Public Service Pensions Update: September 2026

This month's update covers the Scheme Advisory Board's new statement on governance for Local Government Pension Scheme (LGPS) funds and the launch of a review into local government reorganisation, as well as developments in governmental reform, inheritance tax, auto-enrolment and dashboards relevant to all schemes. We also take a look at the Pensions Regulator's new enforcement strategy and the Pensions Ombudsman's new column on pension complaints.

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

Focus on the LGPS

Local government reorganisation | Review of reorganisation launched

In our August update, we mentioned that the Ministry of Housing, Communities and Local Government (MHCLG) has released guidance for officers and councillors choosing a new administering authority (AA) for their fund during the reorganisation process.

MHCLG has since announced a review of the plans for local government reorganisation. Decisions for some areas have been withdrawn and plans for others are also paused for the review.

The secretary of state for Housing, Communities and Local Government, Angela Rayner, has indicated that she wants to be satisfied that an appropriate, robust, and legally-compliant process is in place, as well as to test whether proposals for local government reorganisation meet the priorities of the new administration and new prime minister.

LGPS governance | Scheme Advisory Board publishes new statement

The Scheme Advisory Board has published a statement on Understanding the LGPS: statutory purpose, pension assets and governance. 

It reaffirms that the key purpose of the LGPS is to meet pension promises to members, and gives an overview of the structure and make-up of the scheme's 86 funds, 6.8 million members, and £402bn in assets under management (as of March 2025). 

The statement cites the new statutory framework for the LGPS, which came into force in April 2026 and will be implemented via investment committee working groups agreed by the Scheme Advisory Board. The statement also clarifies the different roles of administering authorities and asset pool companies, and explains how the Scheme Advisory Board supports the LGPS with effective decision-making. It concludes that the LGPS "remains in a strong and sustainable position" to fulfil its purpose.

All schemes

Governmental reform | Treasury sets out changes to consultations and judicial review 

The Treasury has published a letter to all ministers on "The Simplification and Agency of Government", stating that there are three areas of decision-making it seeks to streamline:

• Consultations: the Treasury notes that there is no general duty of consultation, and seeks to do away with "habitual, box-ticking consultation". However, it remains to be seen how much this will change the pensions landscape; ministers will still be able to consult where they believe there is a good case for seeking external input and that a formal consultation is the appropriate vehicle. More guidance will follow.
• Legal considerations: the legal risk guidance used by government lawyers will be updated, reflecting that ministers have the power to take decisions even where there is a high legal risk.
• Judicial review: the government intends to progress legal reforms which will limit the scope for judicial review of projects authorised by Parliament, and broaden these to include all nationally significant infrastructure projects.

Guaranteed minimum pensions | Government consults twice 

The Department for Work and Pensions has launched a consultation on fixed rate revaluation, proposing to maintain the current 3.25% per annum fixed rate of revaluation for guaranteed minimum pensions (GMPs) for early leavers. This would apply to contracted-out members leaving pensionable service for the next five-year period (6 April 2027 to 5 April 2032). The consultation closes on 29 October 2026. 

The government has also published a separate consultation on draft regulations to simplify and clarify the GMP conversion process, particularly to assist schemes using conversion to equalise benefits for the effect of historic GMP rules. 

Inheritance tax and pensions | HMRC issues second technical note

Following its update on upcoming regulations in its July newsletter, HMRC published a second technical note regarding the new inheritance tax regime for pension death benefits due to take effect from April 2027. 

It covers requirements for information sharing between personal representatives and pension scheme administrators, listing the stages at which they will need to share information and giving multiple examples to show how the new regime is intended to operate. It also includes draft guidance on evidence of personal representative identity and draft template withholding and payment notices.

A third technical note which will cover topics including international issues and the interaction of IHT with income tax is expected in autumn 2026. During autumn-winter 2026-27, HMRC also intends to share draft guidance and publish additional regulations relating to split schemes and excepted estates.

Auto-enrolment | Work and Pensions Committee launches adequacy enquiry

The Work and Pensions Committee (WPC) has launched an inquiry to consider whether auto-enrolment contributions for low earners and their employers are adequate. The inquiry will consider questions such as by how much minimum contributions may need to increase, and how the cost of any increase should be split between employers and savers.

Chair of the WPC, Debbie Abrahams, said that the government is seeking to address its findings on pensioner poverty. There will be a balance to be struck between ensuring today's earners contribute enough to their pension and the burden any fix could place on low earners and small businesses.

Evidence can be submitted until 26 October 2026.

