Current Issues December 2025

Budget – DB surplus

The government has confirmed plans to make it easier for well-funded defined benefit schemes to pay surplus directly to members over normal minimum pension age. From April 2027, trustees and employers will be able to agree lump-sum payments (where rules permit), with a reduced tax charge to replace today’s unauthorised payment barriers. Ministers say this will help members benefit from improved funding and encourage investment in the wider economy. The Society of Pension Professionals has long argued for one-off discretionary payments rather than long-term benefit commitments.

Budget – Salary sacrifice

From 6 April 2029, National Insurance relief on salary-sacrificed pension contributions will be limited to £2,000 a year per individual. Amounts above the threshold will attract standard employee and employer NICs, increasing costs especially for higher earners and sponsoring employers. The government estimates the cap will still protect most basic-rate taxpayers using sacrifice. Employers will need payroll changes in order to report totals and may wish to redesign contribution structures or sharing of NI savings ahead of implementation. Other salary sacrifice benefits are unaffected.

PPF consults on levy

The Pension Protection Fund has opened consultation on its 2026/27 levy, proposing a levy rate of zero for conventional schemes, subject to legislative changes progressing through the Pension Schemes Bill. The PPF argues its funding position and reserves support a nil levy, though it retains the option to reinstate charges if conditions deteriorate. It will continue an Alternative Covenant Schemes levy for superfund-type arrangements, with refinements next year and a broader methodology review planned to reflect market developments.

TPR warns on data quality

The Pensions Regulator has published a market oversight report warning that data quality is not a “one-off exercise.” While many schemes have improved personal data ahead of dashboards, improvement plans can be fragmented. Updated Scheme Member Data Quality Guidance consolidates expectations, stressing trustee accountability even where work is delegated. PASA has issued supplementary guidance and a Data Improvement Plan template to help trustees build auditable, ongoing data management processes. TPR will widen engagement in 2026 and may intervene where compliance is not demonstrable. TPR on Data Quality   PASA Data Guidance

PPF members to get capped increases

From January 2027, members of the Pension Protection Fund and Financial Assistance Scheme will receive CPI-linked annual increases on pre-1997 accruals, capped at 2.5% a year, but only where the original scheme rules provided such protection. The move follows growing concerns about erosion of older benefits and will improve outcomes for many members already in the safety net. The change sits alongside wider surplus reforms and is expected to be funded within existing PPF reserves.