This year is shaping up to be one of the most transformative years for the pension industry in over a decade. It’s following hot on the heels of 2025 when the Government set much of the groundwork for its pension reform agenda.
We’re braced for a wave of consultations, regulations and rules – from how schemes measure value and what they’ll look like in the future, to how individuals engage with their pensions.
With so much change ahead, EBCs and corporate advisers will have numerous opportunities to talk with employers and trustees to help them get ready for upcoming pension reforms.
This article will cover the biggest defined contribution (DC) pension topics of 2026, including:
Value for Money Framework
The FCA and TPR have published their latest joint consultation on the Value for Money (VFM) Framework, which closes on 8 March 2026. This will standardise the way trustees and Independent Governance Committees (IGCs) measure, assess, compare and rate their pension scheme default arrangements for value for money.
The consultation introduces several new measures from the previous 2024 consultation. The most significant are: the inclusion of 10-year forward-looking investment performance metrics, a reduction in the number of data points, an extended traffic light rating system from 3 to 4 ratings (red, amber, light green and dark green), and a new VFM database. VFM data will be fed into this central database to generate comparator data, enabling IGCs and trustees to carry out their assessments and assign an overall rating to their arrangement. Dark green will show particularly strong performance, light green will represent good value, amber for improvement, and red for not providing value.
Arrangements rated red and amber must be closed to new business, and both active employers and the appropriate regulator are to be informed of any improvements to amber rated arrangements to get them to green. Red rated arrangements will need to share their action plan with the regulator, which includes how IGCs or trustees intend to transfer members into a value rated arrangement, where this is in the members’ best interests.
The first assessments will start in 2028, based on data from the end of 2027. Collecting and assessing the data will be extensive work for IGCs and trustees, and some may decide to carry out an exercise to work out how their scheme’s default arrangements compares to the Framework metrics before having to do it ‘for real’ in 2028.
IGCs and trustees are likely to need support from their workplace advisers to carry out these early warning exercises and implement any actions. We’ll be writing a more detailed analysis of the Framework in the coming months.
Collecting investment data and performance fees
Also early in 2026, TPR and FCA will start collecting investment data for schemes’ main default funds – giving them a clearer picture of investment performance and how money is invested, including in the UK and private equity. This is expected to be a ‘sub-set’ of the data requirements under the VFM Framework required from the end of 2027.
Related to this, the FCA is planning to consult on the rules around the pension charge cap for contract-based pensions to allow performance fees to be outside the 0.75% cap. This will hopefully bring contract-based schemes in line with DWP rules for trust-based schemes.
Doing so will facilitate the Mansion House Accord objectives of pension providers making a voluntary minimum 10% allocation to more expensive private market assets.
Pension Schemes Bill and regulations
I’m optimistic that the Pension Schemes Bill could receive Royal Assent in Spring – hopefully by May. This will quickly be followed by a raft of DWP draft regulations on Mega Funds, the VFM Framework, default pension benefit solutions, small pots, and defined benefit surpluses, to name a few. These measures will transform the pensions market by 2030, each with a different start date as shown by the Government's indicative pension reform roadmap.
The Bill is an ‘enabling Bill’ which means the finer detail will be set out in regulations, so there are still a lot of unknowns. One of the biggest unknowns is how a main scale default arrangement will be defined and how flexible this definition will be when assessing against the £25 billion mega funds provisions. Will it be at the common investment strategy where the key decisions are made? I believe this is the right way forward to deliver on Government objectives, rather than set at the default arrangement fund level, or even at scheme level.
This will be a key market influencer and we’re looking forward to early conversations with the Government on this.
Contractual override
A key enabler for the Government’s consolidation agenda of reduced fragmentation and better member outcomes will be contractual override. The Bill includes a provision to enable this, but it’s the FCA which must make the rules, and we’re hoping the regulator will consult on these this year.
Contractual override will enable providers of workplace contract-based schemes to make changes to pension contracts and investment funds, and bulk transfers to better value schemes – without members’ consent. This is provided that a new ‘best interest test is met, and signed off by an independent third-party expert.
