For individuals there’s reason to be hopeful, but also careful. The Pensions Commission will take centre stage, tasked with addressing questions of adequacy and fairness while setting a path for sustainable retirement outcomes. This is a rare chance to be bold and ambitious about the future. Alongside this, the Pension Schemes Bill will become an Act. Reforms focussed on scale, value for money, and consolidation will be introduced. These changes aim to create larger, better governed schemes and unlock the potential of sharing over £100 billion in surplus DB capital. Meanwhile, the rise in state pension age to 67 from April 2026 may widen planning gaps, making workplace and personal pensions more critical than ever.
“At the same time, inclusion and diversity will shift from aspiration to expectation, requiring schemes to design default retirement solutions that work for the majority. Perfection must not hinder progress. Both DB and DC scheme designs are likely to evolve, and the growing interest in CDC innovations seen in 2025 will carry into the next year.
“Through all this, a defining challenge will be demographic resilience. Longer lifespans and shrinking working age populations will demand innovative strategies that balance sustainability with security. While 2026 will not be without tough choices, continuing to invest in steps that support sustainable future promises offers hope for a more robust and equitable pension system.”
Commenting on her hopes for 2026 for DB pension schemes, and reflecting on 2025, Laura McLaren, Head of DB Scheme Actuary Services, Hymans Robertson says: “2025 was another landmark year for the UK DB pensions industry. Stronger funding positions, a broader range of strategic options, and the Pension Schemes Bill have reshaped the landscape at a remarkable speed. As the focus shifts away from repairing deficits, schemes are embracing new opportunities for growth and innovation. Although these opportunities also bring fresh challenges that must be carefully managed.
“2026 is set to be the year we see how policy and market shifts begin to shape strategy across pension schemes, and whether they translate into meaningful change. We expect many schemes will reassess long-term objectives. They may take a purposeful pause to ensure schemes are moving in the right direction in an endgame environment that is more flexible than ever, from run-on strategies and insurance, through to superfunds, and other emerging solutions. Underpinned by a growing focus on delivering the best outcomes and experience for members. The new funding code will raise the bar, driving deeper conversations on long-term plans. We’ll also see more action as trustees move towards implementing plans.
“In the insurance space, innovation looks set to continue. At the same time, alternative solutions are gaining traction with fresh models, providers, and clarity under the Pension Schemes Bill. We believe surplus-sharing will gain momentum, boosted by Budget reforms enabling tax-free payments to members. This will be a game changer for negotiations. Vitally, legislative clarity and detailed guidance is necessary as schemes navigate this evolving environment and turn opportunity into action. We are hoping to see this detail continue to take shape.”
Looking back on the DC landscape in 2025, and hopes for the year ahead, Kathryn Fleming, Head of DC Consulting, Hymans Robertson, says: “2025 has been a year of innovation and momentum for DC pensions, defined by significant policy developments and industry collaboration. The introduction of the Pension Commission provided a positive focal point for tackling adequacy. Meanwhile globally inspired changes, through the Pensions Bill, like megafunds, began reshaping the landscape. Opportunities for creative pension solutions, like surplus sharing from DB to DC to support adequacy are emerging too. We saw CDC progress towards multi-employer and retirement-focused models, and the Pension Dashboard achieved major connectivity milestones. Despite policy uncertainty and tax concerns influencing member behaviour, innovation thrived, with launches like Aviva’s Guided Retirement and NEST’s decumulation solution signalling a new era for retirement incomes.
“Looking ahead, we anticipate decumulation will continue to evolve, with big data and global learnings shaping new approaches. Regulatory green lights will allow for new CDC schemes, and targeted support permissions, enabling schemes and providers to do much more for savers. Consolidation trends will accelerate as flows from own-trust to master-trust continue, reinforcing VFM. Across stakeholders, priorities should include trustees defining decumulation objectives and pursuing member-centric decumulation solutions, regulators providing clarity on potential rule relaxations to allow targeted support to flourish, and employers focusing on improving retirement outcomes through segmented communications and refreshed contribution designs, blending short and long-term savings.”
|
