BUFDG Pensions Update - March 2026

Welcome to our pensions newsletter, summarising everything (we know!) from higher education pension scheme updates, general pensions updates that are useful to the sector, and ending with what you’ve all been posting about. Please email us if we are missing anything.

 - A PDF version of this article is available at the foot of this page if you would prefer to read in that format.

USS

UCEA seeking NED for USS Board

UCEA are seeking applications for a non-executive director to join the Board of the USS (one of four UCEA appointed directors on the board) – more information here.

Consultation responses

The consultation response team over at USS has been busy in March, submitting:

• USS response: The Value for Money Framework - brief summary of USS response:
  • USS broadly supported the aim of the Value for Money framework and the focus on better value for savers as long as the framework is fair, practical, and does not create unintended harms for members or the wider market.
  • USS argued the framework is difficult to apply to hybrid DB-DC schemes like USS and suggested hybrid schemes may need to be exempted or at least treated differently.
  • Warns that the proposed ratings system could distort competition and push schemes toward short-term, low-cost choices.
  • Recommends a soft launch in 2028, with no public disclosure at first while the system is tested. Supported some ideas, like external advice, but wanted stronger safeguards against gaming. Several data points, such as DC-only costs and complaints, are hard to separate cleanly in a hybrid scheme.
• USS response: Trustees and Governance – building a stronger future– brief summary of USS response:

• • Current master trust regulatory model works well and gives useful flexibility while maintaining high standards. Future rules should not be too prescriptive, because large schemes like USS need board skills beyond pensions expertise. Scheme size and complexity mean trustee boards need a wider mix of skills, including leadership, audit, risk, technology, and communications.
  • USS supported higher standards for trustees, but wanted flexibility so schemes can tailor board composition to their needs. Proposed trustee directory could work, but the categories for trustees are too simplistic and should allow multiple classifications.
  • Welcomed a clear statutory definition of “professional trustee,” but warned that regulation should distinguish between professional trustees and professional trustee firms. USS said lay trustees still add value, especially where employer and union-appointed trustees bring sector insight and member perspective.
  • It supported training, CPD, and an easy-to-use directory/learning resource, but warned against overly burdensome accreditation. It said member views matter, but trustees must still act in the best interests of the scheme as a whole.

• USS response: Electric Vehicle Excise Duty consultation– brief summary of USS response:

• • USS supported a rapid, orderly transition to electric vehicles, but said the policy needs to stay consistent with net zero goals. It warned that introducing eVED too early could reduce the attractiveness of EVs compared with petrol and diesel vehicles.
  • USS asked government to keep the 2030 phase-out of new ICE cars and the 2035 zero-emission target unchanged. It said EV uptake is still constrained by weak charging infrastructure and expensive grid upgrades.
  • USS welcomed more funding for public charge points and said motorway service areas need stronger support for grid connections. It said any eVED should be simple to implement and liked the idea of measuring mileage at MOT centres. It also highlighted its own investments in renewable energy and clean technology as part of its wider support for decarbonisation.

Member news

USS has published a number of articles this month for members, including:

• What will your perfect retirement cost? Particularly useful in light of the Pensions Age article More than half of Gen X heading for ‘pension shock’
• Helping to inflation proof your benefits
• We're increasing your Retirement Income Builder benefits
• We're increasing your built-up benefits

LGPS

General

For LGPS‑participating universities, the Government has confirmed that public service pensions in payment will increase by 3.8% from 6 April 2026,  in line with the September 2025 CPI figure. This statutory “Pensions Increase” applies to LGPS pensions (including those of former university staff) that have been in payment for at least a year, with lower pro‑rated increases where pensions have been in payment for less than a full year.

Over on Pensions Age, there’s a good article supporting a reduction in employer contributions  given a £148bn surplus.

LGPC Bulletin – Annual Update 2026

The 274 LGPC Bulletin sets out the rates, bands and limits that apply to the LGPS and related payroll/pension matters from 6 April 2026. Summary:

• Employee Contribution Rates – England & Wales: New LGPS employee contribution bands apply from 1 April 2026 (lowest rate remains 5.5% and the highest 12.5%).
• Employee Average Contribution Rates – Scotland: SPPA has published updated bands for 2026/27, ranging from 5.5% up to 11.2%+ (with higher rates above this point not published).
• Additional Pension Limits (APCs): England & Wales - limit increases from £8,903 to £9,054, Scotland - two limits apply:
• Regulation 16(6): £8,568 → £8,713
• Regulation 30(2): £6,591 → £6,703
• Annual Allowance (Tax). No changes for 2026/27
• Lump Sum Allowances: No changes in 2026/27
• Automatic Enrolment Thresholds - earnings trigger remains £10,000
• Revaluation of CARE Benefits (LGPS) - CARE pensions earned up to 31 March 2026 will increase by 8% from 6 April 2026.
• Pensions Increase 2026 - General Pensions Increase (PI) for pensions with a PI date before 22 April 2025 is 8%.
• RPI Increase for ARC Contracts - The increase to ARC‑purchased additional pension (E&W 2008–12; Scotland 2009–12) is 5% from 6 April 2026.
• Guaranteed Minimum Pension (GMP) Increases - Post‑1988 GMP: 3% increase. Some members also receive additional PI to bring increases up to 8%, depending on State Pension Age and conditions.
• Revaluation of Earnings Factors (GMP Calculation) - The 2026/27 revaluation rate is 8%.
• Redundancy Payments - From 6 April 2026, the maximum week’s pay for statutory redundancy increases from £719 to £751.

