What the Pension Schemes Bill means for you

This content was reviewed and approved by Tamlin Russell.

The information on this page should not be considered as financial advice. If you are unsure what’s right for you, please make sure you speak to a financial adviser.

If you’re among the millions of UK people planning for retirement, you may be wondering what the government’s Pension Schemes Bill 2025 could mean for you.

This article will highlight the significant changes to pensions proposed in the Bill and explain the impact these could have on your pension savings.

What UK pension reforms should I know about?

Planning for retirement may get easier for millions of UK workers under pension reforms proposed in the Pension Schemes Bill 2025. The proposals are designed to modernise the UK pension system, simplify the understanding and management of pensions, and enhance long-term value for savers.

The Bill covers a series of recommended changes to both defined benefit (DB) and defined contribution (DC) pension schemes, as well as contract-based personal pension schemes and workplace pension schemes. It consists of a framework that gives the Government powers to issue detailed regulations that will bring the report’s conclusion into force.

The final version of the Pension Schemes Bill is expected to receive Royal Assent in 2026, with changes coming into effect between 2027 and 2030.

The Bill marks a key moment in pension reforms and is a major step in the government’s wider Plan for Change initiative to empower people to take greater control of their financial future and make the most of their retirement savings.

The Pension Schemes Bill aims to:

• address underperforming pension schemes,
  
• consolidate smaller pension pots,
  
• create bigger, more efficient pension funds.

By reducing costs and boosting retirement savings, these measures aim to help savers grow their pension pots, letting them keep more of their money when they retire.

If you’re unsure how these latest UK pension reforms could affect your retirement plans directly, it might be worth speaking to a financial adviser.

What is the focus of the UK pension reforms?

The UK pension reforms put forward in the Pension Schemes Bill aim to reshape how people manage and benefit from their retirement savings, with a focus on workplace pensions. For millions of people, it could support a more comfortable retirement and better financial outcomes when working life ends.

At its core, the Bill aims to bring in major pension reforms to drive stronger investment returns, reduce costs, and simplify pension management.

1. Merging of small pension pots

One of the most powerful aspects of the latest pension reform proposals is the merging of small pension pots.

If you moved between jobs and accumulated several small pensions, you’ll know how difficult it is to monitor your money. Under new rules, all these small pension pots worth £1,000 or less would be consolidated in one place, giving you full visibility and reducing the risk of them being eroded by charges.

2. Tracking of pension performance

The Pension Schemes Bill also aims to bring in a new pension performance tracking system that allows you to check if your fund is delivering good value.

This greater level of transparency and accountability may prevent you from getting trapped in underperforming schemes, enable you to take positive action, and help you feel more confident and secure about your retirement plans.

3. More pension savings options

If you’re considering early retirement or approaching the State Pension age, the latest pension reforms recommendations would require providers to offer clear default options for converting your savings into a steady retirement income, such as a pension drawdown.

The aim is to boost confidence and provide you with more clarity when it comes to deciding how to turn your pensions into sustainable income in a secure way, so your money lasts throughout retirement.

What will the new UK pension reforms affect?

The Pensions Schemes Bill seeks to change the UK’s pension landscape and deliver better value for millions of savers. No matter what type of pension you have, you’ll be expecting a good return for every pound you save to fund your retirement.

The proposed Pension Schemes Bill is designed to deliver larger pension pots for millions of people nearing retirement, while pumping billions of pounds of investment into the UK economy.

Once adopted, the Bill could impact several key areas of pensions, including:

Defined contribution (DC) schemes

The recommended pension changes state that defined contribution pensions must prove they offer good value for money, so you don’t end up stuck in inefficient schemes.

This will involve the creation of multi-employer defined contribution ‘megafunds’ of at least £25 billion so that pension schemes will drive down costs and invest in wider and more diverse assets.

Defined benefit (DB) schemes

The Bill aims to offer greater flexibility around defined benefit pension schemes to support members. Not only that, but it will also allow trustees of well-funded DB schemes to release money back to employers and members when safe to do so for reinvestment in the UK economy, boost business growth, and benefit savers.

The proposed Bill is also designed to help savers by supporting the development of defined benefit superfunds, which will encourage market growth while safeguarding members’ pensions.

Default pension benefit solutions

If you’ve invested in one or multiple pension schemes, you could benefit from the government’s new default pension benefit solutions under the recommended pension changes.

You would still have the usual pension freedoms, but also extra support offering default routes to a retirement income that could help you live more comfortably.

Pension Protection Fund (PPF) changes

Under the new pension reforms, restrictions preventing the Board of Pension Protection Fund from reducing the amount of annual levy it collects would be removed.

This would allow the PPF to collect less money from UK businesses and reduce the burden when it is safe to do so.

Local Government Pension Scheme overhaul

The new Bill intends to streamline and enhance the Local Government Pension Scheme (LGPS) by consolidating assets into six professionally managed pools, enabling greater investment in local infrastructure, housing, and clean energy initiatives.

Pension dashboards

The new Bill aims to support the introduction of pension dashboards, giving savers a complete overview of their pensions at all times. Details of all pensions that you hold, including workplace pensions, personal pension schemes and the State Pension, would be included.

These dashboards aim to boost engagement among savers, while pension details will be held securely and in one location online, offering easy access to information and full visibility.

Unsure what to do next following the latest pension reforms?

Saving into one or more pension schemes can help you secure a comfortable retirement. If you’re unsure what to do in the wake of the government’s latest pension reform proposals, speak to one of our retirement and pension advisers to discuss your options.