HL UK Pensions Law Digest 15 January 2026 | Hogan Lovells

(co-author: Susanne Wilkins)

A bite-sized abstract of latest UK pension information

Welcome to our newest replace, by which we cowl:

Worth for cash (VFM): session

• The Pensions Regulator (TPR) and the Monetary Conduct Authority (FCA) set out particulars of the brand new VFM Framework;

Pensions Dashboards Programme (PDP): session on the supply of personal sector dashboards

• PDP requests suggestions on learn how to finest assist the supply of personal sector dashboards, together with on learn how to apply the trade participant strategy;

Pension Safety Fund (PPF): FAQs about pre-97 will increase

• The PPF solutions some questions on will increase to pre-97 pensions;

Assured Minimal Pensions Improve Order 2026

• Setting the speed for rising post-88 GMPs in fee at 3%.

Worth for cash (VFM) framework: session

The Pensions Regulator (TPR) and the Monetary Conduct Authority (FCA) have issued a joint paper (CP26/1) on the brand new Worth for Cash (VFM) Framework for outlined contribution (DC) preparations. The paper covers three areas:

• The FCA’s response to its earlier session (CP24/16) on the VFM Framework in August 2024;
• For contract-based preparations: detailed proposed guidelines and steerage (to be carried out through the FCA Handbook); and
• For trust-based preparations: a dialogue paper to feed into improvement of laws below the Pension Schemes Invoice.

Session closes on 8 March 2026. Alongside the session, TPR has issued a summary for occupational schemes.

The FCA, DWP and TPR intend the VFM Framework to be constant throughout each contract and trust-based preparations and to return into power on the similar time. At present, the expectation is that the primary VFM assessments can be required in 2028.

Factors to notice, together with important modifications launched for the reason that earlier session (CP24/16), embrace the next.

Scope of VFM Framework

• The VFM Framework will apply initially to auto-enrolment default preparations and “quasi-default” preparations (legacy preparations which predate auto-enrolment and which meet sure circumstances) in accumulation which have been working for at the very least one calendar yr and which have:
  • At the very least 1,000 members;
  • Fewer than 1,000 members however are the only real default (or quasi-default) association offered by a scheme; or
  • Fewer than 1,000 members and aren’t the only real default (or quasi-default) association offered by the scheme however are the most important association.
• Preparations which use the identical default fund however which supply commercially totally different service ranges have to be handled individually, with a VFM evaluation carried out for every association.
• An association which receives members transferred in with out consent will routinely be handled as a default association for the needs of the VFM Framework.
• A trust-based scheme can be exempt from the requirement to provide a VFM evaluation if the trustees have:
  • Notified TPR that winding up has commenced,; or
  • Offered proof to TPR of an settlement in precept with one other supplier to which members can be transferred.
• Government pension plans (EPPs) and small self-administered schemes (SSASs) can be excluded from the VFM Framework.

Evaluation and ranking

• VFM metrics for trust-based preparations can be set out in laws. The intention is to make use of widespread metrics throughout belief and contract-based preparations, to allow significant comparisons to be made.
• Ahead-looking metrics can be launched, for use alongside backward-looking metrics when assessing funding efficiency. The Framework paper provides particulars of what could also be required below every metric.
• Some disclosure of asset allocation can be required. Particulars of disclosures anticipated from trust-based schemes can be included in laws.
• Preparations have to be in contrast in opposition to a wider industrial comparator group. To allow this wider comparability, preparations should submit their knowledge to a central VFM database. (The earlier session proposed that preparations must be in contrast in opposition to three different preparations.)
• Complete prices and expenses paid by members and employers have to be reported over 1 yr, 3 years and 5 years the place obtainable, and over 10 years the place fairly practicable to acquire. Reporting for a 1-year interval should embrace the cut up between service prices and funding expenses. For multi-employer preparations the place prices and expenses differ, a most, minimal, and median have to be disclosed all the time durations.
• Metrics to evaluate how savers interact with pensions can be developed over the medium time period, recognising that the brand new guided retirement requirement and the introduction of focused assist could convey important change.

