As the Pensions Bill has passed, the critical challenge will be implementing the key measures to meet tight legal deadlines.
Guided Retirement: trustees must offer simple default options for turning pension savings into retirement income, helping members who don’t want to choose themselves.
Trustees will need to work closely with industry partners to achieve the best results for members against challenging timelines.
Neary eleven months after it was first published, the Pension Schemes Bill was given Royal Assent on 29 April, becoming the Pension Schemes Act 2026. Containing measures that will reshape the workplace DC savings and retirement landscape, the Act is the most significant piece of pensions legislation since the introduction of auto-enrolment in 2012.
For trustees, the hard work now begins. The critical challenge will be implementing the key measures to meet tight legal deadlines, even while the fine policy detail is determined through further Government consultations. At the same time, trustees will also need to remain focused on the array of other changes, unconnected with the Act, which are being introduced: from pensions dashboards and salary sacrifice to inheritance tax treatment and potential reforms to trusteeship.
Introduced in June 2025, the Bill was long anticipated, containing a range of measures – across DB, DC and the LGPS – that had been consulted on over previous years. The vast majority of the proposals represented points of industry consensus, with the so-called “backstop mandation” power the principal point of contention. Now finalised, the key measures for DC schemes are:
One of the biggest changes in the Act, trustees will have a new duty to offer ‘default’ decumulation solutions to members who can’t or don’t wish to take an active decision about how to generate a retirement income from their savings.
The framework itself is being developed by the FCA and The Pensions Regulator (TPR). However, the Act gives Government the powers to apply the framework to trust-based schemes and sets out the penalties for schemes deemed not to be delivering value for money – such as closure to new employers and the potential transfer of members to an alternative scheme.
The Act requires that existing master trusts and GPPs will need to have assets of at least £10bn in their main scale default arrangement by 2030, with a credible business plan to scale to £25bn by 2035. Those schemes unable to meet the scale requirements may be forced to transfer their members’ assets to an ‘at scale’ provider.
Unsurprisingly, this power proved to be the most controversial measure in the Bill, with MPs and peers at odds on its inclusion until the final day of debate. The Act ultimately retains the power for the Government to direct schemes to allocate up to 10% of their assets to private market investments – in line with the voluntary Mansion House Accord. The section below demonstrates, the Government was forced to introduce a range of concessions such as to make exercise of this power highly unlikely and a major administrative burden for the Government.
Contract-based schemes will have the power to move or consolidate schemes and members in savers’ best interests.
Despite the attention focused on the above key measures in Parliament, a lot of the important fine details remain to be finalised. With the Bill now passed, attention now turns to anticipated consultations on draft regulations and guidance in each area:
Alongside such consultations, trustees will also need to stay focused on wider regulatory changes coming down the track:
Against this evolving policy backdrop, scale and execution matter more than ever. We believe that Invesco’s size and global investment platform, combined with deep experience across both public and private markets, positions us well to support pension schemes through this next phase of change. Our solutions‑oriented approach – working in partnership with trustees to translate regulatory intent into practical, investable outcomes – aims to help schemes manage complexity and continue acting in members’ long‑term interests amid an increasingly demanding operating environment.
As a result of all these regulatory changes, trustees will need to work closely with industry partners to achieve the best results for members against challenging timelines. The passing of the Pension Schemes Act is a critical moment in the evolution of UK occupational DC pensions, but the hard work is only just beginning.
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