New 2026 pensions SORP published
This is effective for accounting periods beginning on or after 1 January 2026, so year ends 31 December 2026, 31 March 2027, 5 April 2027 onwards. Early adoption is permitted.
The update follows the publication of FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland and other FRSs, which was published in September 2024.
There are no major changes to the SORP; however, there are proposed changes that will impact all pension schemes.
Liquidity risk
One of the key new requirements affecting all schemes is the disclosures on liquidity risk. This arose following significant market volatility during 2022, caused by the rapid increase in gilt yields and resulting in the Liability Driven Investment crisis and consequential liquidity issues. In addition, most defined benefit schemes are closed, with many in surplus, and therefore, no contributions are received. This means that liquid investments need to be disinvested to pay pensions, and cash flow management is important.
Other key changes
- Annuity contracts can no longer be valued using annuity provider values.
- Conversion of a buy-in annuity policy to a buy-out is at the fair value on conversation.
- Where investment year-end prices are unavailable, use the price immediately before the year-end.
- Investment performance commentary should focus on the specific strategy and benchmark, recognising DC and DB differences.
- Guidance on derivatives, repurchase agreements and short-sold bonds.
- Collateral disclosed by derivative type.
- Further disclosures on going concern.
- Changes to the investment movement note.
- Requirement for an investment movement disclosure note.
- DC switches disclosed under the investment reconciliation table.
- Pooled investment funds analysed by type in the fair value hierarchy.
- More disclosures for sole investor funds.
- Wind up accounts show zero assets and zero liabilities.
- Guidance on the treatment of surplus utilised.
Planning for these changes
These changes will require early planning to ensure additional information that will need to be compiled has been requested from the relevant advisers, and where comparative data is needed, this has been obtained or extracted. The financial statement templates will need to be updated for the new format requirements.
Revised SORP
The revised SORP is available to PRAG members or can be purchased on the PRAG website by non-members.
Crowe's industry involvement
Shona Harvie, a Partner at Crowe, is a member of the PRAG SORP Working Party and the PRAG Executive that issued the 2026 SORP. Crowe is, therefore, in a good position to assist you with these changes.
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