LONDON, 15 December 2025 –
Aon plc (NYSE: AON), a leading global professional services firm, a leading global professional services firm, has outlined its ‘hopes and fears’ for UK pensions in 2026.
As 2025 draws to a close, Matthew Arends, partner and head of UK retirement policy at Aon, previews the key events, changes and themes that are likely to influence the pensions industry in the coming year
Matthew Arends said:
“It’s hard to escape the feeling that the world is going through a more volatile phase than for many years – and UK pension schemes are not immune to it. If we set aside economic volatility, the UK findings of Aon’s Global Pension Risk Survey 2025/26, ranked regulatory risk as the second most significant, highlighting the concerns of defined benefit (DB) pension stakeholders at the pace and volume of change. My expectation – and fear - is that the pace of change will not abate, particularly as we begin to see the regulations that will support the Pension Schemes Act and as the new Pensions Commission moves into its main work during 2026.
“Overall, my concern is that the industry, which already has much on its hands dealing with the challenges of existing issues, will need to stay increasingly alert and flexible to deal with the next round of change.”
Tax triggers
Matthew Arends continued:
“A particular area of concern is around the tax rules for pensions. We saw this year how careless commentary around the misplaced fear of reductions in tax-free cash allowances, motivated some individuals to retire prematurely and take their lump sums. We need stability of pensions tax rules in order to engender public confidence. Unfortunately, the timetabled changes to salary sacrifice and inheritance tax serve to undermine engagement and long-term trust in pensions.”
The drive to dashboards – and more
Matthew Arends continued:
“2026 could well prove to be the year of preparation, with schemes readying themselves for the launch of Pensions Dashboards, for the implementation of new inheritance tax and DB surplus release rules in 2027, and for DC providers to launch their decumulation solutions for providing guided retirement options. Pension scheme administrators in particular will be aiming to get ahead of the potential volume of activity that will inevitably follow these changes.”
CDC – a new era
Matthew Arends continued:
“Given Aon’s long involvement in the process, one of my big hopes for 2026 is that the Pensions Regulator’s guidance is finalised alongside the laying of regulations for multi-employer Collective Defined Contribution (CDC) schemes. Once these have taken place, the first schemes will be able to seek authorisation under the new regime from midway through 2026. This will usher in a new era of commercial CDC offerings, with the potential to provide a third way of saving for and spending in retirement.”
The Virgin Media case – and its implications
Matthew Arends continued:
“One of the hopes I identified for 2025 was for progress in the Virgin Media case – and this was fulfilled. Going into 2026, I have high hopes that the government’s measures within the Pension Schemes Bill will come to fruition and that - with pragmatic guidance to actuaries on how to provide retrospective confirmations - schemes can feel confident that, in most cases, the Virgin Media ruling will not prove problematic. If anything, the shadow falling over this particular topic comes from the long-awaited judgment in the Verity Trustees case – but let’s hope that it does not unravel the progress that we seem to be making.
PPF protection
Matthew Arends continued:
“The Chancellor’s announcement in the Budget of the extension of Pension Protection Fund (PPF) benefits to include increases on certain pre-1997 pensions was a surprise, but I sincerely hope this change is not reflected in S179 valuations. To do so would just pass on the cost of extra PPF benefits to levy-payers. It is vital given the very substantial surplus in the PPF - even after paying for pre-1997 pension increases - that this is not allowed to happen and that PPF levies remain at zero for the indefinite future.”
Fighting AI fraud
Matthew Arends continued:
“There is a growing fear that artificial intelligence (AI) will be increasingly used to commit fraud against pension savers and savings. Alongside more familiar forms of scamming, we have already seen instances of AI being used to impersonate members. It’s hard not to see these attempts becoming more sophisticated – and devious. Equally, I have a fear that cyberattacks such as those seen in 2025 against retailers and car manufacturers will happen against pension schemes, leading to extended payroll interruptions. Regulators, law enforcers and the industry – and pensions administrators in particular - will increasingly need to be on their guard to protect scheme members.
About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that protect and grow their businesses.
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