The Department for Work and Pensions has made the Occupational Pensions (Revaluation) Order 2025, the annual update that sets statutory revaluation for deferred defined benefit entitlements under the final salary method. Signed by Parliamentary Under Secretary of State Torsten Bell on 19 November 2025, it was laid before Parliament on 21 November and takes effect on 1 January 2026. The Order applies in England, Wales and Scotland, and the accompanying note describes a formulaic change with negligible administrative impact, according to legislation.gov.uk.

For members, this is about the value of a deferred pension between leaving a scheme and reaching its normal pension age. The Order fixes the percentages schemes must use for that pre‑retirement period in 2026 cases. It is separate from increases applied to pensions already in payment, which follow different rules and timetables under scheme terms.

Statute sets out how these percentages work. Each year the Secretary of State specifies a higher and, where relevant, a lower revaluation percentage for defined revaluation periods. The higher figure reflects price inflation over the reference window but is capped at 5% a year; the lower figure is capped at 2.5%. The reference period runs from 1 October to 30 September, and the ‘appropriate’ percentage applied to a member matches the number of complete years in the pre‑pension period.

Consistent with past practice, the 2025 Order lists the percentages for every revaluation period from 1 January 1986 to 31 December 2025 so schemes can calculate uplifts for those reaching normal pension age in 2026. It also states there is no need to specify a lower revaluation percentage for periods starting before 1 January 2009, reflecting the post‑2009 statutory cap structure.

For deferred DB members, the signal is straightforward: statutory revaluation remains CPI‑based with the familiar caps. If inflation over the relevant reference period runs above 5% or 2.5%, the statutory minimum uplift may lag prices, so the preserved pension grows more slowly than living costs; when CPI sits below the caps, the increase mirrors inflation. Transfer values and retirement quotes issued during 2026 will embed these settings.

For sponsoring employers and trustees, the Order helps lock down assumptions for year‑end financial reporting and 2026 valuations. IAS 19 and FRS 102 disclosures for deferred obligations should reflect the CPI‑to‑September window and statutory maxima where scheme rules reference the minimum. Funding models, member option pricing and CETV bases can now be refreshed with greater certainty, supporting clearer budgeting and risk reporting.

Scheme rules matter. Many trust deeds hard‑wire their own revaluation formulae or provide more generous terms than statute; in those cases, administrators follow the scheme wording. Where rules track statutory revaluation by reference, these Order‑set percentages flow through automatically. Employers should confirm which approach applies before they finalise any communications or quotes.

Operationally, administrators should align calculation engines to the new schedule once actuarial teams have validated the entries, ensure tranche splits for pre‑2009 and post‑2009 service are correctly flagged, and update member letters to explain 2026 treatment in plain English. For SMEs sponsoring closed DB plans, this is mainly an assumptions tidy‑up rather than a cash call, but it still earns a line in audit and board papers.

This is a routine, rules‑based intervention rather than a policy shift. It sets a clear timetable for the 2026 retirement cohort and removes ambiguity for both members and sponsors. The Department’s note indicates no significant administrative impact, which matches the pattern seen in prior revaluation cycles.