Public Service Pensions Update: March 2026

This month we highlight three Local Government Pension Scheme (LGPS)-specific developments, eight developments for all public service schemes, and a recent Pensions Ombudsman decision that sets out the ombudsman's position on recovery of overpayment cases in public service pension schemes. 

If you would like to discuss anything in this newsletter, please contact one of the experts listed at the end.

Focus on the LGPS

Pension Schemes Bill
House of Lords amends LGPS pooling and governance provisions: further changes possible before Royal Assent

The House of Lords has made a number of changes to the LGPS pooling and governance provisions in the Pension Schemes Bill.  On 16 March, at report stage, the Lords agreed changes to:

• Clause 2 (asset management) to prevent the regulations to be made under that clause from including "any provision about investment in specific assets or asset classes or about the location of investments." This amendment was proposed to prevent the government from mandating investment in particular assets, asset classes or locations of investment, to provide certainty on this point. (See column 676.) The House of Lords has also now voted to remove from the bill the reserve power that would allow the government to mandate asset allocations for defined contribution master trust and group personal pensions used for automatic enrolment.
   
• Clause 4 (exemption from public procurement rules) to confirm scope of application (only contracts made by a LGPS manager acting in its capacity as such can be exempt contracts, the “80% condition” refers only to investment management activities carried out for LGPS managers acting in their capacity as such, and in the definition of “investment management activities” the reference is to funds or other assets for which a LGPS manager is responsible).
   
• Insert a new clause requiring LGPS valuations "to be benchmarked against insurer pricing and gilt-based discount rates, with explanations where significantly greater prudence is applied" in the LGPS valuation. "It also requires those benchmarks, the funding strategy statement, and employer contribution rates to be published together, with accessible explanatory material to support meaningful consultation."  (See column 692.)
   
• Insert another new clause which "aims to strengthen regulation 64A of the Local Government Pension Scheme Regulations 2013 to make interim reviews of employer contribution rates more accessible and transparent." (See column 702.)

These amendments may be reversed during the bill's final remaining parliamentary stages before Royal Assent.

Access and fairness reforms
Regulations made

The LGPS (Miscellaneous Amendments) (Member Benefits) Regulations 2026 make the reforms confirmed for 2026/27 in the recent "access and fairness" consultation response: changes to survivor benefits and death grants, the gender pension gap (unpaid leave and gender pension gap reporting), abolition of the lifetime allowance, the McCloud remedy and Combined County Authorities as scheme employers.

The regulations have been made and will come into force on 1 April 2026. 

Access and protection reforms
Government confirms LGPS access for councillors and mayors in England

The government has published the first of two responses to its autumn 2025 consultation LGPS in England and Wales: Scheme improvements (access and protections). The response confirms that the government will proceed with the proposals to grant access to the LGPS for mayors and councillors in England and sets out next steps. (Councillors in Scotland, Northern Ireland and Wales already have access.)

The "access and protections" consultation followed on from the "access and fairness" consultation launched by the government last May (response published last month) and contains:

• Proposals to extend access to the scheme for councillors and mayors in England.
• "New Fair Deal" – proposals to implement "Fair Deal" protections in the LGPS, aligning across government in ensuring continued access to the LGPS for outsourced workers.
• Proposals to amend the normal minimum pension age to age 57, following the Finance Act 2022, and to ensure that members with a protected pension age can still take pension benefits at that age except for members that have transferred benefits into the LGPS.
• Academies and applications for directions – proposals to put criteria for applications for directions into legislation, and to remove secretary of state consent where all criteria are met.

A response on the remaining three proposals should follow later this year.

All schemes

Inheritance tax and pensions
Finance Act 2026 receives Royal Assent: action needed ahead of April 2027

Funds should take legal advice now on the Inheritance Tax changes in the Finance Act 2026, which received Royal Assent on 18 March 2026. The act contains the final version of the primary legislation that will bring certain benefits paid following the death of a member of a registered pension scheme into the member's estate for inheritance tax purposes where the member dies on or after 6 April 2027, whether or not there is a discretion to decide who should receive the benefit.

The legislation has been substantially amended since it was released in draft last summer. Actions for administering authorities to consider taking immediately include taking legal advice on what this change means for their scheme and its members, what information to give to members at this stage, and what actions will be needed as April 2027 approaches and HMRC releases regulations, tools and guidance.

Pension Schemes Bill
House of Lords introduces new clause requiring review of public service pensions

One of the amendments made to the Pension Schemes Bill this month at House of Lords report stage was the introduction of a new clause which would require the government to "within 12 months of the day on which [the Bill] is passed, conduct and publish a review of the long-term affordability, intergenerational fairness, fiscal sustainability, and accounting treatment of public service pension schemes" operating on an unfunded or pay-as-you-go basis. (See column 1301.)

