29 June 2026 
Julia Ascott, Employment taxes specialist
Welcome to our pensions newsletter, summarising everything we’ve gleaned from higher education pension scheme updates, and general pensions updates that are useful to the sector.
USS has announced that Dame Kate Barker will step down as Chair in July 2027, with a successor to be appointed through a formal recruitment process.
It has also confirmed that Sarah Bates will step down as Chair of USS Investment Management at the end of 2026, with Rita Bajaj appointed to join the board in October 2026 and expected to become Chair from January 2027 (subject to approval).
USS has responded to TPR’s Corporate Strategy consultation, broadly welcoming its focus on delivering sustainable retirement incomes but is calling for a stronger emphasis on security and value for members, alongside clearer measures of success.
It highlights the importance of a flexible, proportionate regulatory approach, noting that large hybrid schemes like USS don’t fit neatly into standard DB/DC models, and stresses that regulation should support innovation, appropriate risk-taking, and member outcomes while ensuring trustees’ primary duty remains acting in members’ best financial interests.
Recent USS member updates provide timely reminders on planning for retirement and understanding how different pension elements fit together.
In its article on what you should know about your State Pension, USS highlights that the State Pension forms a key part of most people’s retirement income alongside USS benefits and encourages members to check their forecast, consider filling any contribution gaps, and be aware of tax implications.
A related article, five things you should know about your State Pension, reinforces these core points while emphasising the importance of understanding how your State Pension, USS benefits, and overall spending needs come together when planning for retirement.
USS also draws attention to confidence levels among members in its article more than a quarter of members are not sure about pension decisions. Survey findings show that 37% of members aged 55+ are unsure about the decisions they need to make, underlining the importance of accessing guidance and support when approaching retirement.
Finally, in taking your USS benefits, USS outlines what members can expect when accessing their pension, and signposts the wide range of support available to help members make informed choices.
And in their blog, The six month shift, a USS colleague reflects on taking six months of fully paid paternity leave and the impact it had on family life, wellbeing and their return to work. The piece highlights how extended leave can strengthen family relationships, support better work–life balance, and provide a valuable reset before returning to professional responsibilities.
Mercer has shared a briefing with universities on the option of offering USS as an alternative to TPS membership for eligible staff. The note highlights potential differences in employer and employee contribution rates, and outlines considerations for institutions reviewing their pension strategy. Further detail is available in Mercer’s note: Offering USS as an option to TPS members.
THE has picked up the news that Northumbria University, who have offered USS as an alternative to TPS to their staff, reported that nearly half of eligible staff (around 43%) have switched over to USS.
The latest LGPS bulletin confirms new LGPS investment and governance regulations from 30 June 2026. Funds must move assets into pools within set deadlines, appoint a senior LGPS officer and independent person, and publish a new investment strategy by 31 March 2027.
The SCAPE discount rate has increased to CPI +2.0% (from +1.7%), which affects how costs are assessed across public service pension schemes.
New Qualifying Additional Pension Arrangements (QAPAs) have been introduced from April 2026. These must be handled differently from APCs, including transferring on Club terms, so processes may need updating.
The bulletin also notes delays to Civil Service pension transfers, updates to guidance (including annual allowance), and ongoing work on pensions dashboards, all of which may affect administration and member communications.
Elsewhere on the website, there are new resources for employers to highlight the value of LGPS to their employees. The toolkit includes promotional materials such as leaflets, videos, email footers and social media posts.
Mercer has also shared an example of a pre‑1992 university exiting the LGPS, where the institution received a multi‑million pound credit from the fund and transferred affected employees into its main pension arrangements with additional support, including guidance sessions.
The note highlights potential outcomes such as removing future exit debt risk and ongoing LGPS liabilities, while stressing that employers should carefully review all options and implications before making any decisions on LGPS participation.
Pensions Age contends that most LGPS funds do not have sufficient staff and skills for day-to-day operations, following a study by Aon.
In Parliament, the Secretary of State for Education has once again stated that the government is seeking to “better understand concerns” around TPS in the HE sector. It’s hard not to question why this remains such a challenge, given how long these issues have been under discussion.
