The Government's new Pension Schemes Bill, currently before Parliament, introduces wide-reaching reforms aimed at improving outcomes for pension savers. These changes will not only affect how pensions are administered but also impact scheme selection, cost management, and employee engagement over the long term.
Figures released last week suggest that the average worker on an average salary saving into a pension pot over their working life could benefit by up to £29,000 when they retire.
📊1. Automatic Consolidation of Small Pension Pots
Small pension pots under £1,000, often created when employees change jobs, will now be automatically consolidated into large, authorised schemes that have been certified as delivering good value.
This change will reduce the administrative burden of managing multiple inactive pots — a potential indirect benefit for employers too.
✅ 2. Schemes Must Prove Value for Money
Pension schemes will need to meet new regulatory standards to prove they offer long-term value, not just low charges. This is designed to protect savers from underperforming schemes and help employees achieve better retirement outcomes.
As an employer, you’ll need to ensure your default pension scheme meets these standards. Failing to do so could mean being required to switch schemes — and a poorly performing scheme could also affect your ability to attract and retain talent.
🧭 What Can You Do to Prepare?
• 📞 Speak to your pension adviser for tailored advice on your current scheme.
• 🔍 Review your pension provider’s performance and compliance with the new standards.
• 💬 Be ready to communicate with employees and answer questions about the changes.
• 🧠 Use this as an opportunity to re-evaluate how your pension offering supports retention and financial wellbeing.
By staying ahead of these changes, you can ensure your business continues to offer a high-quality, compliant pension scheme that supports your team’s long-term financial health.