UK sets 2026 revaluation rates for final salary pensions
Most of us never read statutory instruments, but they quietly set the numbers that shape our money. The government has now made the Occupational Pensions (Revaluation) Order 2025 (SI 2025/1211), laid it before Parliament on 21 November 2025, and it comes into force on 1 January 2026. If you’ve ever left a defined benefit (final salary) scheme, this is the annual rulebook that tells schemes how to uprate what you’ve already earned when you hit pension age in 2026.
Revaluation is a legal safeguard. When you leave a salary‑linked scheme before its normal pension age, the pension you’ve built up becomes “preserved”. The law then requires schemes to increase that preserved amount each year so it keeps pace with prices until it’s due to be paid. The mechanism is set out in Schedule 3 to the Pension Schemes Act 1993, which is why a fresh order is made every year.
Who is actually affected in 2026? Anyone with final‑salary (defined benefit) rights in an occupational scheme who reaches their scheme’s normal pension age between 1 January and 31 December 2026. The Order applies in England, Wales and Scotland. Northern Ireland issues a separate instrument each year through its Department for Communities, so if your scheme is based there, check the NI rule.
You’ll see two phrases in the law: “higher revaluation percentage” and “lower revaluation percentage”. They reflect two statutory caps. The higher rate is capped at 5% a year; the lower rate is capped at 2.5% a year. Broadly, the lower 2.5% cap applies to rights built up from 2009 onwards, after changes brought in by the Pensions Act 2008. That is why Orders don’t specify a lower rate for revaluation periods that start before 1 January 2009.
How are the actual percentages chosen? Each Order includes a table of revaluation periods running from 1 January 1986 up to the end of the year before the Order takes effect-in this case, to 31 December 2025. Administrators pick the row that matches the length of your “pre‑pension period” (the number of complete years between leaving and pension age) and apply the corresponding percentage to your preserved pension. The Act calls this the “appropriate revaluation percentage”.
What this means in practice: if you left a scheme several years ago and reach its normal pension age in 2026, your pension is uprated using the percentages in this Order. If your service straddled 2009, schemes apply a blended approach so rights earned before 2009 track the 5%‑cap rules while rights earned from 2009 follow the 2.5%‑cap rules. Your scheme’s administrator will do that split for you.
A quick clarity check so you don’t mix policies up. This Order is about private‑sector and other occupational defined benefit schemes using the final salary method for revaluing preserved benefits. It is not the same as the Treasury’s Public Service Pensions Revaluation Order, which updates career‑average public service schemes each year using prices and/or earnings. Different law, different calculation.
Dates and signatures matter for media literacy. This Order was made on 19 November 2025, laid before Parliament on 21 November 2025, and begins on 1 January 2026. It was signed by Torsten Bell, the Parliamentary Under‑Secretary of State at the Department for Work and Pensions, acting with the authority of the Secretary of State.
Why use a Statutory Instrument at all? Parliament set the framework in the 1993 Act; ministers then update the yearly percentages by SI so schemes have certainty without passing a new Act each time. These Orders follow a pre‑set formula, and the explanatory notes consistently say there’s no significant administrative impact-useful context when you’re judging headlines about pensions “changes”. (That “minimal impact” wording appears in previous years’ Orders too.)
What you should do now. If you’re a member, check your scheme’s normal pension age and your latest preserved‑benefit statement; expect an update that reflects this Order as you approach 2026. If you help run a scheme or teach personal finance, make sure your materials explain the two caps, the 2009 split, and how the “appropriate revaluation percentage” is picked from the table-so people know what’s coming and why.