Pensions Bulletin 2026/21

Pensions Regulator sets expectations for the use of artificial intelligence 

The Pensions Regulator (TPR) has published its AI plan setting out its initial expectations for the responsible use of artificial intelligence in workplace pensions.   

TPR states that adoption of AI in large segments of the pensions industry is now widespread and accelerating. TPR also cites a survey by Lloyds Banking Group that found that 40% of UK adults have used AI for financial planning (including pensions planning) in the past 12 months – with 23% of 25–30-year-olds trusting AI generated advice more than traditional sources.  

Beneficial uses of AI include personalised and targeted communications and guidance, as well as in administration where machine learning and data analytics automate routine tasks and improve fraud detection. However, TPR notes that there are risks as well, including members using AI for unregulated and potentially inaccurate financial planning and advice, and increased and more sophisticated cyber-attacks threatening system and operational resilience. 

TPR expects pension scheme trustees and managers to ensure that schemes are well run and deliver good outcomes, regardless of which technologies are being used. They remain accountable for decisions and outcomes even when they delegate activities. They need to understand where and how AI is being used by them or on behalf of them.  

TPR’s plan sets out specific expectations for good governance and data for trustees and scheme managers. Under the governance heading, areas covered include clear governance and accountability for the use of AI systems and technologies, rigorous testing, monitoring and risk identification, evaluation and control of such systems and preventing and responding to evolving AI-driven fraud threat. Under the data heading, expectations include a clear data strategy, high quality data, compliance with relevant data protection legislation, and understanding how AI models use and process data. 

TPR further expects trustees and managers to seek appropriate and proportional professional advice when considering or implementing innovations (and discuss these with TPR using its innovation service).  

TPR also recommends among other things, that trustees, administrators and other providers are transparent with scheme members and stakeholders about AI use where appropriate in order to build trust and confidence. 

TPR then sets out some features of its own AI workplan, including a case study showing that it already uses an AI enabled process to identify and take down fraudulent websites. 

TPR aims to publish guidance in 2026 for pension schemes on the responsible adoption of AI, after engaging with the industry on AI use in schemes and their supply chains. It also plans to develop metrics to measure safe AI adoption and AI-powered innovation across its regulated community for reporting in future years.

LCP launches its latest Accounting for Pensions report  

The theme of this year’s Accounting for Pensions report by LCP is “Surplus in the spotlight”, in part because of the increasing focus from the Financial Reporting Council on how companies are presenting pension surpluses in their accounts. 

The report sets out the accounting implications of various strategic options created by persistent surpluses, regulatory reform and recent market innovation, stressing the importance of companies carefully managing the market messaging around their chosen strategy. 

The report also takes a step back and looks at how over the past two decades pensions have moved from being a principal corporate risk to a much smaller balance sheet concern for most companies, and at what risks have replaced them – principally climate change and geopolitical risks, with macroeconomic risks still remaining prominent.  

Some of the other key findings in the report include: 

• The estimated aggregate surplus for UK defined benefit (DB) pension schemes sponsored by a FTSE100 company was £39bn as at 31 December 2025. This corresponds to an average surplus of over £550m for every FTSE100 company with a UK DB pension scheme. 
• Over 80% of FTSE100 companies with a UK DB pension scheme had a pension accounting surplus at their 2025 balance sheet date. 
• There has been a 95% reduction over the last 20 years in the number of FTSE100 companies who consider pensions a principal risk, with just three doing so in 2025. 
• 74% of FTSE100 companies considered climate change to be a principal risk in 2025 compared to just one company in 2005. 

FRC updates its Virgin Media guidance 

Following the Pension Schemes Act 2026 receiving Royal Assent in April 2026, the Financial Reporting Council has announced that it has made minor amendments to the Virgin Media guidance it issued in January 2026 (see Pensions Bulletin 2026/04), to “ensure clarity and alignment with the enacted legislation”. 

The finalised guidance makes some adjustments to the section that deals with where a confirmation is sought for a case which the actuary believes is outside the scope of section 102 (paragraphs 4.27-4.30), along with the linked Example 12. It now suggests that the actuary should caveat their confirmation, to the effect that it can only be taken as a formal confirmation if the case is within scope. 

The January guidance also included numerous legislative references within it which were ultimately out of sync with the finalised Act. These have all been adjusted – most notably, what had been expected to be a “section 101” confirmation by the scheme actuary (and section 105 in Northern Ireland), will in fact be given under section 102 (and section 106) of the Act. 

David Everett retires  

After over 20 years at LCP and nearly 45 years in the pensions business, LCP partner and editor in chief of our weekly Pensions Bulletin, David Everett, is leaving LCP at the end of this week to enjoy a well-earned retirement. Over his time at LCP, he has been instrumental to LCP’s reporting on more than two decades’ worth of regulatory developments, from the Pensions Act 2004 and Finance Act 2004 to the recent Pension Schemes Act 2026 and almost everything in-between. 

He has also been actively involved on various industry committees and policy working groups, most notably at the Association of Consulting Actuaries. Although David’s hands will shortly come off the tiller, LCP’s Pensions Research team will continue to produce the weekly Pensions Bulletin under the oversight of LCP Head of Pensions Developments, Jon Forsyth.  

We sincerely thank David for his hugely significant contribution to both LCP and the wider industry over the years and wish him the very best for a long and happy retirement!