Episode 80 – Aon Retirement Podcast – September 2026

Hello and welcome to the Aeon Retirement and Investment Podcast. I'm your host for this episode, John Harney. And there's a real back to school feeling in the air right now, isn't there? So, we thought that it would be a good idea to focus our minds on those pensions reforms, roadmaps that we heard about back in July, and think about what they actually mean for your current action plans, as well as, of course, your long term pension strategy. But before we dive into all of that, let's catch up on the latest pensions and investment news. Starting with an old favourite of ours when it comes to pensions news and that's pensions dashboards. The pensions administration standards association has published new interim guidance to help administrators, providers and service centres respond clearly and consistently to member enquiries about pensions dashboards. A guidance sets out a practical series of frequently asked questions and suggested responses for use when speaking with members about dashboards, including who pensions dashboards are for, what information they will show, and how it's saved their data will be protected. Turning to inheritance tax changes, final regulations have been published following consultation that amend the pensions provision of information regulations that are very important for the changes to inheritance tax on pensions due to come into force from 6th April 2027. The regulations require pension providers and personal representatives to share certain information with each other and with pension beneficiaries and HMRC in respect of the deceased's pensions assets. A formal consultation response is, however, still awaited. The Department for Work and Pensions has published a consultation on proposed changes to the structure and rates of the general levy on occupational and personal pensions schemes for the period from April 2027 to March 2030. The consultation seeks views to help ensure that the levy remains fair, sustainable and aligned with the changing pensions landscape. This consultation closes at midday on 8th of September 2026. Something we'll be coming back to in my chat with colleagues in just a few moments, the value for member framework for DC schemes. The Department for Work and Pensions has published a policy consultation setting out the objectives, reforms, implementation approach and proposals for the value for money framework for DC schemes alongside draft DWP and FCA rules. The consultation seeks views on the development of the VFM framework for both FCA and TPR regulated schemes and combines policy proposals in respect of trust-based schemes with those for contract-based schemes. It represents the final set of proposals ahead of implementation. This consultation closes at time of recording on 1 September 2026. Additionally, the Pensions Regulator has published two overviews relating to the VFM framework. Firstly, an overview for trust-based schemes to help trustees better understand these latest proposals for VFM currently being consulted on. Secondly, a technical overview setting at the practical information on the proposed digital solution for the VFM framework and how trustees and providers can start preparing for their data submission. Sticking with DC Pensions, the DWP has published a policy paper on the government's guiding principles for guided retirement duties in the Pensions Games Act 2026. The document outlines the outcomes the government expects default pensions to achieve, including reducing the need for complex decision making, providing protection against longevity risk, supporting clear and simple member journeys, and finally ensuring individuals continue to have the freedom to choose alternative options if they wish. For a defined benefit pensions, the Pension Protection Fund is consulting until the 16th of September 2026 on updated assumptions for Section 143 and Section 179 valuations. The PPF states that the main proposed changes cover discount rates and longevity assumptions, and that these updates are intended to keep the assumptions aligned with current bio pricing and would generally reduce estimated scheme liabilities. Today, we're going to take a closer look at the recent TPR and DWP pensions reform roadmaps. They were published in July and revised some timing for some key upcoming requirements for both DB and DC schemes. But we're not just going to tell you what the roadmaps say, we're going to explore what the implications and practicalities are for you and your schemes. Watch you can be doing now, but also how might wider context and other developments influence all of your actions on the road map. There's an awful lot there, so I am joined by two of my expert colleagues from Aeon. Matthew Arons is our Head of UK Retirement Policy and Gemma Burrows is a partner in our DC Consulting team here at Aeon. You are both very welcome to the podcast and Gemma, I'm good to start with you because it is your Aeon podcast debut, so you're very welcome. And I'm going to ask you to do the easy job of a quick recap of what's on that roadmap from a DC perspective. Okay, thanks, John. Thanks for having me here. Very nice to join you on the podcast. I might start by saying I was slightly horrified when you told me we had 10 minutes to talk about what's going on from a DC perspective because there really is so much. Some of which affects trust-based schemes, some of which will affect outsourced schemes, so the likes of master trusts and group personal pension plans. But all of it is going to have an impact on the market in general. In terms of recapping what's in the pension schemes act, we've got the small pots consolidation, so generally dormant pots of £1,000 or less. We've got the contractual overrides, which has given the ability for providers to non-consent move pots from one place into another that they perceive will be equal to or better value. We've also got the guided retirement requirements, so the need for schemes to put in place a default pension benefit solution. There's the value for money and changes, and then there's also the scale requirements, so schemes needed to reach £25 billion of assets under management by 2030, so lots of a DC perspective. Definitely, and then Matthew, if I can ask you to look then beyond DC on the roadmap. By all means, John, great to join