The Government has scheduled contractual override for 2028 according to its indicative roadmap, the same year as the first VFM Framework reports will be published.
Pensions Commission
Spring will see the Pensions Commission publish its ‘problem statement’ on pensions inadequacy and inequality, before working on its recommendations that are due to be published in Spring 2027.
I’m eager to hear what the Pensions Commission says about the Chancellor’s 2025 Budget announcement on capping National Insurance savings when using salary sacrifice to make pension contributions. This isn’t going to help solve the pensions adequacy conundrum!
Pension dashboards
Perhaps the most publicly visible milestone of 2026 will be progress on pension dashboards. By the statutory deadline of 31 October 2026, all pension schemes and providers will be connected to the pension dashboard ecosystem.
It’s possible that the MoneyHelper pension dashboard could go live before the end of the year, enabling millions to view all their pensions online in one place. This could be a huge step towards helping people understand how much they have across their pension savings, supporting them in their pension engagement journey. If it goes lives this year, the Government, regulators and pension industry – including EBCs and corporate advisers – will have to work together to promote the MoneyHelper dashboard and encourage individuals to engage with it.
Multiple employer and retirement collective defined contribution (CDC)
The multiple employer CDC regulations are now finalised and become effective on 31 July 2026, enabling interested firms to offer these new pension schemes. We await to see how this market will develop.
The DWP has recently consulted on retirement CDC and we expect it to push ahead with this, possibly publishing draft regulations before the end of 2026. The Government sees retirement CDC as a potential ‘default pension benefit solution’ which is required under the Pension Schemes Bill.
Trusteeship and fiduciary duty
It’s looking as though 2026 is going to be an interesting year for trustees too, both in terms of governance and fiduciary duty decision-making. The DWP is currently consulting on improving the standards of pension scheme trusteeship, as the role of trustees continues to evolve and expand. It’s looking at several measures, including possible accreditation for professional trustees, and ways to improve Board diversity.
Since there’ll also be larger, but fewer, pension schemes in the future – with most employers using multi-employer pension schemes – it’s consulting on how the member voice can be considered as part of trustees’ decision making.
The Government will once again be looking at fiduciary duty. It’s announced that it’ll be producing guidance for private trust-based schemes aimed at how they can interpret and apply their fiduciary duties when considering wider factors in investment decision-making, including systematic risks such as climate risks and members' standards of living.
Targeted Support
The FCA’s Targeted Support service is designed to plug a gap between holistic advice and generic guidance by offering ready-made suggestions to groups of individuals sharing common characteristics. This includes non-advised workplace pension members, particularly those saving in a contract-based pension scheme.
Firms which receive regulatory permissions will be able to consider offering support on adequacy, investment choices and ‘at and in’ retirement support, but not on consolidation. You can read more about Targeted Support, which is expected to go live in April, in Steven Cameron’s article.
UK Budget 2026
Despite all the speculation and hullabaloo, thankfully, the main pension tax rules remain unchanged after the 2025 Budget. But the big announcement was the capping at £2,000 of the salary sacrificed pensions contributions which qualify for national insurance savings. This won’t happen until 2029, so employers and pension scheme members can carry on using salary sacrifice to make pension contributions and qualify for full national insurance relief until then.
I really hope that the 2026 Budget won’t create the same level of speculation and uncertainty among pension savers and those running pension schemes. We’re calling on the Government to be clear that they won’t make retrospective changes to pension tax perks to try and stop people making decisions based on speculation which could be detrimental to their retirement plans.
Looking forward - what this means for EBCs and corporate advisers
The pace of change is going to be intense in the coming years. EBCs and corporate advisers will want to keep on top of 2026’s packed legislative and regulatory pension reform agenda and understand how the pension market is evolving.
There will be plenty of opportunities to support customers, both trustees and employers, to get them ready for the road ahead. At Aegon, we’ll continue to share our thinking as the year progresses.