Pensions Weekly Update: 16 July 2026

Here is our weekly summary of key legal and regulatory developments relevant to occupational pension schemes that you might have missed, with links for further information.

The Department for Work and Pensions (DWP), HM Revenue and Customs (HMRC), The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have published a flurry of consultations and papers to keep the pensions industry busy over the summer period. Below are links to those documents. We look at some of these in more detail in this update.
The government has updated its pensions roadmap. This provides a detailed timeline for the implementation of the measures introduced by the Pension Schemes Act 2026 (PSA26). Some of the timescales have moved since the original roadmap. Expected timings for full implementation of the key provisions in the PSA26 are now: 6 April 2027 (release of surplus); March 2028 (FCA contractual override in place); March 2028 (VFM – first schemes to submit data); April 2029 to June 2029 (Retirement Collective Defined Contribution (CDC) – first schemes to be authorised); July 2029 to September 2029 (guided retirement – master trusts and FCA regulated workplace schemes to be compliant (note later July 2030 date for those offering retirement CDC default pensions)); April 2030 (consolidation of small pots begins); April 2030 (DC master trusts and group personal pension schemes to have £25 billion of assets in default fund, transitional period starts for schemes with £10 billion or more) and April 2035 (transitional arrangements for DC scaling up to £25 billion of assets ends). Also of note is that the DWP plans on publishing for consultation fiduciary duty and investment decision-making guidance between July 2026 and September 2026, with the final guidance being published between January 2027 and March 2027. In relation to the DWP’s response to consultation on pension trusteeship, this will be published “in due course”.
The DWP has issued a lengthy consultation on draft regulations and draft FCA conduct of business rules relating to the new VFM framework. Consistent with earlier consultations, it is proposed that the VFM requirements will initially apply to pension savings in accumulation in default and quasi-default DC arrangements within workplace schemes, but this will be extended in due course. Although the first VFM assessments are scheduled for 2028, a phased approach to implementation is now planned, starting with larger schemes (i.e. DC master trusts, single employer trusts with more than 50,000 active and deferred members, as well as non-bespoke multiemployer contract-based arrangements open to new employers). Full assessments for other schemes will begin in 2029, although data returns will still be required in 2028. As a result of the phased implementation, the application of consequences attached to red and amber ratings would be delayed until 2029. Consultation closes on 1 September 2026.
The DWP has issued a short policy paper on principles for guided retirement. The broad aims are to reduce the complexity and risk for members, and improve the sustainability of retirement incomes. Although the principles are largely based on member inertia, members would still need to give consent at the point of accessing their pension via the default option (but would not be required to consent multiple times if a default pension includes different phases, such as a “flex then fix” approach). Individuals will still have the freedom to make their own retirement choices. The DWP has also issued the findings of its research on DC pension decumulation and decision-making, which may be interesting to trustees and pensions professionals engaged in designing decumulation strategies or member communications.
The DWP is consulting on changes to the general levy. The general levy recovers the funding provided by the DWP to TPR, The Pensions Ombudsman and some pensions related functions of the Money and Pensions Service. The DWP sets out its revised plans to recover the current levy deficit in a way that avoids substantial levy increases over a short period. It also proposes to revise the amounts payable by different scheme types to reflect the concentration of regulatory effort. For the three-year period from 2027 to 2030, schemes would see an increase of between 5% and 9% per year, depending on scheme type, with the larger increases applying to master trusts and personal pension schemes. Alongside this, modest and predictable annual increases would be applied. Consultation closes at midday on 8 September 2026.
HMRC has published VAT notice 700/17. This provides some further explanation around the updated guidance that HMRC published in relation to the deduction of VAT by employers on the management of pension fund assets. Our weekly update of 24 June 2026 provides more information. The VAT notice clarifies that an employer of a defined benefit (DB) scheme can reclaim all VAT incurred in relation to the management of the scheme, including where a provider’s invoice covers both administration and investment costs, provided the employer contracted for the services, as evidenced by an invoice made out to the employer. Wording in the VAT guidance manual notes that this can include the scenario where the invoice is “c/o” the employer. The VAT notice says, “You should hold tax invoices made out in your name. If the trustees pay for the supplies on your behalf, you should arrange for the suppliers to make out the invoices in your name.” However, if the employer is reimbursed by the trustees or charges them for costs incurred in managing the pension scheme, the employer cannot charge output tax. This is because these costs are treated as business costs. There is no longer any apportionment between the trustees and employer of dual use of costs. If there is a corporate trustee, VAT grouping with the employer continues to be an option. The 30/70 split is no longer in use. Likewise, the tripartite agreement is no longer in use. (See our weekly update of 25 June 2025 for an explanation of the 30/70 split and tripartite agreements).