20 million workers set to benefit from new Pension Schemes Bill
Source: gov.uk (2025-06-04)

Millions of people across the UK will find it easier to manage and get more from their pensions thanks to the Government’s new Pension Schemes Bill.

- The Pension Schemes Bill will tackle schemes delivering poor returns for savers, combine smaller pension pots, and create bigger and better pension funds.
- These measures will drive costs down and returns up on workers’ retirement savings – putting more money in people’s pockets as part of the Plan for Change.
Millions of people planning their retirement will find it easier to manage and get more from their pension pots thanks to the new Pension Schemes Bill introduced today [Thursday 5 June].

The Bill is designed to support working people plan for their retirement by making pensions simpler to understand, easier to manage, and drive better value over the long term – delivering on the Plan for Change to put more money into people’s pockets.

One of its biggest benefits is the merging of small pension pots. Many people build up several small pensions as they move between jobs, and these can be hard to keep track of. The new rules will bring these pots together, helping savers see their full pension picture in one place.

The Bill also introduces a new system to show how well pension schemes are performing, this will help savers understand whether their scheme is giving them good value and protect them from getting stuck in underperforming schemes for years on end, to help working people feel more secure about their retirement savings.

For those approaching retirement, the Bill will require schemes to offer clear default options for turning savings into a retirement income. This means people will have clearer, more secure routes to decide how they use their pension money over time.

Work and Pensions Secretary Liz Kendall said:

Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners.

The Bill is about securing better value for savers’ pensions and driving long-term investment in British businesses to boost economic growth in our country.

As part of our Plan for Change we’re helping people find work, stay in work, and ensuring that work pays them back to give them the secure income in retirement they deserve.

Chancellor of the Exchequer Rachel Reeves said:

The Bill is a game changer, delivering bigger pension pots for savers and driving £50 billion of investment directly into the UK economy– putting more money into people’s pockets through the Plan for Change.

The Bill will transform the £2 trillion pensions landscape to ensure savers get good returns for each pound they save, and drive investment into the economy, through a suite of measures, including:
- Requiring DC schemes to prove they are value for money, to protect savers from getting stuck in underperforming schemes.
- Simplifying retirement choices, with all pension schemes offering default routes to an income in retirement.
- Bringing together small pension pots worth £1,000 or less into one pension scheme that is certified as delivering good value to savers, making pension saving less hassle and more rewarding.
- New rules creating multi-employer DC scheme “megafunds” of at least £25 billion, so that bigger and better pension schemes can drive down costs and invest in a wider range of assets.
- Consolidating and professionalising the Local Government Pension Scheme (LGPS), with assets held in six pools that can invest in local areas infrastructure, housing and clean energy.
- Increased flexibility for Defined Benefit (DB) pension schemes to safely release surplus worth collectively £160 billion, to support employers’ investment plans and to benefit scheme members.
Minister for Pensions Torsten Bell said:

We are ramping up the pace of pensions reform. Workers deserve to get better bang for each buck saved, and these sweeping reforms will make sure they do.

Pension saving is a long game, but getting this right is urgent so that millions can look forward to a higher income in retirement.

The Pension Schemes Bill is part of this Government’s significant pension reform agenda. It follows the major consolidation of the UK pension system set out in the Pension Investment Review.

Today’s legislation will create a more efficient, resilient pension landscape, and lay the foundation for the upcoming Pensions Review to examine outcomes for pensioners and set out how to develop a fair and sustainable pensions system, ultimately benefiting both individual savers and the broader UK economy.

Andy Briggs, CEO, Phoenix Group said:

The Bill sets a clear direction for the future of pensions with the emphasis on building scale and ensuring savers receive value for money. People across the country will feel the impact of these changes with plans to consolidate small pots, ensure the dashboard delivers and provide default retirement income options at the point of retirement. Individually these initiatives would be significant but in combination they have the potential make a significant difference to people’s retirement across the UK and we look forward to working through the detail with government and other stakeholders.

Patrick Heath-Lay, Chief Executive, People’s Partnership said:

This is a pivotal moment in pension reform. The Bill contains many measures that will require providers to deliver better outcomes for savers and improve the workplace pension system.

Ian Cornelius, CEO, NEST said:

At Nest, everything we do is with our members’ best interests at heart. We believe that large, well-governed schemes can drive great outcomes for their members by using their scale and expertise to diversify where money is invested, and gain access to attractive investment opportunities not available to smaller investors at low cost. I am proud of how Nest has used its scale to invest on behalf of our members, developing sophisticated investment opportunities which generate great risk adjusted returns, and play a role in supporting communities in the UK. We welcome this new Pension Schemes Bill, and the invitation it sends to keep innovating in the best interests of UK savers.

