HL UK Pensions Law Digest 29 January 2026

Pension Schemes Bill: Virgin Media remedy

• Guidance from the Financial Reporting Council (FRC) for actuaries when considering “potentially remediable alterations”;

Inheritance tax (IHT) and pensions: House of Lords Report

• Recommendations from the House of Lords’ investigation into the extension of IHT to many pension benefits;

Pensions Dashboards Programme (PDP): blog on data preparation

• The PDP has published a blog on data preparation which includes links to a range of on-line resources and guidance;

Pension transfers: government response to petition

• The DWP is expected to consult on smoothing the transfer process.

Virgin Media: guidance for actuaries

The Financial Reporting Council (FRC) has announced the publication of its guidance for actuaries who are asked to confirm whether a “potentially remediable alteration” (PRA) would have prevented a scheme from continuing to meet the reference scheme test (RST).

The PRA remedy is contained in the Pension Schemes Bill, currently before Parliament. Where the actuary gives confirmation under the PRA remedy provisions, the amendment will be treated as always having been valid for the purposes of the contracting-out legislation.

For more details of the PRA remedy, the FRC guidance and a reminder of why the decision in the Virgin Media case has prompted the government to introduce the remedy, please see our briefing note.

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Inheritance tax on pensions: House of Lords Report

The Economic Affairs Committee of the House of Lords issued a 109-page report on 26 January 2026, following its call for evidence in September 2025 on provisions in the Finance Bill to bring unused pension funds within the scope of inheritance tax (IHT), and to reform IHT relief on agricultural and business property.

The Committee welcomed changes made by government since the proposed reforms to IHT and pensions were first announced in October 2024. However, the Committee still has many concerns about the proposals and urges the government to take “significant steps” to ensure that the reforms can work in practice.

The Committee’s recommendations include the following.

Deadlines for payment of IHT

• The six-month deadline for payment of IHT should be extended to 12 months for IHT on pension assets for a transitional period, while pension scheme administrators (PSAs) adapt to the new processes.
• Interest on late payment of IHT and penalties should be suspended for a minimum of two years.

Information sharing

• The government’s “Tell Us Once” service (which enables a death to be reported to most government organisations by a single notification) should be made accessible by PSAs, so that the member’s personal representatives (PRs) do not need to notify the member’s individual pension schemes separately.
• Regulations on information sharing between PSAs and PRs should include a process for verifying the identity of PRs. (This will be particularly important where a member dies intestate and the PRs will need to demonstrate their status to gather pension information from the PSA before probate is granted.)
• The current proposed deadline of four weeks for providing a valuation of pension assets to PRs should be reconsidered, especially where a pension scheme holds illiquid assets. It should also be possible to provide HMRC with an approximate value initially.
• Unless final regulations and guidance on information-sharing between PRs and PSAs are available by April 2026, it will not be sensible or appropriate for the changes to pensions and IHT to come into effect in April 2027 as planned.

Locating pension pots

• Pensions dashboards should show all an individual’s pension arrangements, including those in drawdown. (As currently being brought in, only an individual’s active and deferred arrangements will show up on a dashboards search.)
• PRs should be able to access information about a deceased member’s pensions via pension dashboards.

Power for PRs (or beneficiary) to require the PSA to retain benefits and pay IHT direct

• The requirement for PSAs to pay IHT on pension benefits within 35 days of a direction from the PRs (or beneficiary) should be reconsidered where the scheme holds illiquid assets.
• By April 2026, HMRC should publish guidance on the direct payment mechanism, in a form that PSAs may use when communicating with beneficiaries.
• If experience shows that PSAs are being required to sell assets at a loss to be able to meet IHT deadlines, the government should consider introducing loss-in-sale relief for land and qualifying investments held within a pension scheme.

Communication and awareness

• HMRC should work with the pension industry to develop a leaflet on the changes to IHT and pensions, which PSAs may send to members.
• By December 2026, HMRC should publish step-by-step guidance for PRs explaining what they must do if the deceased’s estate includes pension benefits.

IHT and pensions: wider implications

• The Committee is concerned at the difference in IHT treatment between benefits from defined benefit (DB) or defined contribution (DC) schemes.
• In 2026, the government should consult further on the impact of the IHT changes where there is an early or unexpected death leaving financial dependants (such as children) but no spouse or civil partner. (DC benefits will be exempt from IHT if they are paid to a spouse or civil partner, but not if the benefits are paid to children or other financial dependants.)

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Pensions Dashboards Programme publishes a blog on data preparation 

On 22 January 2026, the Pensions Dashboards Programme (PDP) published its blog: Preparing data for dashboards: what you need to do.

The blog notes that ensuring pension data is reliable and up to date is "one of the most critical steps for pension providers and schemes in preparing for connection".

It contains links to a range of resources and guidance to help trustees and providers with their data preparation steps and to navigate the dashboards landscape more generally.

Other points of interest include:

• The blog reminds trustees of the need to comply with version 2.0 of the data standards. These data standards specify how pension providers and schemes receive "find requests" from the central digital architecture and how they should send "view responses" to the dashboard.
• The PDP notes that legislation requires trustees to decide on their "data matching criteria" (including first name, last name and date of birth) and to complete matching when they receive a "find request". The blog cites the Pension Administration Standards Association's Data Matching Convention Guidance as a resource to help trustees to develop and decide their data matching criteria. The PDP also suggests that trustees may wish to consider which attributes the identity service verifies, when determining their data matching approach. The identity service ensures pensions data is requested by users with verified identities and is returned to the same user.

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Pension transfers: consultation ahead

The government has responded to a petition asking for clear, enforceable standards to be set for pension transfers, to enable transfers to be made faster and electronically. The petition achieved just over 16,700 signatures, and so fell short of the 100,000 signature-threshold at which a petition will be considered for debate in Parliament.

According to the government response, the DWP is planning to consult “in the coming months” on the outcome of its work with the pension sector on smoothing the transfer process while responding to developing risks.

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Authored by Jill Clucas and Susanne Wilkins.