UK Pensions: What’s New This Week? - May 11, 2026

Welcome to your weekly update from the A&O Shearman Pensions team, covering all the latest legal and regulatory developments in the world of workplace pensions.

Summary

• TPR’s latest Annual Funding Statement focuses on endgame planning and current risks, and provides guidance on employer covenant, supportable risk and low dependency.
• TPO sets out plans to continue efficiency drive and encourage earlier settlement of disputes.

TPR publishes annual funding statement 2026

The Pensions Regulator (TPR) has published its latest Annual Funding Statement (AFS), reporting on current DB funding levels and setting out its analysis and expectations. The AFS is particularly relevant for schemes with valuation dates between September 22, 2025 and September 21, 2026, but also sets out key information for trustees and sponsors of DB schemes more generally.

What are TPR’s key messages in the AFS?

• DB funding levels continue to be positive, with an estimated 90% of schemes in surplus on a technical provisions basis and 60% on a buy-out basis (both as at December 31, 2025).
• TPR expects most schemes in this tranche to be shifting their focus from deficit recovery to endgame planning.
• Experience to date supports TPR’s estimate that around 80% of schemes are likely to be able to meet the Fast Track approach for valuations if they choose that option.
• As funding positions improve, valuations are becoming a strategic tool to develop or refine endgame plans and assess progress against long-term objectives. TPR emphasises that statements of strategy are ‘live’ documents that evolve between valuations and should drive the valuation process rather than being a by-product of it.
• Trustees should remain alert to wider economic and geopolitical uncertainty; continued volatility could influence scheme funding positions. Trustees should understand the potential impact of ongoing macroeconomic uncertainty on investment strategies and employer covenants and ensure that robust operational processes are in place to enhance scheme resilience to market shocks and to reduce risks to acceptable levels.

The AFS also highlights the potential impacts from cyber incidents and climate change/wider sustainability issues, including transition and physical risks, as matters for trustees to understand and monitor.

Appendices to the AFS provide important clarifications on: (a) assessing and monitoring the employer covenant; (b) assessing supportable risk, including how to treat surplus, asset-backed contributions and collateral; and (c) the low dependency funding basis and low dependency investment allocation.

TPR is not proposing any changes to the Fast Track parameters published in November 2024, but notes that market conditions have changed and that it may make updates to the parameters for the next tranche of valuations. It also notes that it is reviewing other matters, including the definition of low-risk schemes for statement of strategy purposes and how this applies to schemes that have a buy-in covering all members. Amendments, clarifications or additional guidance may follow.

TPR will shortly publish a statement providing ‘early views’ on the issues trustees should consider around surplus release, alongside the government’s consultation on regulations under the new Pension Schemes Act provisions. More detailed surplus guidance will follow, to accompany the final regulations which are expected to come into force in 2027.

Read the statement, accompanying analysis and press release.

TPO publishes 2026/27 corporate plan

The Pensions Ombudsman (TPO) has published its corporate plan for 2026/27. The report highlights higher levels of closed cases, though demand for TPO’s services continues to increase. The plan sets out steps TPO will take to achieve its strategic objectives of enhancing efficiency in service delivery and increasing control over the number of complaints received. A key focus is increasing awareness of the changes TPO has introduced around scheme-level dispute resolution, encouraging schemes and members to resolve complaints earlier, without needing to come to TPO. As part of this, TPO intends to enhance stakeholder engagement, with a particular focus on large public and private sector schemes and notes it ‘will continue to work closely with organisations such as TPR to improve pension schemes’ own internal dispute resolution processes’.

Read the corporate plan and TPO’s press release.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.