Later in the month, the House of Lords debated the ongoing pressures facing post-92 institutions (you can read the Hansard record here). During the discussion, Lord Davies of Brixton noted his own “back-of-the-envelope” estimate, suggesting employer contributions could potentially fall towards the lower end of expectations, at around 16%. While still uncertain, there appears to be a broad consensus that a meaningful reduction is on the horizon.
For those trying to make sense of what future TPS employer contributions might look like, a useful starting point is the recent First Actuarial/UCEA session. A recording is available via their booking system and provides a helpful overview of the possible outcomes.
The latest processing times for first pensions payment shows that whilst the NHSPS is processing a high number of cases, as at May 2026, 97% of new pension claims were paid within the 30-day target. They need to show Capita how it’s done…
The government has confirmed it will review the FAA framework after a high-profile transaction used the mechanism in a way not originally envisaged, particularly involving the transfer of DB liabilities to a commercial provider. The review will consider whether additional safeguards are needed to protect members and the Pension Protection Fund, with a consultation expected in due course.
FAAs were originally designed to support restructures, mergers and similar transactions by allowing DB pension liabilities to be transferred between employers without triggering a section 75 debt, provided there is a suitable replacement employer. However, the government’s concern is that evolving market practices (including the potential for schemes to be run on a more commercial or profit-driven basis) may introduce risks that were not anticipated when the legislation was introduced.
For universities, FAAs remain a useful mechanism, most often arising where staff move between employers, such as through subsidiary creation, outsourcing or TUPE transfers, or in the context of mergers and group restructuring. In these scenarios, they allow pension liabilities to follow employees without triggering an immediate employer debt, supporting organisational flexibility.
That said, their use is tightly constrained. FAAs require trustee approval and depend heavily on the strength of the receiving employer’s covenant. In multi-employer schemes such as USS, trustees will also consider the impact on the wider scheme, which can make arrangements complex and, in some cases, difficult to achieve.
Their latest pension schemes newsletter 181 is available, with articles on:
Proposals to Amend the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021
The DWP has launched a consultation on proposed changes to the 2021 pension transfer regulations, aimed at strengthening protections against pension scams and improving how transfer conditions operate in practice, including measures targeting risks in Small Self-Administered Schemes (SSASs).
While not specific to higher education, the proposals could affect university pension schemes and administrators by altering transfer due diligence requirements and processes, with potential implications for scheme governance and member transfer activity across the sector.
Guaranteed minimum pension conversion provisions
HMRC this time issued a consulting on changes to make sure people aren’t unexpectedly charged extra tax when pension schemes make technical adjustments to equalise benefits between men and women (known as GMP conversion). The aim is to protect members from losing tax safeguards during this process.
For higher education, this mainly matters for universities with Defined Benefit schemes, as it should help ensure staff don’t face unexpected tax bills when schemes carry out these changes, making the process simpler and fairer for members.
Surplus Flexibilities for Defined Benefit Pension Schemes
The DWP is consulting on new rules that would make it easier for well-funded Defined Benefit (DB) pension schemes to return surplus funds (money left over after meeting liabilities) to their sponsoring employers, while still protecting members’ benefits.
This could be relevant for universities involved in DB schemes (such as USS), potentially giving employers more flexibility to access surplus funds and influencing how schemes are managed and funded in the future. Pensions Expert has more here.
The Pensions Policy Institute have been busy this last month, issuing reports on Unlocking DB surpluses: Balancing Risks and Rewards, examining the scale and drivers of DB surpluses, and Assessing megafund pension reforms: Insights from international experience which explores the strengths and limitation of the megafund approach.
PwC highlight the growing pressure on pensions administration to evolve, arguing that traditional models are no longer sustainable in an environment of rising expectations, regulatory scrutiny and increasing complexity.
Numerous articles and guidance are available on the introduction of inheritance tax on pensions (see HMRC above), First Actuarial share their briefing here.
Over at Pensions Expert, they are concerned that the pensions transfer process varies greatly between providers risking a two-tier system and calls for reforms to system inefficiencies. They also pick up on the news that the UK pension system is shifting from Defined Benefit to Defined Contribution, with DC pension assets projected to overtake TB assets by around 2030 and there’s an interesting story on the rise of AI in the pension sector.
