LCP’s research team has studied a range of official sources to assess the front-runners for inclusion in the Bill, expected to be published before the Summer.
LCP identify two main groups of measures:
a) Measures flagged at the time of the King’s Speech
A pension schemes bill was announced by the King in July 2024 as part of the Government’s legislative programme. At that stage, the key measures related to DC pensions and included:
Default decumulation - a new duty on DC scheme trustees to offer a suite of decumulation products and services, which are suitable for their members and consistent with pension freedoms. Such services are to act as a backstop unless the member makes an active choice.
Small pot consolidation – this will provide for a ‘multiple default consolidator’ model, whereby certain DC pots under a specified limit will be automatically swept up into a consolidator scheme; DWP has indicated that a feasibility review for the proposed Small Pots Data Platform needs to be undertaken (expected June 2025), so it may be that the first published version of the Bill does not include all of the necessary primary legislation.
Value for money - Whilst the framework for contract-based schemes is being finalised by the FCA, the Bill will need to contain measures to apply the framework to trust-based schemes. The King’s Speech said that a standardised test will be introduced that trust-based DC schemes will need to meet to demonstrate they deliver value for money.
The other major measure mentioned last summer related to a primary legislative framework for DB superfunds. Although the Pensions Regulator has established an interim regime which allowed Clara to set up as the first DB superfund, the new legal framework is expected to include rules on capital extraction and to pave the way for new providers to enter the DB superfund market.
In addition to more major measures such as these, most legislation includes more detailed ‘tidying up’ measures. One which has been flagged for this Bill is that it will re-establish that the Pensions Ombudsman is a competent court for the purposes of concluding overpayment disputes where recoupment is sought. This will then reverse the November 2023 Court of Appeal decision.
b) Legislation arising from subsequent policy initiatives
1. Measures arising from part one of the Pensions Review
In Summer 2024 the Government launched the first phase of its Pensions Review, focusing on consolidation in the Local Government Pension Scheme (LGPS) and on the investment strategy of DC pension schemes. Legislation is likely to be needed to strengthen the current process of pooling assets across the LGPS and to promote DC ‘mega funds’, gradually forcing the market in the direction of a smaller number of relatively large DC Master Trusts.
2. New rules around DB surplus distribution
Although the King’s Speech was silent on the matter, in January 2025 the Government said that it would legislate to make it easier for surplus from DB schemes to be paid to employers or to be given to scheme members as additional benefits. A response to the DB Options consultation issued by DWP in February 2024 is expected imminently. The new law and associated TPR guidance will need to cover things like how ‘surplus’ assets are to be defined, and whether and how scheme rules can be over-ridden to make surplus distribution easier.
3. The Pension Protection Fund (PPF)
The Government has indicated that it plans to legislate to ease the restrictions on changes in the PPF levy from year to year. The PPF has said that it would have considered a zero levy for this year, given the robust funding position of the PPF, but cannot do so because it would then not be able to increase it again, given it is currently prevented from making annual increases of more than 25% in the levy. Ministers have been clear that they will address this issue.
Separately, the previous government indicated that it had decided in principle that the PPF would take on a role of a ‘public sector consolidator’ of smaller DB schemes, but the new government so far seems less committed. In May 2025 the Government said that “We continue to explore whether a small, focused Government Consolidator, run by the PPF, could be an option for schemes less attractive to commercial providers”. This suggests that measures on this proposal are unlikely in the Pension Schemes Bill.
Regarding potential improvements to the cover provided by the PPF and the Financial Assistance Scheme, DWP has sounded more cautious of late, but any changes are likely to focus in particular on improving indexation for pre-97 service.
David Everett, Partner and Head of Pensions Research, LCP said: “The forthcoming Pension Schemes Bill is set to be a ‘blockbuster’, crammed to bursting with measures affecting everything from the largest DB schemes to micro DC pots created through automatic enrolment. Some of these measures, such as DB superfunds and consolidation of micro DC pots, have been in development for many years and are finally reaching the legislative stage. Whilst other measures reflect much more recent thinking, particularly around DB surpluses and the creation of DC megafunds. But it is important to remember that even when the Bill becomes an Act next year, there will still be a lot more secondary legislation needed to fill in the details of these high level policies, so the pensions industry can expect to be busy in dialogue with the Government on the fine details for years to come”.
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