Public Service Pensions Update: June 2026
Published on 24th June 2026
Welcome to the June edition of the UK Public Service Pensions Update
Key developments this month include new tools and guidance for Local Government Pension Scheme (LGPS) funds, a consultation on changes to the conditions that must be met before a statutory transfer value can be paid to another scheme, and new pensions dashboards guidance.
If you would like to discuss anything in this newsletter, please contact one of the experts listed at the end.
Focus on the LGPS
McCloud remedy and pensions dashboards | LGA shares McCloud remedy tool and updated pensions dashboard guidance
The Local Government Association has published several new and updated documents this month.
These include a tool to help administering authorities calculate any addition needed to a cash equivalent transfer value to take account of McCloud remedy underpin protection. Updated versions of the "Pensions Dashboards before and after connection" and "AVCs and Pensions Dashboards" guides have also been published.
Repayment of surplus | New rules for private sector schemes from April 2027
The Pension Schemes Act 2026 will change the law to make it easier for the trustees of an ongoing private sector defined benefit (DB) scheme to change scheme rules to allow them to share surplus with a scheme employer.
On 10 June, the government opened a consultation on draft regulations saying more about the conditions that will need to be met before trustees can make a surplus payment to an employer. The Pensions Regulator (TPR) also published an initial statement (guidance) for trustees and employers considering or preparing for a release of surplus.
The Financial Reporting Council plans to develop technical actuarial guidance to help scheme actuaries certify that surplus payments to employers meet the legislative requirements.
The consultation paper suggests that the government intends for the new rules to come into force in April 2027, along with TPR guidance for trustees. The new rules will not apply to the LGPS, but funds might like to take note of this change.
All schemes
Transfers out | Government consults on changes to the conditions that must be met before a statutory transfer value can be paid
The government is consulting on draft regulations to change The Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021).
The changes will be relevant where a member wants to transfer to a scheme which is not a public service pension scheme, or TPR-authorised defined contribution (DC) master trust or collective defined contribution (CDC) scheme. Funds might like to consider responding to the consultation, which is open until 21 July 2026.
- Introducing a new "reputable scheme" option to speed up transfers where there are no concerns about the receiving scheme
The draft regulations amend the first condition in the regulations so that it is met either, as at present, where they are satisfied beyond reasonable doubt that the transfer is to a public service pension scheme or TPR-authorised DC master trust or CDC scheme or, additionally, where they are satisfied on the balance of probabilities that the receiving scheme is one that they consider to be a "reputable scheme". A knock-on amendment would provide that the current second condition in the regulations applies to all transfers for which the first condition is not satisfied.
The reputable scheme option is designed to avoid schemes having to assess transfers under the second condition by checking whether any red or amber flags are present in cases where they have no concerns about the receiving scheme. The consultation paper suggests that the final regulations should include a "non‑exhaustive list of factors to which trustees and scheme managers may have regard when assessing whether a receiving scheme is reputable", lists possible factors and asks for views on them.
- Removing the overseas investment flag
For cases where the second condition applies (with the result that the transferring scheme must check for red or amber flags before making a transfer), the regulations are being amended to remove the overseas investment flag. The Department for Work and Pensions (DWP) notes in its consultation paper that removing this flag "reflects the reality that many legitimate schemes include overseas investments" and that requiring a check on whether the receiving scheme includes high‑risk or unregulated investments or unclear, complex or unorthodox investment structures "should protect against the types of scam risk that the overseas investments amber flag was intended to address."
- Keeping the incentives flag
The "incentives" flag will remain, but the consultation paper says that the broadening of the first condition will give trustees greater discretion to proceed where they are satisfied that the receiving scheme is safe.
- Exempting some members from the need to take advice from the Money and Pension Service
The regulations will also be changed to exempt members who have taken Money and Pension Service (MaPS) guidance within the last 12 months from having to take it again. This is intended to help members who are trying to consolidate multiple pots and to reduce the wait time for MaPS appointments.
- Upgrading a missing employment link from an amber to a red flag
To help prevent the misuse of small self-administered schemes (SSASs), the draft regulations change the lack of an employment link between the member and an employer in an occupational pension scheme from an amber flag to a red flag. The DWP paper explains that the change is being made because a "missing employment link is a strong indicator that the receiving SSAS may be operating outside its legitimate purpose. The new red flag will empower scheme providers to refuse the transfer, helping to ensure that SSASs are used only for their intended, lawful functions and denying fraudsters opportunities to exploit the system."
The DWP describes the changes as "the first stage in a broader programme of work relating to pension scams and pension transfer," Later this year, it expects the programme to explore wider pension transfer issues. These include "how processes can be modernised and how savers who choose to transfer their pensions are enabled to make well informed decisions, while maintaining the robust protections needed to defend against evolving scams risks." There will also be work to "restore SSASs to their intended purpose as flexible retirement vehicles for legitimate users, closing down avenues for abuse."
Pensions dashboards | PASA releases new guidance on monitoring ongoing compliance and on survivor benefit indicators
The Pensions Administration Standards Association (PASA) has published guidance on what trustees, scheme managers and service providers should monitor to support ongoing compliance. The guidance "focuses on the practical monitoring of compliance across three key areas of dashboards activity: matching, pension information provision and connection performance. It also considers the role of saver queries, complaints and feedback in identifying potential compliance issues and supporting continuous improvement" and reporting.
PASA has also published a note addressing industry questions on the application of survivor benefit indicators within dashboards value data, offering practical guidance to support consistent interpretation across schemes and providers.
Abolition of the Lifetime Allowance | Final set of amending regulations
The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2026 will make a final set of technical amendments to pensions tax legislation following the abolition of the lifetime allowance.
The regulations amend the legislation relating to availability of an individual's lump sum allowance. When more than one "relevant benefit crystallisation event", that is, becoming entitled to a pension commencement lump sum or an uncrystallised funds pension lump sum, occurs in relation to an individual on the same day, the individual will decide the order in which they are to be treated as occurring for the purposes of calculating their available lump sum allowance.
They also change the legislation relating to the availability of an individual's lump sum and death benefit allowance, confirming that any decision they took on the order of occurrence for lump sum allowance purposes will also apply when calculating their available lump sum and death benefit allowance.
The way in which available lump sum and death benefit allowance is calculated is adjusted where more than one lump sum death benefit is paid in respect of a deceased member.
Changes are also made to the "permitted maximum", that is, the limit on the size of a pension commencement lump sum, and how the value of a member's pensions rights must be calculated when checking whether those rights fall below the trivial commutation limit of £30,000.
The legislation applying to individual protection 2014 and 2016 is tidied up.
Anyone issued with a transitional tax-free amount certificate is required to provide a copy of it to any scheme of which they subsequently become a member.
Changes are being made in relation to the Financial Assistance Scheme and its members.
Most of the changes will take effect from the date the lifetime allowance was abolished, but some will take effect on 29 June this year. Not all of the changes being made are listed here.
Automatic enrolment | Call for evidence on the alternative quality requirements
The government has launched a call for evidence seeking views on whether the alternative quality requirements for DB, hybrid, and CDC pension schemes are operating as intended. The alternative quality requirements include the cost of accruals test for DB and hybrid schemes.
The call for evidence is open until 27 July.
House of Commons Library | New and updated briefing papers
Recent House of Commons Library briefing papers of interest include:
This newsletter covers developments relating to public service pensions in England and Wales with a focus on the Local Government Pension Scheme.
