Pensions law update: June 2025

Welcome to our June pensions law update.

There was breaking news as we went to press on Thursday 5 June with confirmation that the Pension Schemes Bill was to be laid before Parliament, and, in a very welcome development for the industry, an announcement confirming that the Government intends to legislate to address the effects of the Virgin Media section 37 decision. More detail in our update here.

Of course, we always anticipated that Spring would be a busy time and in the first few weeks of May there was indeed a flurry of policy updates, with the Mansion House Accord signed, a consultation on LGPS access and equality published, and an announcement from the DWP on DB surplus release. This was followed on 29 May with a bumper news day for the pensions industry with the publication of the response to the Pensions Investment Review, accompanied by responses to the Options for Defined Benefit schemes, “Unlocking the UK Pensions market for Growth” and LGPS Fit for the Future consultations – more details in our pensions policy round up below.

And on Thursday 5 June we finally received the much-anticipated Pension Schemes Bill, together with a document setting out the roadmap for future reform. Look out for further updates on the Bill from us over the coming weeks and in our July newsletter.

In this pre Pension Schemes Bill June edition, as well as the policy updates in the weeks leading up to the Bill, we consider the DC decumulation dilemma through the lens of some recent reports, analyse the latest dashboards update from the PDP, and look at how the Pensions Ombudsman is handling the dispute in the Boots Pension Scheme. There’s also news of some fantastic events at our London and Bristol offices in the coming weeks.

Pensions Policy round-up

Pension Schemes Bill published on Thursday 5 June

On Thursday 5 June, as this newsletter went to press we received confirmation that the Pension Schemes Bill would be published that day. Ahead of the Bill being laid before Parliament, the DWP had published a press release summarising at a high level the changes the Bill will include. You can read the Bill, the accompanying roadmap for reform of workplace pensions and the DWP press release, and look out for analysis of the new Bill from us over the next few weeks.

Final response to Pensions investment review

On Thursday 29 May the Government response to its landmark Pensions Investment Review was published. As a reminder, the review was launched in July 2024, and an interim response was published when the Chancellor gave her Mansion House speech in November 2024, at which point two consultations were launched:

• Unlocking the UK pensions market for Growth – this focused on proposals for a major consolidation of the defined contribution market (read our December commentary on the proposals here).
• Local Government Pension Scheme in England and Wales: Fit for the Future? – alongside changes to governance and local investment targets, the consultation proposed significant changes to existing pooling arrangements.

Responses to both of these consultations have been published alongside the final response to the Investment review. There is a significant amount of detail to unpack but some of initial headlines for DC schemes are:

• The Pension Schemes Bill will include a new minimum fund size requirement for DC schemes – providers and master trusts will have to have at least one main default arrangement with at least £25bn of assets under management by 2030.
• The requirement will not apply to single employer schemes, and there will be a transition pathway allowing extra time for smaller schemes.
• The Bill will also include a “reserve” power, giving Government the power “if necessary” to set targets for schemes to invest a broader range of private assets, including in the UK. The plan is that this power would only be exercised if the Government “considers that the industry has not delivered the change on its own, following the Mansion House commitments”.

Read more

On the subject of the Mansion House Accord, this was announced earlier in May, amid much media fanfare. Louise Pettit and Steven Hull considered the Accord in this article, but with reports already then widely circulating that the Government was still considering implementing some form of mandation for minimum levels of investment in UK private markets by DC schemes, they also explored some of the legal issues that could arise should mandation be prescribed.

Read more

Response to consultation on Options for Defined Benefit schemes

Also published on Thursday 29 May was the much-anticipated response to the Options for DB schemes consultation (promised in the spring). To recap, the consultation had considered two key areas – changes to the rules around distribution of surpluses and a potential public sector consolidator vehicle.

In a press release in the weeks leading up to the response being published, Pensions Minister Torsten Bell had already confirmed that the forthcoming Pension Schemes Bill will include provisions to allow trustees and employers “to safely release part of this surplus to boost investment and benefit scheme members”.

The consultation response confirms that the Bill will do away with the current rules lottery when it comes to surplus distribution (which we’ve written about previously), providing trustees with a statutory power to modify their scheme rules to provide for surplus sharing. The Bill will also make changes to the existing statutory requirements for returning surplus including an amendment to section 37 of the Pensions Act 1995 to clarify trustee duties when considering a return of surplus.

There are areas where the Government is still considering its position – it is “minded” to change the funding threshold for distribution to full funding on a “low dependency basis” but will be consulting on draft regulations, and is also still looking at the tax position (though the response notes that the Government believes the current tax framework is “broadly balanced and fair”).

The Options for DB schemes consultation also set out proposals for a potential public sector consolidator vehicle, to be operated by the Pension Protection Fund. The response confirms that the Government will not be legislating for a consolidator vehicle in the Pension Schemes Bill, but that it is continuing to consider “how a consolidator could be additive to complement rather than compete with existing options in the DB market”.

Read more

Focus on DC

With the Pensions Schemes Bill and its new “guided retirement” duty for DC schemes expected imminently, a number of timely reports have been published in the past couple of weeks, focusing on retirement needs. Susannah Young and Mamunul Wahid highlight some key findings.

Read more

For further discussion of what the Pension Schemes Bill will mean for DC schemes, please follow the link to view a recording of the recent XPS webinar (recorded before the Bill was published), which Alice Honeywill was delighted to speak at.

Watch now

Governance

It has been another busy month in the world of dashboards – with a number of providers now confirmed as connected to the ecosystem, a project many years in the planning is now coming to life. In this update, Andy Prater considers the latest monthly update from the Pensions Dashboards Programme.

Read more

LGPS round-up

Government responds to “Fit for the Future” consultation

Alongside a number of other publications on 29 May, the Government has released its response to the Fit for the Future consultation. As we take some time to digest the outcome (and associated legal changes), some key measures making the headlines include:

• The Government is proceeding with its proposal that all administering authorities will be required to transfer all assets to the management of their pool.
• All pools will need to be established as investment management companies, authorised and regulated by the FCA.
• All administering authorities will be required to delegate the implementation of their investment strategy to, and take their principal investment advice from, the pool.

The deadline for making these changes will be March 2026 as originally proposed, although there is some limited flexibility for those changing pools / pools taking on new administering authorities.

Follow the link below to read the consultation response, and look out for more commentary from us in the coming weeks.

Read more

Consultation on access and fairness

The Ministry for Housing, Communities and Local Government has launched a consultation on changes to the Local Government Pension Scheme. Whilst most of the coverage to date has focused on the changes designed to address access and equality concerns, there are other important changes proposed to the LGPS regulations, including in relation to forfeiture of benefits and deferred debt arrangements on exit.

Read more