Pensions Bulletin 2026/42

Price inflation and earnings figures set the scene for next year’s pension increases

On 20 October 2026 the Office for National Statistics released its latest earnings figures, confirming that average weekly earnings (total pay, seasonally adjusted, series KAC3) for the three months to July 2026 were 3.9% higher than a year earlier. The following day the ONS announced that the Consumer Prices Index (CPI) had risen by 3.5% over the 12 months to September 2026. Over the same period the Retail Prices Index (RPI) rose by 3.9%.

These announcements set the scene for the calculation of a number of pension increases next year. 

State pensions

The KAC3 figure above is ordinarily used by the Department for Work and Pensions to determine the earnings element of the state pension “triple lock”. Provided the triple lock policy continues to operate in full, the earnings element of 3.9% should determine the April 2027 increases, as it exceeds both the CPI figure of 3.5% and the fixed 2.5%. Therefore, subject to government confirmation, from April 2027 the full rate of the Single Tier State Pension, currently £241.30 a week, will increase to £250.70 a week, and the Basic State Pension will increase to £192.10 a week from its current £184.90 a week.

Additional State Pension entitlements under SERPS and S2P that are already in payment should increase by 3.5% in April 2027.

Occupational pensions

For DB schemes that use September CPI as a reference point and apply the Limited Price Indexation rules to pensions in payment, the statutory minimum increases to pensions in payment in 2027 should be 3.5% for pension accrued from 6 April 1997 to 5 April 2005, and 2.5% for pension accrued from 6 April 2005. These reflect the respective annual caps of 5% and 2.5%. GMPs accrued after 5 April 1988 should also increase by 3.0% in 2027, reflecting the statutory cap on the inflation linked increase.

For pensions in deferment, September CPI feeds into the statutory revaluation for pension in excess of GMP. The 3.5% figure will therefore contribute to the calculation of the cumulative statutory minimum, subject to annual caps of 5.0% for pensions accrued prior to 6 April 2009, and 2.5% for pensions accrued from that date. These caps are applied over the whole period of deferment, rather than separately each year, so the outcome for an individual will depend on how cumulative inflation compares with the applicable cap over the whole period of their deferment.

The above comments relate to statutory minima. Many schemes will have increases in their rules that are in excess of this and some will use different inflation reference months.

Pensions tax

For members accruing defined benefits or cash balance benefits, the September-to-September CPI is key to annual allowance calculations. The 3.5% increase in the CPI is effectively the inflation allowance made before the annual allowance starts to be used up in the 2027/28 tax year.

TPT Superfund passes TPR assessment

TPT Retirement Solutions (“TPT”) has announced that its DB superfund has successfully completed the Pensions Regulator’s assessment process, enabling it to bring the proposition to market and progress its first transactions. The announcement, made on 21 October 2026, follows TPT’s launch plans reported in Pensions Bulletin 2025/41 and means it is the second superfund to pass TPR assessment, after Clara (see Pensions Bulletin 2021/50).

Unlike Clara’s “bridge to buyout” approach, TPT’s superfund will adopt a long-term run on approach, with the potential for surplus sharing with members after 5 years.

TPT also says it has already secured the capital required to fund the first £1bn to £1.5bn of transactions, which it anticipates will be sufficient to support a number of deals, subject to scale, transaction approval and market conditions.

PPF broadens its climate risk analysis

The Pension Protection Fund has published its Sustainability Report 2025/26, bringing together its investment stewardship, climate change reporting and corporate sustainability activity. This is the PPF’s second combined report (see Pensions Bulletin 2025/43).

The report highlights broader climate analysis and stronger stewardship oversight since the PPF first published a dedicated sustainability report in 2020/21. Carbon-footprint metrics now cover 82% of Fund net asset value, compared with around 30% in 2020/21, while its transition and sustainable assets analysis now extends across all asset classes.

The PPF reported engagement with the 99 companies in its Climate Watchlist of the biggest carbon emitters in its portfolio, highlighting its focus on driving better climate disclosure, target-setting and transition planning.

A new physical climate risk analysis finds that companies representing 31% of the PPF’s equity portfolio by asset value could face at least one potentially severe physical hazard today. The PPF cautions that exposure does not automatically translate into financial impact, but helps identify where to prioritise its stewardship activities.

The PPF’s priorities for 2026/27 include a focus on higher-risk and higher-impact assets, clearer expectations around credible transition planning, and improved use of data and technology.

PDP progresses daily data operational reporting for Dashboards

The Pensions Dashboards Programme (PDP) has published draft version 2.3 of its reporting standards that set out the technical requirements for submitting daily data. This concerns the timetable for routine operational reporting to the Money and Pensions Service (MaPS) rather than the core dashboards data duties themselves (see Pensions Bulletin 2026/25). As a result, this will be of most interest to third-party connection providers who manage the implementation, although as PDP notes, it is ultimately trustees and scheme managers who remain responsible for compliance.

The reporting standards set out requirements for generating, recording and reporting operational information to the Money and Pensions Service and PDP does not expect further substantive changes to version 2.3 ahead of approval. Once approved, it is intended to apply from 1 March 2027, and will become the new legally binding version of the reporting standards, replacing version 2.0. However, PDP states that it expects directly connected organisations to work to implement the new daily reporting requirements ahead of this mandatory deadline.

The PDP has also requested that the data previously required to be collected under version 2.0 and made available to MaPS on request, now be reported to MaPS as a monthly manual report. The PDP has produced guidance setting out what must be provided and how and expects to continue ad hoc requests for coverage data in parallel until 1 November 2026.

PASA publishes toolkit on resolving Dashboards possible matches

The Pensions Administration Standards Association (PASA) has published “Resolving Possible Matches – FAQ Approach” to help pension schemes, providers and administrators resolve “possible matches” generated through the Pensions Dashboards ecosystem.

The guidance sets out a practical, principles-based approach to handling cases where it is not clear whether a pension record belongs to the individual making the enquiry. It emphasises proportionate identity verification, consistent case handling and robust fraud prevention, while ensuring pension information is not disclosed inappropriately.

PASA recommends establishing clear contact routes, triaging enquiries promptly and preparing for potentially significant contact volumes. Schemes, providers and administrators should assess the evidence against their matching criteria, rather than relying solely on an individual’s confidence that a pension is theirs. Existing identity verification standards should apply, with additional checks where necessary. Unresolved cases should also be kept under review.

The toolkit is intended to evolve to reflect emerging good practice and PASA recommends it is read alongside its Data Matching Convention Guidance (see Pensions Bulletin 2025/28).