Police pensions | Home Office circular on CPI and the Police Pension Scheme 2015

The Home Office has published circular 012/2026 in response to the consultation outcome regarding Consumer Price Index (CPI) revaluation for the Police Pension Scheme. 

As noted in our August update, the Home Office published the response to its recent consultation on a proposal to align the Police Pension 2015 career average revalued earnings (CARE) scheme revaluation date with the start of the tax year, a step already taken by some other public service pension schemes. This entails changing the current revaluation date of 1 April each year to 6 April.

The circular states that the government is currently drafting the necessary regulations to enact this change from April 2027, and urges police forces to act now to make the necessary updates to their pensions administration systems.

Judicial pensions | Ministry of Justice extends consultation on proposed changes

As noted in August's update, the Ministry of Justice is consulting on a series of proposed amendments to judicial pensions legislation. The closing date for this consultation has been extended from 22 September to 6 October 2026.

NHS pensions | Department of Health and Social Care publishes report on McCloud remedy

The Department of Health and Social Care has published a report on the independent review of the McCloud remedy as delivered by the NHS Business Services Authority to the NHS Pension Scheme.

This review was commissioned following missed delivery milestones, and identifies remaining risks to delivery as well as areas of meaningful progress. The report makes recommendations as to a range of areas, including the governance of the McCloud Remedy Programme, the leadership and organisational culture, and the programme plan.

Minister of state for health, Karin Smyth, gave a written statement in which she confirmed that she will provide regular updates to Parliament and set new statutory deadlines for McCloud in future.

McCloud remedy | Application of £30,000 limit to further payments 

LGPC Bulletin 282 prepared by the Local Government Association (LGA) provides an update on how to apply the £30,000 limit for a trivial commutation lump sum death benefit (TCLSDB) when, following a review under the McCloud remedy, a further payment is due to a survivor. 

Following the LGA's request for clarification in Bulletin 281, HMRC has confirmed that the £30,000 limit applies to the combined value of the original TCLSDB and any McCloud top-up in relation to that payment – not in relation to each separate payment.

The Pensions Regulator | Launch of new enforcement strategy

The Pensions Regulator has published its new enforcement approach and response to last year's consultation on its new approach to enforcement. 

This new approach seeks to adapt to the evolving risks in the pensions landscape by focusing on risks and harms to members, and giving the Pensions Regulator a framework which allows it to respond to risks with greater speed and flexibility. 

The regulator aims to target key risks to members, take decisive action against breaches and economic crime, and strengthen TPR's use of data, analytics and digital capability. 

Pensions Administration Standards Association | Dashboards toolkit to measure changes to behaviour

The Pensions Administration Standards Association (PASA) has published a new Dashboards Toolkit on Post Use Behaviour.

PASA and the Pensions Regulator have together developed this toolkit to aid understanding of how the availability of pensions dashboards impacts member behaviour. 

PASA's Compliance Monitoring Guidance (as mentioned in our June issue) describes the monitoring now required under legislation and the reporting that is likely to be required of trustees, scheme managers and service providers. The toolkit focuses on the types of reporting that may be helpful to capture the operational impact of dashboards, which includes measuring information such as any change in the number of completed transfer payments, transfer out quotations, retirement quotations, and fraud cases.

Pensions Ombudsman | New column on pension complaints

The Pensions Ombudsman has issued the first instalment of a new regular column series, in which he looks to share lessons learnt and insights gained during his experience.

The inaugural issue discusses CAS-96095-S3W4. This complaint was brought by Ms W, a member of the Teachers' Pension Scheme. She applied for a refund of contributions after leaving pensionable service, but establishing whether she was eligible was not straightforward because of her stints of service with multiple employers.

The ombudsman characterises this as "a case where the scheme did things right", noting that the administrator promptly established lines of open communication with the relevant employers, gave Ms W progress updates, and spotted errors in employer responses with thorough attention to detail. The ombudsman has encouraged all scheme administrators to aim for this standard of proactive communication.

Pensions Ombudsman | Members directed to increased range of guidance 

To mark Pensions Awareness Week 2026, the Pensions Ombudsman highlighted its growing range of member-focused guidance. 

The number of complaints from pension scheme members to the Pensions Ombudsman in 2025/26 increased by 14% compared to 2024/25. The ombudsman is seeking to promote the information available to members on how to complain, who can complain, common complaint topics, and what the Pensions Ombudsman can and cannot do.

House of Commons Library | New and updated briefing papers

Recent House of Commons Library briefing papers of interest include:

• Administration of the civil service pension scheme.
• Retrospective taxation.