The 2026 Pensions Statement of Recommended Practice (SORP) introduces a number of changes to pension scheme financial reporting, including new requirements relating to annuity valuations, liquidity risk, investment reporting, going concern and the presentation of pension scheme financial statements.
Published by the Pensions Research Accountants Group (PRAG) in March 2026, the new SORP applies to accounting periods beginning on or after 1 January 2026. It reflects changes to FRS 102, as well as developments in pension legislation, regulation and pension scheme investment strategies.
For trustees, administrators and those responsible for preparing pension scheme accounts, early preparation will be important. Some schemes will need additional information from actuaries, investment managers and other advisers, while existing financial statement and annual report templates will also need to be reviewed.
2026 Pensions SORP: what has changed?
The new SORP replaces the previous version, which was last updated in 2018. While many of the changes are technical, several could have a practical impact on the information schemes need to obtain and the way it is presented in their financial statements.
Key changes include:
- revised requirements for the valuation of annuity contracts;
- guidance on the conversion of buy-in annuity policies to buy-out;
- additional liquidity risk disclosures;
- changes to investment reporting and the investment reconciliation;
- additional requirements for sole-investor funds;
- further guidance on scheme surpluses and going concern; and
- changes to the presentation of information within pension scheme annual reports and financial statements.
Schemes with annuity contracts, those considering buy-in or buy-out transactions and schemes in surplus may find some of these changes particularly relevant.
Changes to annuity valuations and buy-in/buy-out
One of the more significant accounting changes concerns annuity contracts.
Under the 2026 Pensions SORP, annuity contracts can no longer be valued using values provided by the annuity provider. Schemes will therefore need to consider how an appropriate valuation will be obtained and whether additional information will be required from their actuary.
The change in valuation approach is applied prospectively in the period of change.
The SORP also provides guidance where a buy-in annuity policy is converted to a buy-out. On conversion, the transaction is recognised at fair value.
For schemes undertaking or considering a buy-in or buy-out, discussing the information and valuation requirements with advisers in advance should help avoid unexpected issues during the accounts preparation and audit process.
New liquidity risk disclosures
Liquidity risk is given greater prominence under the 2026 Pensions SORP.
Pension schemes are now required to include liquidity risk within their investment risk disclosures. This reflects developments in investment strategies and the potential need for schemes to meet obligations such as benefit payments, capital commitments and collateral calls.
The requirements mean trustees and preparers should consider whether the information currently available is sufficient to explain the scheme’s exposure to liquidity risk and how that risk is managed.
Changes to investment reporting
The 2026 SORP introduces several other changes affecting the reporting and disclosure of pension scheme investments.
Where an investment price is unavailable at the scheme’s year-end, the price immediately preceding the year-end should be used.
Sole-investor funds must be presented separately on the face of the Statement of Net Assets Available for Benefits, with additional disclosures required. Pooled investment funds must also be analysed by type within the fair value hierarchy.
There are changes to the investment reconciliation information too. Annuity income included within sales proceeds and fund switches within investment movements should be separately disclosed.
These changes may require schemes to obtain more detailed information from investment managers than they have needed previously.
Scheme surpluses and going concern
The revised SORP provides additional guidance on the treatment of surplus utilised, which may be particularly relevant to schemes that are currently in surplus.
There are also further requirements concerning going concern disclosures.
Trustees and those preparing pension scheme financial statements should therefore review their existing disclosures rather than automatically carrying forward wording used in previous years.
Changes to pension scheme annual reports and financial statements
Some of the changes concern the presentation of information within the Annual Report and financial statements.
The Summary of Contributions must be presented as a separate section of the Annual Report rather than as part of the Trustees’ Report.
The Auditor’s Statement about Contributions must be presented immediately before or after the Summary of Contributions.
Transfers out must also be presented on the face of the Fund Account.
Existing financial statement and Annual Report templates will therefore need to be reviewed and updated to reflect the new presentation and disclosure requirements.
What should trustees and administrators do now?
Although the 2026 Pensions SORP is already effective for relevant accounting periods, early planning can make the first reporting cycle under the new requirements considerably easier.
Trustees and administrators should consider:
- reviewing the new requirements with their accountants, auditors and other advisers;
- identifying additional information that may be required from actuaries and investment managers;
- obtaining or extracting any comparative information that will be needed;
- reviewing annuity valuation arrangements where applicable;
- considering the new liquidity risk disclosure requirements; and
- updating financial statement and Annual Report templates before the year-end reporting process begins.
Identifying these requirements in advance should reduce the risk of missing information causing delays during the preparation or audit of the scheme’s accounts.
Frequently asked questions about the 2026 Pensions SORP
When does the 2026 Pensions SORP apply?
The 2026 Pensions SORP applies to accounting periods beginning on or after 1 January 2026.
Why has the Pensions SORP changed?
The previous Pensions SORP was updated in 2018. Since then, there have been amendments to FRS 102 as well as changes in pensions legislation, regulation and pension scheme investment strategies. The 2026 SORP updates pension scheme financial reporting guidance to reflect these developments.
Do pension schemes need to prepare for the changes now?
Yes. Some of the new requirements may mean schemes need information from actuaries, investment managers or other advisers that was not previously required. Identifying this information early, together with any comparative data needed, can help make the accounts preparation and audit process more efficient.
Preparing for the 2026 Pensions SORP
The impact of the new SORP will vary between pension schemes depending on their investments, funding position and individual circumstances.
For some schemes, the changes will principally involve additional disclosures and amendments to existing reporting templates. For others, particularly those holding annuity contracts or considering buy-in or buy-out transactions, more detailed preparation may be required.
Reviewing the requirements early provides time to identify the information needed, involve the appropriate advisers and ensure financial reporting processes are ready for the new SORP.
Endor Consultants provides accounting and audit services to pension schemes. If you would like to discuss the 2026 Pensions SORP and what the changes may mean for your scheme’s financial reporting, please contact our team.