Nausicaa Delfas, Chief Executive, The Pensions Regulator (TPR) said:

The Pension Schemes Bill is a once in a generation opportunity to address unfinished business in the UK pension system. Making sure all schemes are focused on delivering value for money, helping to stop small, and often forgotten pension pots forming, and guiding savers towards the right retirement products for them, will mean savers benefit from a system fit for the future. We have long advocated for fewer, larger well-run schemes with the size and skill to deliver better outcomes for savers. As such we are also pleased to see the proposed legislative framework for DB superfunds, providing options and choice in defined benefit consolidation.

Michelle Ostermann, Chief Executive, Pension Protection Fund (PPF) said:

We welcome the introduction of this important Bill, especially the measures which would give the Pension Protection Fund (PPF) greater flexibility to reduce the levy, enable PPF and Financial Assistance Scheme (FAS) member data to be made available for pension dashboards, and better support members with a terminal illness. We will support the government and policy makers as the Bill progresses so we can achieve the best outcomes for all our stakeholders.

Rocio Concha, Director of Policy and Advocacy, Which? said:

Pensions have become far too complex and fragmented, so it’s good to see the government taking steps to simplify them and ensure schemes provide value for money. Which? has campaigned for years for the consolidation of small pots, so we are delighted that this Bill is seeking to do just that - a move that will provide greater value for savers and support them to keep track of their pensions. “Which? looks forward to working with the government to ensure the pensions system is fit for the future.”

Jamie Jenkins, Policy Director, Royal London said:

The Pension Schemes Bill brings together several initiatives aimed at improving the pensions landscape for savers. While there are still many details to work through, this hopefully marks the start of a long-term strategic plan for pensions.

Patrick Luthi, CEO, NOW:Pensions said:

NOW:Pensions have been campaigning on small pots for a number of years, and we are pleased to see measures to deliver on the ‘multiple default consolidator’ solution included. We look forward to seeing the details which will be crucial to supporting members in an efficient way

Further Information

To build scale in the pensions industry and stimulate UK investment, the Pension Schemes Bill will:
- Require multi-employer Defined Contribution schemes, unless exempt, to have at least £25 billion of assets in their main default arrangement by 2030 or be on route to achieving that scale by 2035 through having £10 billion in their main default.
- Allow trustees of well-funded Defined Benefit pension schemes to release money back to employers and their scheme members, when safe to do so, unlocking some of the £160 billion surplus funds to be reinvested across the UK economy and boost business productivity and deliver for members.
- Legislate for Defined Benefit pension scheme superfunds to encourage growth of the superfund market and underpin the security of members’ benefits
- Remove the restrictions that prevent the Board of the Pension Protection Fund (PPF) from reducing the annual pension protection levy it collects, when it is not required - allowing the PPF to collect less from businesses up and down the country
Extend the definition of ‘terminal illness’ in the Pension Protection Fund and Financial Assistance Scheme legislation, so that eligible members who are diagnosed as terminally ill can receive payments at an earlier stage of their illness.

To ensure better outcomes for savers, the Pension Schemes Bill will:
- Introduce a Value for Money framework to enable a shift in focus from cost towards value and protect savers from becoming stuck in underperforming arrangements for extended periods.
Implement Default Pension Benefit Solutions which will mean savers will still have the options available to them through pension freedoms, but they will get an extra offer of support – through being enrolled into default solution(s) – which could include CDC provision, and they can take this or make their own choices.
- Authorise providers to act as a consolidator scheme which will see members pots automatically transferred to their largest pot. This will also aid the building of scale with pots worth £1,000 or less consolidated into a small number of large, good value schemes.
- Support the introduction of pensions dashboards to improve engagement by providing users with their whole pensions picture, including workplace and state pensions, securely and all in one place online. By providing this comprehensive overview of retirement savings, pensions dashboards will address key barriers to engagement, such as information fragmentation and lack of visibility.
Facilitate PPF and FAS information to be displayed on the Government-backed pensions dashboard service provided by the Money and Pensions Service.
- The Competent Court measure in the Bill will also re-establish the legal standing of The Pensions Ombudsman (TPO) to make enforceable determinations in pensions overpayment recoupment cases without requiring a county court judge’s order, leading to quicker customer journeys and shorter waiting times.
- More information on the Government’s Pension Investment Review can be found here: Pensions Investment Review: Final Report - GOV.UK (https://www.gov.uk/government/publications/pensions-investment-review-final-report)