Pension Talks Interview: Mark Smith, Head of Media Relations at Pensions UK

This month, we spoke to Mark Smith, Head of Media Relations at Pensions UK who shared insight on the Autumn Budget, key themes for 2026, pensions schemes and sustainability investments and the use of AI to innovate the sector. 

1. 2025 has been a huge year for the pensions sector in terms of policy changes (e.g. Introduction of Pensions Schemes Bill, the establishment of the new Mansion House Accord and a Pensions Commission). What are likely to be the key themes for 2026?

With the Pension Schemes Bill making its way through Parliament, and the Pensions Commission preparing to define its scope, the coming year could redefine the fundamentals of the industry for a decade to come.

Pensions UK’s 2030 Ready report shows the choices we need to make to prepare the system for the challenges and opportunities of the next five years: better governance, smarter consolidation, bolder investment thinking and a renewed focus on adequacy. These are necessary conditions for a system that delivers for savers over the long term. The Pension Schemes Bill will sharpen expectations on Value for Money (VFM) and accountability, while the Commission’s work sparks long-overdue conversations about outcomes, fairness and long-term sustainability.

2. What is the sector’s view of the changes announced in the Budget, in particular the changing tax arrangements for salary sacrifice?

There is serious concern that the £2,000 cap on salary-sacrificed pension contributions will see some employers reconsider the generosity of their workplace pension arrangements. Prior to the Budget, Pensions UK sent a joint letter with the Federation of Small Business (FSB) explaining the detrimental impact this measure would have on savers, businesses and the economy.  

So it’s disappointing in the context of a wider national problem of under-saving for retirement. The silver lining is that schemes and employers have until April 2029 to prepare for the changes. We’re encouraging employers to do what they can to mitigate the impact on employees. That said, things could have been worse. There was the threat to remove the 25% tax free lump sum – a key incentive to save. The fact that it stays is a relief.

There were other positives in the Budget for pension funds too. The Triple Lock on the State Pension was retained, which was a key manifesto commitment from this Government. The basic and new State Pension will be increase by 4.8% from April 2026.

The move to reduce the tax charge on released defined benefit surpluses if they are used to benefit pension members directly is most welcome and a reform we have called for. Provided robust safeguards are in place to protect scheme funding and member benefits, enabling trustees to use surplus to improve pension benefits without penalty is undoubtedly good news for savers. Also, the Chancellor announced measures to protect pre 97 members of the Pension Protection Fund (PPF) and Financial Assistance Scheme (FAS) from the impact of inflation with CPI-linked increases, capped at 2.5% a year.

Elsewhere, the new ‘listing relief’ removes the 0.5% Stamp Duty Reserve Tax charge for companies choosing to list in the UK. This will no doubt bring more confidence to the UK equity market.

3. Are we seeing changing priorities on sustainability issues for pension scheme investments? Is this being influenced by the political climate?

At home the focus on the role pension schemes have to play in UK growth in the last couple of years has meant that ESG has been less prominent in the news. This is perhaps why there was a proposed amendment to the Pensions Schemes Bill to include ESG as a consideration under the fiduciary duty. However, the Government rejected this amendment, instead taking the guidance approach as an alternative to a legislative requirement.

The rhetoric coming from the other side of the Atlantic on sustainability and climate-aware investing has certainly been less than helpful.

My sense is it’s leading some large investment managers and asset owners to be less vocal about their efforts to support the green transition. Behind the scenes, however, our members remain as committed as ever to taking climate and other ESG considerations into account within their investment strategies.

Our latest member survey showed that 96% of respondents say sustainability is important in their investment decision-making and most savers in the UK with a workplace DC default fund now belong to a scheme which has made a net zero commitment.

Our annual Stewardship and Voting Guidelines includes a section on climate change and sustainability with detailed guidance on how asset owners should approach voting resolutions. ESG remains at the centre of investment decision-making.

4. How is the rise of AI and new technology supporting innovation in the pensions industry?

The potential of AI is certainly exciting. Some pensions schemes are embracing it more avidly than others, but all expect it to have a much larger role to play in the future.

The most visible adoption is online governance portals where AI can be used to summarise reports and advice papers. We’re also aware of it being widely used to take meeting minutes and actuaries are increasingly making use of AI to analyse large data sets and run modelling.

AI assistants can process repetitive, manual tasks in a fraction of the time and cost that it would take human employees to manage the same workload. At the same time, we know that many schemes are struggling to find enough administrative staff, so AI can really help to relieve this pressure. AI can also be used to improve member communications, such as through AI ‘chat bots’ answering member questions. The lower costs of these kinds of tools are helping savers who otherwise might not have been able to afford financial advice.

That being said, the strong regulatory environment in which the UK pensions industry operates necessitates human accountability and strong governance mechanisms. AI is unlikely to be solely responsible for end-to-end decision making in the foreseeable future, with human agents likely to remain central to decision making across the industry.

No doubt we will see more and more innovative applications. But the key concern is for pension schemes to ensure that member data remains secure. Our message is: approach with caution.

5. Given the level of political intervention in the pensions industry recently (particularly the prospect of government mandation of pension scheme investments), how do we ensure that the sector puts fiduciary duty to savers at its heart?

The positive is that, for once, the pensions sector is not just waiting for change, it is standing on the edge of it. The Pension Schemes Bill making its way through Parliament includes a lot of measures that the industry has been asking for over many years: guided retirement, solutions small pots and the Value for Money framework. This is not business as usual and is a real boon for savers.

We continue to highlight the risks that reserve mandation power presents to savers. Government intervention in investment decisions is likely to erode trust and could lead to poorer returns. We strongly believe in a collaborative, voluntary approach, where the industry and government work together to identify and develop investment opportunities. We are advocating for the reserve mandation power to be narrowed in scope, time limited and used only as a last resort.

Pensions UK is a robust champion of fiduciary duty which must remain undiluted and core to pension schemes’ governance. Pensions trustees must have the agency to act in line with the long-term interests of their beneficiaries.