New Pension Trustee Duties and Pension Inheritance Tax Changes: What Pension Schemes Need to Know

Estate planning is not regulated by the Financial Conduct Authority

The UK pensions landscape is changing rapidly, with new trustee responsibilities, increased scheme transparency requirements, and major inheritance tax reforms affecting savers and their families.

One of the most significant changes is the new legal duty requiring trustees of defined contribution schemes to design, offer, and regularly review default retirement options for members approaching retirement.

This reform marks a major shift in pension governance and is expected to play a key role in improving retirement outcomes for pension savers.

What Is Happening to UK Pensions Right Now?

The news on pensions in May 2026 has been unusually busy. Several significant policy developments have landed at the same time, and between them they touch almost every aspect of how pension schemes are managed, how retirement savings are invested, and what happens to pension pots when someone dies.

The three main areas of change are:

• Inheritance tax reform bringing pension pots within the scope of taxable estates
• Pension scheme performance ratings requiring trustees to publish and compare data
• Stronger rules on pension overpayment disputes giving savers faster resolution

Each of these changes has been shaped by input from pension advisors, financial pension consultants, independent trustee services, and consumer groups. Together they reflect a broader shift toward greater transparency, accountability, and complexity in the UK pension system.

Inheritance Tax and Pensions: An Admin Nightmare for Families

The most talked-about development is the planned inclusion of unspent pension savings within the scope of inheritance tax. HMRC published further guidance on this change, confirming that personal representatives dealing with estates will face significant new obligations.

What the Change Means in Practice

Historically, pension pots sat outside a person’s estate for inheritance tax purposes. That is now changing and may create additional challenges for families.

Under the new rules, personal representatives will be required to:

1. Identify every pension pot held by the deceased, including old workplace schemes
2. Contact all relevant pension scheme administrators and pension trustee services
3. Gather formal valuations for each pension pot
4. Calculate any inheritance tax owed on those pension assets
5. Report all of this information to HMRC within defined timeframes
6. Pay any tax due, potentially before the beneficiaries receive their inheritance

In practice, this could involve searching old records, contacting multiple pension providers, and tracking down missing account details.

What You Should Do Now

Given the scale of the administrative challenge ahead, pension advisors are urging people to act well in advance. The key steps recommended are:

1. Keep your expression of wish forms updated with all pension providers
2. Consider consolidating pension pots to simplify estate administration and seek professional pension consolidation guidance before making any transfers.
3. Maintain a record of all pension schemes and provider details
4. Seek advice from a qualified pension or financial advisor
5. Review your overall estate plan, including pensions and other assets

The Retirement Planning Gap: Are You Drawing Down Too Quickly?

Pension advisors are increasingly concerned that many people reach retirement age without a clear plan for managing their pension savings. Maike Currie highlighted that some savers risk withdrawing funds too quickly, while others may be too cautious and fail to make full use of their retirement income.

What a Good Pension Investment Plan Looks Like

A robust pension investment plan for retirement should take into account:

• How much income you need each year to cover your essential and discretionary spending
• How long your money needs to last, taking into account life expectancy and health considerations
• Whether to take a regular income through drawdown, purchase an annuity, or use a combination of both
• The tax implications of different approaches to accessing your pension savings
• What other assets and income sources you have available, including state pension entitlement, property, and savings

Pension advisors can help you build a retirement plan that balances long-term financial security with your future income and lifestyle needs.

How the Reforms Change the Pension Landscape: A Summary

The table below brings together the key changes and their implications for savers, families, and pension professionals.

Area of Change	What Has Changed	Who Is Affected
Inheritance tax on pensions	Unspent pension pots now included in taxable estate	All pension holders and their families
Pension trustee reporting	Schemes must publish performance ratings	Savers, trustees, pension advisors
Default retirement options	Trustees must design and review retirement income options	Defined contribution savers
Overpayment dispute resolution	Ombudsman decisions enforceable without court action	Savers in overpayment disputes
UK investment direction power	Government can direct a proportion of pension investment to UK assets	Pension fund investment consultants and trustees
Consolidation support	Easier for savers to view and consolidate pots in one place	Multi-employer savers

The Growing Role of Professional Pension Trustee Services

Taken together, these changes are making pension management and retirement planning far more complex for trustees, advisors, and savers. Professional and independent trustee services now play a vital role in supporting scheme governance, regulatory compliance, transparency, and member communication in an increasingly demanding pensions environment.

What to Look for When Seeking Pension Scheme Advice

If you are looking for pension scheme advice or working with a pension financial advisor for the first time, here are the key things to look for:

1. Relevant qualifications and FCA or Pensions Regulator authorisation
2. Experience in both retirement and estate planning
3. Clear and transparent fee structures
4. Ability to work with solicitors, accountants, and trustees
5. A whole-of-market approach that considers a wide range of options

Choosing the right pension or financial advisor can make a significant difference to your long-term retirement outcomes.

You can also visit our office for personalised guidance on pension planning, retirement strategies, and estate planning matters.

Final Thoughts

The pension changes being introduced across the UK are expected to have a major impact on savers, families, and pension professionals. New inheritance tax rules, stronger pension scheme oversight, and increased trustee responsibilities are making pension planning more important than ever. Advisors are encouraging people to review their pension arrangements, update beneficiary nominations, consider pension consolidation where appropriate, and treat pensions as an important part of their overall estate planning strategy.

Taking action early can help reduce future complications and provide greater financial clarity for both savers and their families. Contact us today to speak with a pension advisor about reviewing your retirement and estate planning arrangements.

Approved for 12 months under reference F38552 under the provision that the following disclaimer is added on 08/06/26 – 08/06/27

 

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