Notice of our provisional revised pension allowance values and 2026 reasonableness review

Every three years, we review the pension allowances that RIIO network companies can recover through regulated revenues, which are ultimately funded by consumers through their energy bills. Our review considers the latest pension scheme valuations and the governance arrangements companies have in place. It can result in revisions to previously determined allowances, taking account of the latest valuations, company submissions and our assessment of scheme governance. 

Today we set out our provisional revised pension allowances and the conclusions of our 2026 reasonableness review. Overall, funding positions have generally improved since the previous review, with eleven schemes reporting a surplus compared with five in 2023. The proposed allowances would result in an overall net recovery position broadly consistent with that determined following the 2023 reasonableness review. 

Improved funding positions mean that the management of pension scheme surpluses is becoming increasingly important. Our draft Notice therefore sets out our current thinking on the treatment of surpluses and our provisional recommendations to network operators ahead of the next reasonableness review in 2029. 

We are seeking views on the draft Notice and the provisional revised pension allowance values by 13 November 2026. We expect to publish our final decision, revised pension allowance values and the Government Actuary’s Department’s final report following consideration of responses. The revised allowances are expected to take effect from 1 April 2027.