TPS

UCU ‘irreparable damage’ and UCEA ‘fair and sustainable’

UCU lobbied the government in a letter to both the Secretary of State of Education and the Minister for Skills to take account to “safeguard pensions in higher education” after a number of universities have looked to remove themselves from TPS due to significant costs, calling on the government to:

• rule out any legislative changes that would allow universities to opt out of the TPS, which employers are lobbying for
• stop institutions using fire-and-rehire tactics to force staff out of TPS, and consider sanctioning employers for this anti-worker behaviour
• provide an emergency financial support package to help universities meet TPS contribution costs, similar to support already provided to schools and colleges.  

UCEA responded to this letter by re-highlighting challenges faced by post-92 and specialist universities mandated to participate in TPS and warning UCU of the potential catastrophic outcomes for not considering realistic alternatives.

Member news

TPS has also been letting it’s members know about the Pensions Increase of 3.8% from 6 April 2026, along with updates to the member contribution bands (aligned with CPI). They have also confirmed that they will be removing the option to receive Multi Factor Authentication codes via email due to known fraudulent activity.

Move to Tata

As you are aware, the administration of TPS will be moving from Capita to Tata. This transition has been delayed until ‘late 2026’ as “The Department for Education has recognised that additional time is required to complete the transition effectively and maintain service continuity for members and employers”.

SAUL

Member news

As with the other providers, SAUL is keen to let members know that pensions are increasing in April and they have been highlighting pension gender gap with their articles on why men tend to be better of in retirement and looking at options to decide the best approach for making GMP equal for men and women.

HMRC

IHT Pension Changes

Pensions Age reports that 89% of adults have limited or no awareness of the IHT pensions changes being introduced in 2027. May be a good idea to have a look at the HMRC policy paper ask your pension provider for help with an employee communication.

Newsletter 178 – February 2026

HMRC’s Pensions Schemes Newsletter 178 (February 2026) has minimal direct impact on USS, TPS, LGPS or SAUL as it’s focusing more on administrative and tax compliance rather than employer contributions or benefit structures. Universities administering pensions (e.g., via LGPS funds) should review QROPS transfer processes and ensure IHT guidance is reflected in staff communications, but no immediate action is required beyond routine scheme governance.

The newsletter covers HMRC updates on transfers to qualifying recognised overseas pension schemes (QROPS), inheritance tax rules for pensions, and the normal minimum pension age (NMPA). It provides scheme administrators with compliance reminders and clarifications on reporting and scheme rules.

Newsletter 179 – March 2026

HMRC’s March 2026 Pensions Schemes Newsletter covers updates on the UK-Luxembourg double taxation agreement, lifetime allowance protections, and the digitisation of relief at source (DigiRAS). For universities, the main relevance is operational: payroll, pensions, and HR teams should be aware of any implications for overseas pensioners, member communications, and scheme administration processes.

UCEA

For those of you who are UCEA members, you can access their latest pension newsletter here, where this month they are discussing the phased increase to the State Pension age (starting this April), some updates on DB and DC schemes, discussing improvements to NHS pension scheme, important developments with Pensions Dashboard and finally, talks through their FlexHE pension arrangements (following their email last week).

General

SI 2026/212 – Updated earnings factors from April 2026
The government has published Statutory Instrument 2026/212, which updates the “earnings factors” used in various state pension and benefits calculations. These figures must be reviewed each year to keep past earnings in line with overall earnings growth, as required under the Social Security Administration Act 1992.

The updated factors apply to calculations such as the additional State Pension, Guaranteed Minimum Pension (GMP), and other assessments made under Part III of the Pension Schemes Act 1993. The Order increases historic earnings factors for the tax years listed so they reflect 2025/26 earnings levels. The changes will take effect from 6 April 2026.

External Events

First Actuarial Event

Key issues for pension cost accounting – What employers need to know

What do changes in areas such as financial markets and life expectancy mean for your Defined Benefit scheme pension cost accounting? Our 45-minute pension cost accounting webinar takes place on Wednesday 15 April 2026 at 10am. It’s aimed at employers with a 31 March year-end. In the webinar, our pension cost accounting specialists will discuss:

• Financial market developments over the past 12 months and what they mean for balance sheets
• The latest life expectancy data and how this may change the value of pension scheme liabilities
• Scope for flexibility when setting assumptions at year-end and – with multi-employer schemes such as LGPS or SHPS – why the default assumptions provided by your fund may not be appropriate
• What auditors are focusing on, including the Verity Trustee v Woods case.

What are members talking about?

UCEA meeting on prudent approach to LGPS valuations for HEIs

Retention Period