minimum Retirement Living Standard (£13,400 pa for a single person), around five million people are projected not to be able to afford the basic minimum. 

Auto-enrolment has been only a partial success 

Around nine in every ten eligible employees are now members of a workplace pension.  However, around a third of eligible private sector employees have only auto-enrolment minimum contributions, rising to half of the lowest paid employees. Where there is additional saving, this is frequently because employers calculate pension contributions using total pay rather than qualifying earnings, while often using the same 8% marginal rate.   

Participation gaps remain 

Four million employees are outside auto-enrolment because of age or earnings thresholds. The self-employed remain the most obvious gaps in the system; only 17% of them are saving into a pension, falling to 4% for those whose only income is from self-employment. 

The report also highlights persistent gaps affecting women, carers, people with disabilities and some ethnic minority groups, noting that the private pension gender gap remains material. 

Decumulation 

The report is notably concerned about decumulation, stating that the pension freedoms changed the role of DC saving by giving individuals much greater flexibility, but also much greater responsibility. The Commission is concerned about full cash withdrawals, early access to tax-free cash and withdrawal rates that may run down pension pots too quickly. The report links this to current policy developments, including targeted support, collective defined contribution and guided retirement. 

IHT on pensions – HMRC consults on information sharing regulations 

Following on from the technical note published last week (see Pensions Bulletin 2026/19) HMRC has published draft information sharing regulations for technical consultation. 

The Finance Act 2026 brings most unused pension funds and death benefits into a person’s estate for Inheritance Tax (IHT) purposes for deaths on or after 6 April 2027. These draft regulations set out necessary changes to the 2006 Provision of Information Regulations (the 2006 Regulations) to allow for the new information that pension providers and personal representatives will need to share with each other and with pension beneficiaries and HMRC as a result. 

The draft regulations start by introducing a whole host of new definitions, the majority of which cross-reference the changes made to the Inheritance Tax Act 1984. They then extend the 2006 Regulations covering the annual Event Report that the Scheme Administrator (SA) must make to HMRC to include information about death in service payments. 

The draft regulations then go on to adjust and extend a number of the information exchange requirements between various parties, including the following: 

• Amendments to require confirmation of the amount by which a beneficiary’s entitlement to the lump sum death benefit was reduced because the SA paid IHT under the new provisions, as set out in a payment notice from the personal representative (PR) – both by the SA to the PR and by the PR to HMRC. 
• Extensive new information that will need to be provided by SAs and insurance companies to PRs and beneficiaries to enable them to comply with the new provisions and the timescales within which these details must be provided. This includes information to be provided on any “excluded benefits” (those that will not come into scope for IHT) to be paid, information where a withholding notice is given by the PR to the SA and the form of the confirmation the SA must make to beneficiaries and PRs when an IHT payment is made by the SA.  

Finally, the draft regulations amend the separate Electronic Communication Regulations 2006 to require this information, along with information on the other reportable events, to be provided electronically. 

Consultation closes on 11 June 2026.

Pensions Regulator tells DB and hybrid schemes to get value data ready for dashboards 

The Pensions Regulator (TPR) has launched a new regulatory initiative aimed at private sector DB and hybrid schemes, warning them to act now to ensure their “value data” – ie accrued and projected pension values, including an Estimated Retirement Income (ERI) – is ready ahead of the 31 October 2026 pensions dashboards connection deadline. 

TPR said that “data readiness goes beyond matching people to their pensions. Schemes need to be ready to return the correct values to members”. This is a particular concern for DB and hybrid schemes, which do not have the same extensive annual benefit statement requirements as DC schemes for the DB benefits that they provide, meaning their value data is more likely to be out of date. 

The initiative will look at 240 private sector DB and hybrid schemes and will focus on whether they are able to provide accurate, up-to-date values within the statutory dashboards timescales. TPR notes that around 2,600 schemes are required to connect by 31 October 2026, including around 2,000 private sector DB and hybrid schemes, and says the findings from this work will help inform discussions on the timing of the MoneyHelper dashboard launch (currently expected to be in 2027/28 according to a recent speech made by the Money and Pensions Service, although an update on launch plans is expected around the time of the October connection deadline). 

TPR also highlights the potential harm to members that could be caused if value data is not accurate and current. It says value data should generally be recent, within the last 12 to 13 months, and that recently calculated values may need to be returned within a few seconds. Where a fresh calculation is needed, values must be returned within three days for DC pensions or 10 days in other cases.