Articles - DC trustees: time to get ready for higher standards

 

Our vision is clear: sustainable and adequate retirement income for everyone. But with 15 million heading towards an insecure future, there are challenges to face down.

 

We are starting a direct communications programme this week to help schemes prepare. It will:

 

A new Pension Schemes Act webpage has been created which will be updated as details of secondary legislation become available under the Act. This is part of our wider phased communications programme to build awareness of regulatory requirements and how entities should respond. It will be targeted at schemes providing DC benefits that are likely to need to comply.

 

The first phase has launched this week. It includes an email and encourages trustees to reflect on their scheme’s ability to comply with these requirements and start to prepare, targeting schemes providing DC benefits that are not likely to be exempted from regulations.

 

Regular emails will be sent out to update recipients on developments, such as regulatory requirements as they evolve. They will encourage trustees to reflect on their scheme’s ability to comply with these and start to prepare. Look out for forthcoming ‘roadmap’ publications from DWP and TPR coming soon, setting out more detail on the implementation of the Pension Schemes Act.

 

DC trustees have traditionally focused on accumulation, and many have prioritised low costs over genuine value. At retirement, disengaged members have faced difficult decisions between annuities, cash, and drawdown. New legislation changes that dynamic. From the first contribution through to retirement, there are higher expectations on trustees to achieve better outcomes.

 

 

Our data shows that master trusts and larger single employer schemes are better placed to deliver good outcomes. That does not mean that others cannot, but the bar is rising. Operating a smaller scheme is becoming more complex, more demanding, and more resource intensive.

 

The market is consolidating rapidly. The inescapable trend is towards fewer, larger schemes that can deliver stronger investment performance, higher governance standards and an improved member experience. Our 2025 DC landscape data shows a 15% fall in the number of non-micro DC and hybrid schemes in the last year, with the decline concentrated among schemes with fewer than 5,000 members. For those that remain, we will expect the value for money requirements to raise the floor on transparency.

 

Trustees should assess if they can meet the higher legislative standards – or if members would benefit from consolidation into a scheme that can provide scale, value and good governance.

 

If you continue running the scheme, be ready to show how you will meet the new requirements and why that is in members’ best interests. You will need to demonstrate:

 

External support may be needed to strengthen administration, governance, or offer retirement income options.We expect employers to work with trustees on the scheme’s future and administrators to facilitate and enable compliance.

 

The direction is clear: stronger governance, better data and supporting members into retirement are now essential. Review your scheme. Close gaps quickly. If they are too large, consider if another route could serve members better. The key question is not “can we carry on as we are?” but “what is the best route to good outcomes for members?” Our message is to start now, consider the options, and act in your members’ best interests.