The highly anticipated Pension Schemes Bill is here and there’s a lot to digest, with DB surplus and DB superfunds, as well as VFM, small pot consolidation, “megafunds” and new “retirement income solutions” on the DC side. However, with Royal Assent not expected until 2026, and detailed regulations to follow after, the current proposals are very much a slow burn.

6 April 2024 marked the end of the lifetime allowance (LTA). The original timeframe for making the required changes was extremely tight, with two sets of amending regulations coming into force as recently as November 2024. With further updates to HMRC guidance still expected, checking pensions systems and processes to ensure they are up to speed remains a 2025 priority.

At the Autumn Budget, the Chancellor, Rachel Reeves, announced that most authorised death benefits, including DB lump sum death benefits, will become subject to inheritance tax (“IHT”) from April 2027. From the same date, “unspent” DC pots will fall within individual’s estates for the purposes of calculating their IHT liability.

The Government is planning to make changes to allow “trapped surplus funds to be invested in the wider economy” by making it easier for trustees to return surplus to their sponsoring employers. Details of its surplus policy will be published this spring, as part of the DWP’s response to its 2024 consultation on options for DB schemes.