The Department for Work and Pensions has made the Occupational Pensions (Revaluation) Order 2025 (SI 2025/1211), confirming the statutory percentages DB schemes must apply when revaluing deferred final‑salary benefits for members reaching normal pension age in 2026. The instrument is made under the Pension Schemes Act 1993 and applies in England, Wales and Scotland. It was signed by Pensions Minister Torsten Bell.

What matters for payroll planners and trustees is the one‑year entry covering 1 January 2025 to 31 December 2025. By law, the ‘higher’ percentage for that period tracks the 12‑month CPI to September 2025, which the ONS reports at 3.8%. The ‘lower’ percentage for a single year is capped at 2.5% under the post‑2008 rules, so schemes will see 3.8% (higher) and 2.5% (lower) for 2025 service.

The Order also updates the cumulative ‘higher’ and ‘lower’ percentages for revaluation periods back to 1 January 1986. The framework comes from Schedule 3 of the Pension Schemes Act 1993 (final salary method), with a 5% per‑annum ceiling applied to pre‑2009 service and a 2.5% ceiling applied to post‑2008 service. That’s why no ‘lower’ figure is shown for periods starting before 1 January 2009.

To help finance teams sense‑check the shift from last year, we’ve run the maths off the published 2024 table and the latest CPI. On that basis, the 2019–2025 cumulative ‘higher’ figure comes out at roughly 30.6% versus about 18.9% on the ‘lower’ basis; the 2024–2025 two‑year line is around 5.5% (‘higher’) and 4.2% (‘lower’). These are Market Pulse UK calculations using the 2019–2024 baselines and applying CPI 3.8% for 2025 with the statutory 2.5% cap for the ‘lower’ series.

Practically, administrators should switch over to the new table for any member hitting normal pension age in calendar year 2026. Quotation engines for deferred benefits and early retirement factors will need refreshing so that service accrued in 2025 rolls forward by 3.8% where the ‘higher’ applies and 2.5% where the ‘lower’ applies. That update will feed through to CETVs and member options produced from 1 January 2026.

For finance directors and trustees, the impact on liabilities is incremental but real. A 3.8% CPI print lifts statutory revaluation for recent leavers relative to last year’s 1.7%, nudging up present values for cohorts nearing retirement. Accounting valuations under IFRS or FRS 102 won’t follow the statutory table word‑for‑word, but assumption sets should be revisited so that deferred revaluation and in‑payment indexation assumptions remain consistent with the latest inflation evidence.

Worth separating out: this DWP Order governs revaluation of deferred DB benefits under the final salary method. Public service CARE schemes are set each year by the Treasury’s separate Public Service Pensions Revaluation Order. For 2025 those figures were 1.7% for prices and 4.5% for earnings, effective from 1 April (with some schemes switching on 6 April), which is what drives active CARE revaluation and can affect Pension Input Amounts.

Our read for employers is simple. Build the 2026 switch‑over into year‑end processes; brief HR and payroll teams that this does not alter contribution rates or payroll tax, but it does change how deferred DB promises are rolled forward for those retiring next year. Update member communications to explain why some tranches move by 3.8% and others by 2.5%, depending on when benefits were accrued.

Compared with last year’s Order-when the one‑year line showed 1.7% for both ‘higher’ and ‘lower’-the split is back. With CPI at 3.8% for September 2025, schemes will use 3.8% where the 5% ceiling applies and 2.5% where the 2.5% ceiling applies. That’s the statutory design doing its job.