Pensions law update: December 2025

Policy update

Budget 2025

There were a number of key announcements for pensions in the Budget, including a new cap on the amount of pension contribution that attracts NI relief if paid by salary sacrifice, a promise of a new ability for DB schemes to make direct payments to members out of surplus assets (a change we predicted might be on the cards in this article, published two days before), and increases to be applied for the first time to pre-1997 accrual for some members of the PPF and FAS.

Richard Knight and Louise Pettit outline what we know so far about the new measures, and share some early thoughts on what the changes may mean in practice.

Pensions Schemes Bill – next steps

The Bill continues to work its way through the legislative process and it has been confirmed that the report stage and third reading in the House of Commons will take place on Wednesday 3 December. On Monday (1 December) an amendment paper setting out all of the tabled amendments to the Bill was published. These include proposed changes to the s37 remedy provisions, as well as new clauses to implement some of the measures announced in the Budget, such as indexation of pre-1997 benefits for some members of the PPF and FAS.

For a summary of the key provisions in the Bill as it currently stands (i.e. without the 1 December proposed amendments), please take a look at our Pension Schemes Bill handbook – our user-friendly guide with dedicated chapters for DB and DC schemes and the LGPS.

Focus on tax

Inheritance tax – who will bear the burden of implementing the changes for pension scheme benefits?

Published just before the Budget, in this article Alice Honeywill and Edward Hayes consider the practical implications of putting the Chancellor’s last big pensions tax announcement into practice, and identify the remaining areas of concern and uncertainty.

Inheritance tax – budget update

And in this post-Budget follow up, we set out the impact of the IHT-related announcements that were included, which relate to the mechanics of implementing the IHT payments in practice.

HMRC update on retrospective approach to tax free lump sum reversals

In our last edition we shared an update on announcements from HMRC and the FCA regarding when and how lump sum withdrawals can be unwound. Further guidance has since been provided by HMRC in its 30 October newsletter – Alice Honeywill and Hercules Phillips consider the latest position.