Baroness Sherlock (Labour) said that "the 25-year guarantee…does not mean of course that pensions cannot be changed in any way until 2040, nor was a guarantee written in to individual members. But the central elements of the reforms introduced in the PSPA 2013 were designed to last for at least 25 years, and a high barrier was set out in that Act for any proposed changes to the key design elements, including a requirement for consultation with scheme members or their representatives, with a view to reaching agreement to help deliver that stability."  It seems likely that the government will resist this change at the next Parliamentary stage, consideration of amendments. 

Administration
Impersonation fraud on the rise:  Pensions Regulator urges schemes to tighten security to protect members   

The Pensions Regulator has issued a fraud alert asking trustees, managers and administrators to be vigilant following a rise in impersonation fraud involving unauthorised access to members’ accounts.

The regulator warns that fraudsters "are using people’s personal details to take over their pension accounts and steal savings", calls on the pensions industry to tighten security to protect scheme members and recommends specific actions for both schemes and members.

Funds might also be interested to read about the government's new fraud strategy and a new online crime squad.

Data protection
New complaints procedure requirement: schemes must comply by 19 June

Our Insight "UK ICO explains the Data (Use and Access) Act's new data protection complaints requirements" considers the Information Commissioner's Office's (ICO's) final guidance on handling data protection complaints.

In short, data controllers must provide data subjects with a way of making data protection complaints to them and acknowledge receipt of complaints within 30 days of receipt. They must also, without undue delay, both take appropriate steps to respond to complaints, including making appropriate enquiries and keeping complainants informed, and inform complainants of the outcome of their complaints. The ICO's guidance provides more detail.

Administering authorities (in their capacity as data controllers) need to consider how they will meet their new obligations in this area by 19 June. Legal advice may be helpful.

Artificial intelligence
Confidentiality and privilege risks when using AI tools: two recent decisions

Our Insight "AI tools and privilege in the UK – what are the risks?" considers two recent decisions highlighting the risks of using AI tools without careful consideration of loss of confidentiality and privilege. It also considers a number of unanswered questions in this area, including whether there are privilege risks with AI note takers and meeting transcription, and whether interactions with AI systems are documents for the purposes of disclosure.

Government Actuary's Department
New factors and guidance hub and public sector defined contribution working group

The Government Actuary's Department (GAD) has set up a new hub to make it "easy for administrators of public service pension schemes to locate actuarial factors (within the consolidated factors workbooks) and guidance." The hub "brings all the information – past and present guidance (including McCloud remedy) and factors - together in one area, in a standardised and consistent way."

The GAD has also set up a public sector defined contribution pension scheme working group open to "all public sector organisations with an existing or potential interest in defined contribution pension sections or schemes". This article says more about the group and how you can be part of it.

Firefighters' pensions
New member contribution and Matthews remedy regulations

Two sets of regulations have been made in relation to the Firefighters' Pension Scheme (England).

The Firefighters' Pension Scheme (England) (Amendment) Regulations 2026 update the member contribution tier thresholds and rates for The Firefighters’ Pension Scheme 2015 from 1 April 2026 by providing for a fifth contribution-rate tier, changes to the contribution-rate percentages for all five tiers, contribution tier thresholds to be updated in line with the Consumer Price Index on an annual basis, and contribution rates for all members to be dependent upon their actual earnings rather than whole-time equivalent salary.

The Firefighters’ Pension Scheme (England) (Amendment) Order 2026, ensures that "all those entitled to benefit under the Matthews remedy do so, and…that where the eligible member has deceased prior to being able to benefit under the Matthews remedy, their family can now do so." A minor correction has since been made by this order.

Police Pensions
New member contribution regulations

The Police Pensions (Member Contributions) (Amendment and Transitional Provisions) (England and Wales) Regulations 2026 replace the current contribution structure for the Police Pension Scheme 2015 (which is based on full-time equivalent pensionable earnings) with one based on actual pensionable earnings, update the contribution tier thresholds to take account of pay increases, and increase contribution rates. This report explains more.

Civil Service Pension Scheme
Pension recovery plan update

The Cabinet Office has published two updates (2 and 16 March) to its recovery plan for addressing the  service levels experienced by members of the Civil Service Pension Scheme.

The House of Commons Library has also published this briefing paper.

The Pensions Ombudsman
Ombudsman sets out its position on overpayment cases in public service pension schemes

A recent decision relating to the Teachers' Pension Scheme (CAS-29019-Q6T4) contains a summary of the Pensions Ombudsman’s position on overpayment cases in public service schemes.

It also sets out what the ombudsman will consider when a scheme asks a member to repay the overpaid amount and wishes to rely on section 32(1) of the Limitation Act 1980 (limitation does not start to run until the person seeking to recover the overpayment has discovered the mistake or could with reasonable diligence have discovered it) to extend the standard 6 year cut off for recovery.

House of Commons Library
New and updated briefing papers

Recent House of Commons Library briefing papers of interest include:

• The UK’s plans and progress to reach net zero by 2050.
• Administration of the Civil Service Pension Scheme.

This newsletter covers developments relating to public service pensions in England and Wales with a focus on the Local Government Pension Scheme.