Pension Schemes Bill

What's this all about?

The Government introduced the much-anticipated Pension Schemes Bill to Parliament on 5 June 2025, putting the wheels in motion for large-scale pension reforms. The Bill will undergo parliamentary scrutiny, with consultations and discussion papers to follow. The DWP has published a roadmap for implementing reforms, with key dates extending to 2030. More information can be found in Hymans’ ’60-second summary’ and Policy summary. Highlights from the bill include:

• Value-for-Money (VfM): All DC schemes must assess and disclose VfM across investment, costs and service. Poor-performing schemes will need to improve or consolidate.
• Scale Requirements: Master trusts must grow to £25bn in their main default arrangement by 2030 or face possible consolidation.
• Default Decumulation: Trustees must offer a default retirement solution (e.g. drawdown) and publish a retirement strategy. Initially applies to master trusts (from 2027).
• Small Pot Consolidation: New rules to automatically consolidate sub-£1,000 DC pots, with implementation from 2030.
• Contractual override for GPPs: Introduce a contractual override to allow contract-based providers to transfer members out of underperforming and legacy arrangements if in members’ best interests.

The proposed Bill is designed to encourage the consolidation of DC pension schemes into fewer, larger, and better-performing arrangements, with the aim of improving retirement outcomes for members. Employers and Governance Committees should take note of this shift and assess whether their current pension setup delivers strong value for members and whether the provider is likely to meet future expectations. Although the second phase of the Pensions Review - focused on ensuring members have adequate retirement income - was not included in the Bill, an update on its timing is expected in the coming weeks.

What does this mean for UK employers?

You should speak with your pension provider to understand how they are preparing to align with the government’s proposed reforms. While the industry is still waiting for more detail on the regulations, it’s important to stay informed.

You should also look out for any updates from your provider about meeting scale requirements. There’s a possibility that the scheme’s default investment option could be merged with other default arrangements offered by your provider.