This Statutory Instrument, the National Employment Savings Trust (Amendment) Order 2026, amends the National Employment Savings Trust Order 2010 to introduce greater flexibility in how pension benefits are paid from the National Employment Savings Trust (NEST).
The Order empowers the Trustee to offer members the option of receiving a drawdown pension and modifies benefit payment options upon a member's death to allow for a dependants' scheme pension or a drawdown pension paid to a dependant, nominee, or successor, incorporating terminology defined in the Finance Act 2004.
Arguments For
Expands flexibility for pension drawdown by introducing the option for members of the National Employment Savings Trust (NEST) to receive a drawdown pension.
Enhances survivor benefits by allowing the Trustee to pay a dependent’s scheme pension or a drawdown pension to a member's designated dependant, nominee, or successor.
Modernizes benefit options in line with contemporary pension flexibility introduced elsewhere, ensuring NEST remains a competitive retirement savings vehicle.
The amendments clarify and streamline the structure of benefit payments available under Article 32 of the principal Order through definitional insertions.
Arguments Against
Introducing complex options like 'drawdown pension' might increase the administrative burden on the Trustee and potentially reduce clarity for scheme members regarding their choices.
The changes rely on incorporating detailed definitions from Schedule 28 of the Finance Act 2004, which could create complexity for non-specialist members trying to understand their retirement entitlements.
Implementation requires careful management to ensure consistency with existing legislative frameworks governing pension scheme trustees and benefit distribution rules.
As no full impact assessment was produced, the actual financial or administrative impact on the private, voluntary, or public sectors remains unquantified.
( 1 ) 2008 c. 30.
( 2 ) The term 'trustees' is defined in section 78 of the Pensions Act 2008.
( 3 ) The terms 'members' panel' and 'employers' panel' are defined in section 78 of the Pensions Act 2008.
( 4 ) S.I. 2010/917; relevant amending instruments are S.I. 2013/597, S.I. 2015/178.
The opening notes provide citations for previous legislation and definitions referenced throughout the Order.
It references the Pensions Act 2008, and specific instruments related to the National Employment Savings Trust Order 2010.
STATUTORY INSTRUMENTS
2026 No. 449
PENSIONS
The National Employment Savings Trust (Amendment) Order 2026
Made - - - -
21st April 2026
Coming into force - -
29th April 2026
This identifies the instrument as a Statutory Instrument numbered 2026 No. 449, concerning Pensions matters.
It establishes the instrument's formal title as the National Employment Savings Trust (Amendment) Order 2026, noting it was made on April 21, 2026, and came into force on April 29, 2026.
The Secretary of State makes this Order in exercise of the powers conferred by sections 67(1) and (8) and 144(2) and (4) of the Pensions Act 2008( 1 ).
In accordance with section 71(2) of that Act, the Secretary of State has obtained the consent of the trustees( 2 ) before making this Order, and in accordance with section 71(4) of that Act, the trustees consulted the members' panel and the employers' panel( 3 ) before giving consent to the making of this Order.
In accordance with section 143(4) and 143(5)(c) of that Act, a draft of this Order was laid before Parliament and approved by resolution of each House of Parliament.
The Secretary of State for Work and Pensions enacts this Order using powers granted by the Pensions Act 2008.
Before proceeding, the Secretary of State secured consent from the scheme trustees, who had previously consulted both the members' panel and the employers' panel.
Furthermore, a draft of this Order received prior approval from both Houses of Parliament.
Citation, commencement and extent
- -(1) This Order may be cited as the National Employment Savings Trust (Amendment) Order 2026 and comes into force on 29th April 2026.
- (2) This Order extends to England and Wales, Scotland and Northern Ireland.
The first substantive article covers citation, commencement, and territorial extent.
The Order is officially named the National Employment Savings Trust (Amendment) Order 2026 and became effective on April 29, 2026.
The rules apply across the entire United Kingdom: England, Wales, Scotland, and Northern Ireland.
Amendment of the National Employment Savings Trust Order 2010
- -(1) The National Employment Savings Trust Order 2010( 4 ) is amended as follows.
- (2) In article 32 (payment of benefits by the Trustee)-
- (a) in paragraph (1) after the word 'provide' insert 'one or more of';
- (b) for paragraph (2)(a) substitute-
- '(a) where a member is alive-
- '(i) the payment to the member of a lump sum;
- (ii) the payment to the member of a scheme pension;
- (iii) the purchase of a lifetime annuity policy in the name of the member;
- (iv) the payment to the member of a drawdown pension;''
- (c) in paragraph (2)(b)-
- (i) omit the 'or' after paragraph (iii); and
- (ii) after paragraph (iv), insert ';
- (v) the payment of a dependants' scheme pension;
- (vi) the payment of a drawdown pension to a dependant of the member, a nominee of the member, or a successor of the member.';
Article 2 details the amendments to the existing National Employment Savings Trust Order 2010, focusing specifically on Article 32, which governs benefit payments by the Trustee.
Paragraph (1) modifies Article 32(1) to state the Trustee may provide 'one or more of' the listed benefits.
Paragraph (2) updates the benefits payable while a member is alive (Article 32(2)(a)) by including the option for a 'drawdown pension' alongside existing options like lump sums, scheme pensions, and annuity purchases.