yourself, and Gemma, but yes, I have three things for you beyond DC. The first of those is RCDC. RCDC here, meaning retirement CDC, the ability for members to buy a CDC pension at the point of retirement. We now know the draft regulations for those are expected in October of this year, and the first schemes opening in roundabout summer of 2029. The second area is turning now to the DB pensions area, and we have more information on the new rules to permit surplus to be returned to members and employers, even when the schemes are ongoing. We've just had a consultation on that closing, and we know the new rules will be enforced from April 2027, so pretty soon. And then my third area is to do with DB super funds, or consolidators that they used to be called third-party vehicles to see through the payment of pensions separate from the originating employer, and the formulaic regulation of super funds will now come into force per the roadmap in October 2028. So some significant changes there. And I think just sort of taking this to a slightly higher level, it's really helpful to have these roadmaps from the DWP to give ourselves the entire pensions industry clarity on what is coming when and the interactions between them. But I would also say there are plenty of things that are not on the roadmap, so they're still pretty significant, and just to give you three things quickly, one, the advent of dashboards is not there, two, inheritance tax changes that we know are happening next year are not on there, and three, whatever the pensions commission reports on next year and the implications of that is not on the roadmap. So pensions is not a dull space going forwards. live in interesting times and to that as well regular listeners will know that we talk about dashboards very regularly in our new section and but also that we did a special podcast episode around the Pensions Games Act receiving Royal Ascent, Matthew you were on said podcast as well and so that all happened back in April but yeah I'd love to hear from you Gemma how it's all shaping up and I suppose the changes that I mentioned that happened to that roadmap when it was revised and republished in July. Yeah sure and as you say there were a couple of changes made to to the roadmap one of those changes was around value for money so as part of the newly released consultation they have proposed to move things to a phased rollout so what this means is that all schemes will need to start submitting data in March 2028 and I have to say the data requirements themselves are pretty extensive and are going to take some time to to sort of bring together. Okay but only larger schemes and master trust schemes will need to complete a value for money assessment in 2028. Other schemes are going to then follow in in 2029. The first assessment are going to act as a kind of bed and in period so the automatic intervention is not going to apply to those initial phase one results but we very much look to see some of those extended requirements need and to take some time to to bring to the fore. And when we're thinking about how large is large though Gemma I think I'm right in saying that that phase one large scheme that is single employer trusts are included there but only those with 50 000 members and above please correct me if I'm wrong Gemma. No you're absolutely right John. And is there something unguided retirement is that the other biggie too? In the DC side? Yes that's the other change so I mean then this in and of itself is is quite a huge undertaking and the timescale for this has been adjusted with schemes when schemes needn't be compliant this being pushed back by two years for single employer trust based schemes and by one year for group personal pension plans and master trust schemes. So it gives a little bit more time but as many of our clients will know there is a lot of work that's going to go into having these default benefits solutions in place and an awful lot of work that's going to need to be done. And John maybe now I could just add on to what Gemma said there about the changes to guided retirement because we do know now more about how that interacts with retirement CDC schemes that I mentioned earlier and just to quote DWP on this we will consider allowing schemes who are committed to pursuing our CDC schemes as a default pension a targeted and time limited extension and they're going to consult on this extension in the autumn but let me just translate that into my words which is that if schemes think that part of their guided retirement default will be retirement CDC they are going to get a bit extra time to implement that to allow our CDC schemes to come online and be credible options. Ultimately then this is good for decision makers because it allows them access to the full suite of guided retirement choices and therefore ultimately good news for members that they're going to get the kinds of guided retirements that suit their own needs. Excellent and we have if anyone's playing bingo and had CDC on their cards they're probably winning at this point because we mentioned it a lot but I would also say that next month's podcast is going to be all about CDC so if you're listening to us wondering what our CDC and wider CDC is all about we'll be covering that on next month's podcast but I will stick with you Matthew for now because yes there's lots going on but for our listeners and for our clients what what does this mean? Well let's start with those that have DC schemes and there I'm going to pick up on the guided retirement point that we were just discussing and the key action here is to consider all the available options when determining your own guided retirement strategy and that we now know should include retirement CDC and equally as part of that degree of due diligence is going to need to be required because although some options will have the similar labels and I'm thinking of things like flex and fix for example they can look very different under the bonnet so a certain amount of digging into exactly what solutions are providing to members is going to be required. Yeah and I think just kind of sticking with that guided retirement piece for a moment I would also say that whilst the implementation dates have been pushed back I don't think we should underestimate the amount of work that is going to be involved so there are