Over 20 million workers are set to get more from every pound they save towards retirement thanks to the passing into law of historic pensions legislation.
The Pension Schemes Act will bring about major reform to the UK pensions system, benefitting an average worker to the tune of up to £29,000 by the time they retire.
The Act will require pension schemes to prove they are delivering value for money, enable the automatic consolidation of small pension pots, and create larger, better-performing funds.
The Act aims to transform the pensions landscape, ensuring every pound saved delivers stronger returns while driving investment in the economy. Key measures include:
- Enabling small pension pots to be automatically consolidated.
- The VFM framework will standardise how value is assessed, leading to transparency and comparability. This, in turn, will drive competition and a long-term focus on value across the DC pensions sector.
- Creating multi-employer defined contribution “megafunds” of at least £25 billion, which will drive down costs and enable investment in a wider range of assets, including in UK businesses and infrastructure.
- Consolidating Local Government Pension Scheme assets into pools managed by FCA-regulated managers, supporting long-term investment in local infrastructure, housing and clean energy across the country.
- Providing Defined Benefit schemes with greater flexibility to release surplus funds, unlocking collectively around £160 billion to support employers and deliver for scheme members.