Overview
The Pension Schemes Bill has now completed its journey through Parliament and moves onto becoming the Pension Schemes Act 2025.
For employers and trustees, that marks an important point in the Government’s pensions reform programme, but not the point at which every operational requirement is settled.
The Act establishes the legislative framework for reforms including:
- Value for Money Framework (VfM)
- Default Pension Benefit Solutions often referred as guided retirement
- Scale requirements
- Small pots consolidation
- Contractual override
This matters because the Act is designed to drive a broad set of market changes. The underlying policy intent is to build scale in pension schemes, shift the focus from cost alone to overall value, improving member outcomes and improve support at retirement.
The detail that will determine how these measures operate in practice will be set out through secondary legislation and regulatory guidance. A framework is now in law, but implementation comes later.
The immediate practical message is one of awareness and preparation, rather than urgent change.
While the provisions are now included in the Act, they have not yet been implemented. The Government issued their current roadmap in 2025. Expectations are that the measures will be introduced gradually from 2027 through to 2030, with collection of VfM data and guided retirement for master trusts expected to begin first in 2027. We expect a new roadmap in due course.
What changed during parliamentary scrutiny
The Bill was closely debated through the Commons and Lords, and we followed the passage of the Bill, though its various readings, reporting and committee stages.
The most prominent and politically sensitive issue was the proposed reserve power often referred to as ‘mandation’, the power relating to asset allocation in certain defined contribution default funds. Concerns raised during scrutiny focused on the risk of politicising pension investment, interfering with trustee fiduciary duties and weakening the principle that investment decisions should be made in members’ best interests.
As the Bill moved between the House of Commons and the House of Lords, often referred to as ‘parliamentary ping pong’, where each House considers and responds to the other’s amendments, a series of changes were negotiated. Ultimately, amendments were agreed that constrained the Government’s reserved power be:
- Capped (max. 10% in private assets in main default funds, with a 5% UK-specific cap, aligned with the Mansion House Accord)
- Time-limited (sunset provisions, including expiry in 2032 if unused and full repeal of the wider framework by 2035)
- Subject to a strengthened ‘saver interest’ test
Following these changes, a revised version of the Bill was accepted by the House of Lords on 28 April, bringing the parliamentary process to a close.
What this means for employers and trustees
For clients, the key point is that the reform agenda is now more clearly established, even though the practical detail is not yet final. Employers will need to stay close to developments so they understand how the new requirements may affect the pension arrangements they offer to employees. Trustees will need to understand how the new requirements (confirmed in the Act) will affect their schemes and what they need to do and by when.
There is broad support for reforms that improve value, consolidation and member outcomes, but implementation will matter. Scale needs to deliver better outcomes, and not risk focusing on scale for its own sake over what matters most for members. Retirement solutions need to remain flexible enough to reflect different member needs. And any investment-related reforms must continue to respect the central principle of acting in savers’ best interests.
Our view
We fully support the Government’s ambition, through this Pension Schemes Act, to improve outcomes for savers through greater scale, transparency, and innovation. It represents an important step forward for a wide-ranging package of reforms, but there's a lot of work ahead to bring them into force. This is the starting gun rather than the finishing line.
On mandation, we have been consistent in our view that pension schemes should retain responsibility for investing in members’ best interests. While the parliamentary process has narrowed the scope of the reserve power, the potential for future government intervention in scheme investment decisions remains an area we will continue to monitor.
The next phase will be critical
We are reviewing the final amendments in detail and will provide further updates in due course on what they mean in practice.
While the Act sets the overall framework, much of the practical detail will follow through secondary legislation and regulatory guidance. We will continue to engage closely with this next phase, including expected updates to the Government’s pensions reform roadmap, which will set out any revised timelines for implementation.
The focus now is on helping ensure the final framework supports better long-term outcomes for members and works in practice for schemes and employers. For employers and trustees, the priority is clear: stay informed, focus on what changes when, and be ready to respond as the detail emerges.