The updated Pensions Statement of Recommended Practice (SORP) was issued by the Pensions Research Accountants Group (PRAG) in March 2026. It builds on SORP 2018 and responds to both FRS 102 amendments and the evolving pensions landscape.
The changes come at a time when trustees face increased scrutiny from regulators, sponsors and members alike, driven by lessons learned from past scheme failures alongside stronger regulatory powers and higher governance expectations. This scrutiny is further intensified by growing investment complexity, economic pressure on employers, and an increased focus on protecting member outcomes and demonstrating clear value for money. As these expectations rise, pension scheme audit plays an increasingly important role in providing independent challenge, assurance over governance arrangements, and early identification of emerging risks.
Pension schemes in the UK must prepare accounts under FRS 102, with the SORP translating the principles of FRS 102 into pension-specific reporting requirements. The new SORP (SORP 2026) was issued by PRAG, which is recognised by the Financial Reporting Council (FRC) as the designated SORP‑making body for pension schemes in the UK and Republic of Ireland. It is effective for scheme years beginning on or after 1 January 2026.
So what’s driving the changes? There are three main factors:
FRS 102 underwent a periodic review in 2024 with amendments effective for accounting periods beginning on or after 1 January 2026. SORP 2026 updates pension scheme guidance to reflect the most significant changes and ensure continued consistency with UK GAAP.
Since the previous SORP was issued in 2018, the pensions landscape has evolved significantly. Investment strategies have become more sophisticated, funding positions have improved for many schemes, and trustee objectives have broadened, including an increased focus on run‑on arrangements and schemes in surplus. SORP 2026 responds to these developments by providing updated and more relevant guidance.
Regulators and stakeholders now place greater emphasis on transparency, risk disclosure and comparability across scheme reporting. These expectations have been reflected in SORP 2026, with enhanced disclosures designed to improve clarity, consistency and the quality of decision‑making.
The revised SORP introduces a number of changes. Here are the key areas of focus for trustees and accounts preparers, along with where early action may be needed.
There are no changes to the underlying valuation methodology: bid pricing remains the preferred basis for determining the fair value of investments. There’s some additional clarification in the SORP, which removes choice for which valuation dates to apply when a valuation at the year-end is not available, instead requiring that only valuations provided before the year end can be used.
One major change affects who values annuity policies. The revised SORP removes the option to use insurer‑provided valuations. Annuities must now be valued by the scheme actuary, improving transparency and comparability across scheme accounts.
There’s no requirement to restate prior‑year valuations. However, trustees and accounts preparers holding annuities previously valued by insurers should engage proactively with actuarial advisers. They should confirm data needs, timings and any potential impacts ahead of the next set of financial statements.
Market volatility during the 2022 gilt crisis exposed gaps in how liquidity and inflation risks were disclosed, bringing these risks into sharper focus for pension schemes. SORP 2026 now explicitly includes liquidity risk within investment risk disclosures, increasing transparency around potential liquidity pressures. These disclosures are expected to be proportionate but apply to all schemes, regardless of size.
Although most schemes won’t report under the revised SORP until 31 December 2026 year‑ends, comparative disclosures will be required on first adoption. Trustees should therefore seek early confirmation from managers and advisers that they can provide the required information.
The new SORP introduces more detailed investment reconciliation tables, with the following key enhancements:
The good news is that no immediate changes are required. This information is already available to trustees and preparers, and will need to be incorporated into the first set of accounts prepared under the revised SORP.
As more defined benefit schemes report surpluses, the SORP introduces specific disclosures where surpluses are used to fund employer contributions or are returned to the sponsor.
There’s also additional guidance on going concern assessments where the sponsoring employer is insolvent or the scheme has entered a Pension Protection Fund (PPF) assessment period. Affected schemes should engage early with their advisers and auditors to understand the reporting implications.
Certain investment disclosures have been removed, streamlining financial statements while retaining relevant information for stakeholders.
As pension rules evolve and change, financial reporting is becoming more complex. For trustees, this means audit will play a more visible and proactive role in reinforcing trust, transparency and confidence in scheme reporting. Through independent challenge and review, audits assure members and other stakeholders that benefits are being appropriately safeguarded and governance arrangements are working as intended.
As disclosures expand – particularly around liquidity risk, derivatives and surplus management – auditors will be closely scrutinising:
Well‑planned and well‑executed audits meet regulatory requirements but also help trustees identify emerging risks early, strengthen controls and refine processes. This supports better decision‑making and reduces the risk of issues escalating.
The new Pensions SORP represents an important evolution in pension scheme reporting, reflecting both regulatory change and real‑world experience. While it introduces new disclosure challenges, it also provides an opportunity for schemes to demonstrate strong governance and clear communication.
In this environment, high‑quality pension scheme audits matter more important than ever. They underpin confidence in financial reporting and help trustees meet their responsibilities to members, sponsors and regulators.
For more insight and guidance, get in touch with Lauren Carlyle.
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