Pensions Roadmap – details published on sequencing of pensions reforms

The eagerly anticipated updates to the ‘workplace pensions roadmap’ have been published by the DWP setting out the overall timetable for a host of forthcoming pensions reforms.  There have been some welcome adjustments to the implementation timetable with the aim of ensuring the various changes dovetail together sequentially.

The roadmap covers the implementation of reforms introduced by the Pension Schemes Act 2026 (PSA26), along with a number of other legislative developments. The timetable remains ambitious with the success of a number of the elements dependent on the pensions industry having in place the right retirement solutions and authorisations to support the government’s strategic objectives.

Further information on the roadmap milestones and a host of useful tools and information on the wider PSA26 reforms can be accessed through the Burges Salmon PSA26 webpage.

Which publications have we already seen?

Hot on the heels of the roadmap were a number of other DWP and HMRC publications, setting the ball rolling with the initial phases of the roadmap delivery.

• Regulation Action Plan: Growth Goals for the Pensions Regulator (TPR)

In light of the growth focus of the PSA26, the Minister for Pensions has set the following four growth goals for TPR which are explicitly linked to PSA26 measures and provide a flavour of the regulatory direction of travel:

1. Reform the workplace pensions sector to boost growth and support adequate income for pension savers in retirement;
2. Unlock surplus/capital to benefit savers, employers and the economy:
3. Support productive investment to help grow the economy and increase saver returns; and
4. Promote the responsible and safe use of AI technologies in pensions to improve saver outcomes

Each goal is set out in detail in the policy paper, with the intention to monitor TPR performance against indicators.

The expectations of TPR are clear in terms of supporting the government’s growth agenda, which is consistent with its approach to other UK regulators who are subject to a statutory Growth Duty, and have been for a number of years. For example, performance indicators for goal 2 include an ‘increase in the number of DB schemes safely releasing DB surplus’ and an ‘increase in the amount of DB surplus released to members and employers’

The plan also confirms that TPR will articulate the kinds of investments that would be attractive for UK pension fund investment by summer 2026.

• Discussion Paper on Defined Contribution (DC) Scale requirements

The DWP released a discussion paper seeking industry views on key elements of the DC pension scheme scale requirements under the PSA26 as the detailed design for regulations is developed. 

The scale threshold will come into effect in April 2030 and require all authorised Master Trusts and group personal pension schemes (GPPs) which are used for meeting automatic enrolment obligations to have assets of at least £25bn in a single main scale default arrangement (MSDA). Alternatively, a scheme with £10bn by 2030 may be approved to be on the transition pathway if they are on track to meet the £25bn requirement by 2035. Failure to meet these scale requirements will mean the scheme will no longer be able to be used for meeting automatic enrolment obligations.

The overriding expectation is that automatic enrolment contributions will be invested in one main scale default arrangement unless there are reasons to use alternate default arrangements. Under the PSA26, assets within the MSDA must be managed under a common investment strategy (CIS) - the paper states the purpose of the CIS is to ensure that the assets within the MSDA will be invested in a sufficiently similar way to drive the benefits of scale for members. The paper seeks feedback on providers who hold assets for connected schemes with different investment strategies, and unconnected schemes which may have the same investment strategy.   Views are also sought on circumstances where other assets may be appropriate to include in the scale value calculation.

Whilst not a formal consultation, feedback is requested by 7 September 2026. The DWP intend to consult on draft regulations in this area in 2027.

• Policy paper on Guided Retirement guiding principles

This DWP policy paper sets out the government’s guiding principles for default defined contribution pension solutions which trustees and DC workplace pension providers will need to offer under the PSA26. The clear intention is that a default pension solution will support individuals in retirement through the provision of a simple route to a sustainable income while also preserving freedom of choice for members who wish to make their own decisions. 

This will no doubt be a welcome support mechanism for pension scheme members, many of whom would benefit from greater support when navigating the complex decisions required of them when looking to access their pension. This will however place a greater governance burden on already stretched trustee and scheme provider resources.

The key principles outlined are:

• No requirement for complex decision-making by the member. The government wants to ensure that savers are able to achieve good retirement outcomes without needing to navigate complex financial decisions or develop specialist expertise. The Guided Retirement regime will mean the pensions industry must do the groundwork on behalf of members. The requirements place responsibility on schemes to design and manage appropriate default pensions in members’ interests.
• Protection against longevity risk. The government considers protection against longevity risk to be a crucial element of default pensions, and therefore schemes will be tasked with providing a retirement income to last throughout retirement. Trustees and scheme providers will have flexibility about how to deliver this and so default pensions could potentially incorporate different phases, such as a flex (drawdown) then fix (annuity) approach.
• Freedom of choice. This remains a key concept. Alongside introducing the default pension solution, the government has reiterated its commitment to ensuring that individuals are getting the right support when considering their pension choices. This includes areas such as quality financial advice, the PensionWise service and the recent introduction of targeted support (covered in our article here).
• Consent from the member.   At the point of drawing benefits, a vital element will be obtaining member consent to start receiving payments via the default pension. This is the ‘key consent’ moment. If the default solution includes different phases (such as a flex then fix approach), members should be informed throughout their pensions journey about when their ability to take a different choice would become restricted, but helpfully there is no need to seek consent multiple times.