VFM evaluation and ranking

• Following the VFM evaluation course of will result in preparations being given one in every of 4 scores:
  • Crimson: not delivering worth; a bulk switch to a different association have to be made the place that is in one of the best curiosity of members;
  • Amber: not delivering worth however the trustees or unbiased governance committee (IGC) consider enhancements are doable inside three years;
  • Gentle inexperienced: delivering worth however there are areas which may very well be improved; or
  • Darkish inexperienced: delivering worth and clearly outperforming most within the comparator group; there are minimal areas the place enhancements may very well be made.

Actions for poor worth preparations

The VFM Framework and the Invoice require the trustees or IGC of an association rated purple or amber to take sure actions, together with notifying the related regulator and employers; closing to new enterprise; submitting enchancment plans; and transferring members to a distinct association the place within the members’ finest pursuits.

Return to Contents.

The Pensions Dashboards Programme proposes an trade participant group to assist ship personal sector dashboards

On 8 January 2026, the Pensions Dashboards Programme (PDP) printed a “request for feedback“ on how finest to assist the supply of personal sector dashboards (PSDs). This work is along with the PDP’s persevering with concentrate on connections to, and the end-to-end testing of, the MoneyHelper pensions dashboard.

PSDs are enabled by laws. They are going to grow to be a part of the pensions dashboard ecosystem and can hook up with the central digital structure (CDA) offered by the Cash and Pensions Service (MaPS), in compliance with MaPS requirements.

There isn’t any authorized obligation on any get together to grow to be a PSD operator; and, the place organisations resolve to grow to be operators, there isn’t a legislative deadline for connection to the CDA.

The PDP intends to arrange an “trade participant group” to assist ship PSDs. This may contain a bunch of trade organisations working in shut collaboration with the PDP, permitting organisations to check and form necessities or processes early on.

Membership can be restricted to organisations that are actively planning to function a dashboard. The session confirms that membership of the group shouldn’t be a pre-requisite for turning into a dashboard operator; neither does it assure a profitable software to the Monetary Conduct Authority for authorisation. Nonetheless, the PDP additionally notes that participation within the group is probably going to supply potential PSD operators with perception which can be an element within the velocity at which they’ll develop their dashboards.

The group’s remit will embrace supporting the PDP in numerous areas, together with with the iteration of requirements/steerage, the event of the CDA performance and the event of the connection and testing processes.

The PDP suggests that it’ll search to place framework agreements and non-disclosure agreements in place for the trade participant group, with a view to deal with industrial sensitivities and encourage organisations to contribute.

The request for suggestions closes on 10 February 2026.

Return to Contents.

Pension Safety Fund: FAQs on pre-97 indexation

The Pension Safety Fund (PPF) has issued frequently asked questions (FAQs) on the proposed change to the legislation governing PPF compensation to require fee of inflation will increase (capped at 2.5%) on pre-97 pensions in fee in sure circumstances. The legislative modifications are included within the Pension Schemes Invoice, at the moment earlier than Parliament.

Factors to notice embrace:

• The PPF can be higher positioned to substantiate which PPF members can be eligible for pre-97 will increase after the Invoice turns into legislation. The PPF intends to contact eligible members straight sooner or later.
• The PPF is required to use will increase in January every year and doesn’t have energy to pay out of cycle will increase. If the Invoice turns into legislation in 2026, the earliest the PPF will be capable to pay pre-97 will increase is in January 2027.
• The Invoice as at the moment drafted consists of discretion for the PPF Board to change the speed of pre-97 will increase (it already has energy to take action in relation to post-97 will increase). If the Invoice turns into legislation on this kind, the PPF Board will then think about its strategy to working this discretion.
• The PPF estimated that, as at 31 March 2025, the price of offering pre-97 will increase on the premise proposed within the Invoice can be £1.2bn for the PPF and £300-600m for the Monetary Help Scheme (FAS).
• The PPF doesn’t count on the introduction of pre-97 will increase to impression its levy plans, together with its intention to set a zero levy for 2026/27 for typical schemes. The PPF plans to announce the result of its levy session by the top of March 2026.

Assured Minimal Pensions Improve Order 2026

A draft annual enhance Order has been laid earlier than Parliament which is able to enhance assured minimal pensions (GMPs) in fee earned between 6 April 1988 and 5 April 1997 by 3 per cent. The Order will come into power on 6 April 2026.