some practical steps that schemes trustees can start to think about now for example if you think that it's unlikely your scheme is going to have any material membership changes and then you can start thinking about the profile of your scheme how you might go about understanding the needs and requirements but seeking member feedback on what they find important so that you know really thinking about some of the steps that you can be taking now to to sort of help ease you into that that requirement coming into force and then it's kind of maybe stepping away a little bit from guided retirement but just thinking about what these changes mean on a whole and the implications that they will have on the market I do think that this is going to likely accelerate those schemes and employers that are perhaps looking to move from single employer trust to a group personal pension plan or master trust and when you combine this with the contractual override so the ability for proprietors to be moving some of these these pots and also the scale requirements I think we're going to find that there is going to be an awful lot of activity going on in the market a huge amount of asset transitions taken place and so actually if everybody's transitioning around the same time there's going to be a big squeeze on capacity so I would say that actually if you're one of those schemes that is looking to make some of those strategic changes you need to do that earlier where you can really take control of your destiny rather than it being almost driven by capacity and what's going on more broadly in the markets and I guess the other the other piece to think about there with all of that activity is how that might impact on administration service number queries so thinking about the whole piece there and in that context we have dashboards as well and we all know that when those projects going on in the pensions world business as usual needs to keep on keep on going speaking of market activity and busyness and administration and Matthew on the DB side what does the road map tell us or the big news John in DB space is the surplus legislation changes and we know this is very relevant to a big chunk of the DB universe because our own 2026 DB endgame survey tells us that approximately one quarter of DB schemes do intend to run on beyond the point that buying in becomes possible for the first time so those schemes are very likely to have a surplus and maybe others too so so what well the point here is that these new rules are causing many decision makers both trustees and corporates to re-evaluate what their end games are and certainly to develop their own surplus policies and it's saying this one key thing to bear in mind here is that the new regulations are just laying out what the minimum requirements are for surplus distributions and each situation is going to be different so it will take time to work through exactly what the right surplus policy is for each given pension scheme and therefore with the new rules coming into effect from April 27 that is going to mean starting early and therefore now to get those policies in place perhaps one oddity I could just mention here in all of this which is that those deferred members who see surplus distribution who are under normal minimum pension age and that's 55 now rising to 57 in 2028 they can't receive those additional benefits immediately they have to have a deferred cash sum and should we say that doesn't seem very even handed with older members but equally there is a wrinkle here that as far as I'm aware pension dashboards won't show these deferred lump sum. So potentially there is a bit of an omission there in the pensions landscape that doesn't really accommodate these new surplus distributions. But then perhaps the other one I should mention turning away from surplus now is super funds. As I said, we expect the final regulations to come into force in October 2028. And that does seem as surprisingly drawn out timeline if I'm honest given that we have had super funds up and running in the UK for some time through TPR's more bespoke authorization route. So it's a little bit unclear how that's all going to play out. And what the growth of super funds will look like, particularly when we're seeing alternate solutions to dealing with schemes for the long term, such as the stage coach deal that happened earlier this year. So it sounds like both DB and DC and CDC are going to be very active between now and the end of the decade. I suppose just to to wrap up, I'm going to challenge you to in a sentence or two. I always like doing this to guess sorry Gemma, I might not have warned you. Yeah, in a sentence or two, what do you think our listeners should be doing next? Gemma, what do you think? Thanks, John, you're definitely keeping us on our toes, aren't you? So I think reflecting on what we've talked about in terms of the impact on the market and the level of activity, I would say that what DC schemes need to do next is to have a conversation about your direction of travel and plotting out what that's going to look like so that you can be in control of it rather than it's being in control of you. And John, my one takeaway on the DB side is start now. We've talked about a lot of change on DB and DC and CDC for that matter coming down the tracks in these road maps, but as I pointed out previously, there will continue to be other change coming from the Petchers Commission or wherever. So I think it really is a question of starting early on these things before new priorities come the way of the pensions industry and come they surely will if we know our apples from our apples in this industry. And on that note of action and positivity, congratulations for squeezing so much in to such a short space of time. Congratulations on your podcast debut, Gemma. Thank you. I'm sure you'll be back again. And just a massive thank you to both of you for all of that in sight today. Thanks for joining us this month on the Aeon Retirement and Investment Podcast. Check out the show notes for links to some of the items that we've discussed today. And of course, if you'd like to hear more about anything that we've covered, do drop us a line at talk to us at aeon.com. We'll see you next month where we'll be discussing collective define contribution pensions in more detail. For me, it's bye for now.