Within the pensions roadmap, the expected date for Master Trusts to comply with Guided Retirement has been pushed back from 2027 to 2029.  Single employer trusts and those adopting retirement collective defined contribution (R-CDC) are expected to comply during 2030. Sequencing the reforms in order to allow trustees and providers to choose R-CDC as a part of their default solution has been a key driver in the revised timetable for implementation of the Guided Retirement obligations.

• Draft Value for Money (VfM) Regulations and Consultation

The DWP and Financial Conduct Authority (FCA) have jointly published an updated consultation and draft regulations/FCA rules “CP26/25” in relation to the new VfM requirements which will apply to DC workplace pension arrangements.  The consultation runs until 1 September 2026.

The stated aim of the VfM framework is to ‘shift the market focus from cost alone to overall value, protecting savers from remaining in consistently underperforming schemes’.  The requirements for both contract and trust-based arrangements will come into force at the same time.

There have been a number of changes to the draft proposals since prior iterations (as a reminder, we considered the prior consultation in our previous article) and there are some welcome easements in this latest version, with notable changes including: 

• Phased implementation. Only larger schemes such as Master Trusts, single employer trusts with over 50,000 combined active and deferred members, and multi-employer contract-based arrangements open to new employers will be required to complete a full VfM in 2028, the first year of the framework. There will also be no automatic consequences on the basis of the ratings outcomes in that first year.  Smaller trust-based schemes, arrangements closed to new employers and ‘bespoke’ arrangements will still be required to submit VfM data into the database in 2028 but will not be required to carry out a full VfM assessment until 2029.
• Data collection period. The DWP previously proposed that in the first year, data would be collected from January to December 2027. This is now proposed to be shortened to a 6-month period running from 1 July 2027 to 31 December 2027 to ensure schemes have sufficient lead-in time and that FCA rules and DWP regulations are in place ahead of the data collection period.
• Commercial comparators. There are some adjustments to the commercial comparators at the point of retirement so that schemes will be required to compare against those targeting similar decumulation outcomes (drawdown v drawdown, annuity v annuity).  At further periods out from retirement, the wider full commercial comparator group comparisons will continue.
• Investment performance methodology. An arithmetic approach to measuring investment performance was previously proposed. It is now intended to use a new geometric averaging methodology based on representative members’ actual experience as they move towards retirement.  The 5 year-to-retirement data point will also be removed to reduce reporting burden.
• Assumption disclosure. It was previously proposed that firms and trustees obtain third-party advice on forward-looking metrics. This requirement is intended to be replaced with mandatory disclosure of underlying assumptions, enabling more detailed scrutiny and reducing additional cost.

Implementation of the ‘contractual override’ provisions (enabling providers to transfer members from contract-based schemes which are not providing value to those that are) remains on track for Spring 2028.

• HMRC policy paper and draft legislation on DB surplus payments to members

Further to the recent DWP publication of the consultation covering flexibilities for payment of DB surplus to a sponsoring employer which we covered in our article here, HMRC has now published a policy paper and draft legislation to put in place the framework for DB pension schemes to make authorised surplus payments to members. Currently, a surplus payment to a member is not an authorised member payment and therefore would be treated as an unauthorised payment. 

The new regulations amend Part 4 of Finance Act 2004 (FA04) to introduce a new category of authorised payment: “authorised member surplus payments” which are direct payments to members (or their dependants) once they have reached Normal Minimum Pension Age (or earlier on ill-health retirement). This relates to payments made on or after 6 April 2027.

If there is a prospective award of an authorised member surplus payment to a member or dependant under Normal Minimum Pension Age (NMPA), the value will be held within the DB scheme pending payment and there is a mechanism for revaluation between the date of award and NMPA contained within Part 5 of the draft Occupational Pension Schemes (Payments to Employer) Regulations 2027.

These will be treated as pension income for the purposes of Part 9 of Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) with tax paid in the year the lump sum is paid at the member’s marginal rate of income tax. 

Helpfully, they are not treated as pension benefits or lump sums for other purposes under Part 4 of FA04. They will be excluded from pension input amounts for the purposes of the annual allowance and do not affect an individual’s entitlement to lump sum allowances. 

To qualify as an authorised member surplus payment, the scheme must not be in the process of being wound up and the lump sum must be paid at the discretion of the trustees or manager.

HMRC has requested feedback on the draft legislation by 7 September 2026.

What are we expecting next?

The pensions roadmap promises a steady stream of policy statements, consultations and regulations to progress the various elements of the reforms.  Upcoming deliverables over the next couple of months include:

• Value for money. Additional TPR guidance on the VfM changes is expected at the end of July 2026.
• Fiduciary duties. Consultation is expected in September 2026 for the guidance on trustees’ fiduciary duties related to investment decision making. This will be ‘non-statutory’ given the previous House of Lords’ rejections of a statutory framework.
• Small pots.  A DWP policy consultation: ‘Building the Foundations for Consolidation’ is expected in September 2026.

It is a busy and exciting time for pensions policy and we will continue to bring you updates as the legislation and guidance evolves.  We are very well placed to assist schemes and their sponsors with all aspects of preparing for the reforms so please do get in touch if you would like to discuss any of the issues covered in this article.