Furthermore, the payments available after a member's death (Article 32(2)(b)) are expanded to include a 'dependants' scheme pension' or a 'drawdown pension' paid to a dependant, nominee, or successor of the member.
- (d) in paragraph (4)-
- (i) move the definition of 'dependants' annuity' so that it appears after the definition of 'charity lump sum death benefit';
- (ii) at the appropriate places insert-
''dependant of the member' has the same meaning as in paragraph 15 of Schedule 28 to the Finance Act 2004( 5 )
''dependants' scheme pension' has the same meaning as in paragraph 16 of Schedule 28 to the Finance Act 2004( 6 )
''drawdown pension' has the same meaning as in paragraph 4 of Schedule 28 to the Finance Act 2004( 7 )
''nominee of the member' has the same meaning as in paragraph 27A of Schedule 28 to the Finance Act 2004( 8 )
''scheme pension' has the same meaning as in paragraph 2 of Schedule 28 to the Pensions Act 2008( 9 )
''successor of the member' has the same meaning as in paragraph 27F of Schedule 28 to the Finance Act 2004( 10 )
Paragraph (4) of Article 32 is further amended by reordering the placement of the definition for ‘dependants’ annuity’.
Crucially, this part inserts and formalizes definitions for several key terms, ensuring consistency by referencing specific paragraphs within Schedule 28 of the Finance Act 2004.
These defined terms include 'dependant of the member', 'dependants' scheme pension', 'drawdown pension', 'nominee of the member', and 'successor of the member'.
Signed by authority of the Secretary of State for Work and Pensions
21st April 2026
Torsten Bell Parliamentary Under Secretary of State Department for Work and Pensions
This confirms the instrument was signed on April 21, 2026, under the authority of the Secretary of State for Work and Pensions by Parliamentary Under Secretary of State, Torsten Bell.
( 5 ) Paragraph 15 of Schedule 28 was amended by the Finance Act 2005 (c. 7), Schedule 10, paragraph 26; the Finance Act 2016 (c. 24), Schedule 5, paragraph 6(2) and (5); and S.I. 2005/3229, regulation 180.
( 6 ) Paragraph 16 of Schedule 28 was amended by the Finance Act 2005 (c. 7), Schedule 10, paragraph 27, and Schedule 11, Part 4; and the Finance Act 2008 (c. 9), Schedule 28, paragraph 5.
( 7 ) Paragraph 4 of Schedule 28 was amended by the Finance Act 2011 (c. 11), Schedule 16, paragraph 3.
( 8 ) Paragraph 27A of Schedule 28 was inserted by the Taxation of Pensions Act 2014 (c. 30), Schedule 2, paragraph 3.
( 9 ) Paragraph 2 of Schedule 28 was amended by the Finance Act 2005 (c. 7), Schedule 10, paragraph 11 and Schedule 11, Part 4; the Finance Act 2006 (c. 25), Schedule 23, paragraph 20; the Finance Act 2007 (c. 11), Schedule 20, paragraph 7(1) and (2); the Finance Act 2016 (c. 24), section 20(1) to (4); the Finance Act 2021 (c. 26), Schedule 5, paragraph 20(1) and (2); and S.I. 2007/493, regulation 2(1) and (2).
( 10 ) Paragraph 27F of Schedule 28 was inserted by the Taxation of Pensions Act 2014 (c. 30), Schedule 2, paragraph 3(1).
These footnotes provide extensive details on the historical amendments made to the specific paragraphs within Schedule 28 of the Finance Act 2004 that are being used to define terms in this amending Order.
This demonstrates that the definitions selected are rooted in established mainstream UK pension legislation.
EXPLANATORY NOTE
(This note is not part of the Order)
This Order amends the National Employment Savings Trust Order 2010 (S.I. 2010/917) ('the Order').
Section 67(1) of the Pensions Act 2008 (c. 30) ('the Act') and article 3 of the Order established a pension scheme known as the National Employment Savings Trust ('the Scheme'). The National Employment Savings Trust Corporation established under section 75 of the Act was appointed as the trustee of the Scheme ('the Trustee') under article 4 of the Order.
Article 32 of the Order lists the benefits that the Trustee may pay using the pension account of a member of the Scheme. Article 2(2)(a) and (b) amend article 32 of the Order to provide that the Trustee may additionally provide a drawdown pension or a scheme pension to a member. Article 2(2)(c) amends article 32 of the Order so that, when a member has died, the Trustee may additionally provide either a dependant's scheme pension or a drawdown pension to dependants, nominees or successors. Drawdown pension, dependant, dependants' scheme pension, nominee, scheme pension and successor are defined in reference to terms used in the Finance Act 2004 (c. 12).
A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.
The Explanatory Note clarifies that this Order modifies the 2010 Order governing the National Employment Savings Trust (NEST).
The Note explains that Article 2 amends Article 32 of the 2010 Order to give the NEST Trustee new payment choices for living members, specifically the addition of the drawdown pension option.
Furthermore, it details that benefits payable after death are expanded to allow for dependants' scheme pensions or drawdown pensions for specified beneficiaries like dependants, nominees, or successors.
The definitions for these options are explicitly tied to the Finance Act 2004.
The note concludes by stating that a full impact assessment was not necessary because no significant impact on the private, voluntary, or public sectors is expected.
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