The big, beautiful (pensions) bill has been introduced to the @HouseofCommons this afternoon pic.twitter.com/VFZrPN2kdA
— Torsten Bell (@TorstenBell) June 5, 2025
Two documents that will shape private and public pensions for the next decade
Yesterday saw two documents published that matter for the Pension Industry but as much for the people who have or will have British workplace pensions.
Workplace Pensions; a roadmap which looks at how workplace saving and spending of those savings will happen going forward and is accessible to everyone
The Pension Schemes Bill which is “big and lets hope beautiful” and is going to take a weekend to read and comment on. Part One is on Defined Benefit pensions, Part Two is on Contribution Pensions, Part Three is on Superfunds , Part Four is on “miscellaneous” and Part five is on the general legalities that will be needed to get this over the line.
An assessment
I suspect that Workplace Pensions ; a roadmap (the roadmap) is if not written by, influenced by Torsten Bell. He is a writer as is his pension adviser Andrew Tarrant who gave us after working for Gregg McClymont who was shadow pension Minister in the days of the coalition, a series of booklets on pensions. The roadmap is an accomplished piece of writing designed to be read (not just to please politician’s vanity).
But the Bill itself contains the granularity, it is why the DWP have been pre-occupied this year and we hope that in September, we will have a Pension Act as fulfilled as the roadmap is confidant.
Let me take two examples of writing from the roadmap.
The first is the climax of the roadmap’s “How the challenges we are grappling with have changed” (section 17). It climaxes the analysis of what’s wrong (inefficiencies) with DC. It is saying that we have failed to apply “nudge” to spending. The density of information is thick but the quality of writing sufficient to carry this culmination
Thirdly, when you arrive at pre-retirement as a DC saver, you are responsible for
purchasing or selecting a product that is value for money and suits your
circumstances, including the highly uncertain question of how long you will live.
None of the lessons we have learnt on inertia and saver preferences in
accumulation, through the success of AE, is replicated in decumulation.
Developments in advice and guidance such as the targeted support proposals
being developed by HMT and the FCA will improve available support versus the
status-quo.
However, the significant information asymmetries and low
engagement persist. The present system also reduces opportunity for maximizing
investment in growth assets to and through retirement because around the point a
person makes a choice there is a built-in need for both liquidity and low risk
assets.
The second is from the next part of the roadmap which “Responds to today’s challenges”.
33.Automatic Enrolment has been a success in increasing the number of people
saving for their later life. However, this along with the shift to DC workplace
pension provision and the introduction of Pension Freedoms has placed the onus
on individuals to make complex decisions, reduced investment returns on savings
and left individuals bearing very significant risks (not least on longevity), as they
enter and during retirement.
Guided Retirement: We will place duties on trustees to provide default
solutions for their members, from which they can choose to opt-out. To deliver
the intention of providing guided retirement across the market, we will require
the FCA to make comparable rules for the managers of workplace schemes
and will work closely with the FCA to achieve this.
Different schemes will choose different approaches to providing defaults, taking into account their members characteristics and preferences.
Each will want to address the challenge almost everyone will face: how to secure the highest possible income in retirement alongside a degree of longevity protection.
This is hugely significant to savers and to those who provide them with savings schemes. Master Trusts and GPPs will “with equivalence” offer savers a way to pay themselves an income in later life if they do not opt out. I can foresee schemes opting to find an annuity, I can see some offering CDC and I can see some- as Nest has said it wants to do, offering some guarantees as we get in defined benefit pensions while offering increases “conditional” on there being money from successful investment.
A “degree of longevity protection” is new to defined contribution schemes and is the first move back to our thinking of a “pension” from the saving, some part of the savings will need to be saved to pay for extreme old age.
A selective reading
Readers will enjoy the roadmap, whether expert of not. It is well written and full of good ideas. Here is my friend Calum Cooper. He reads it in a different way and responds as an informed actuary would. We will all take from the roadmap what matter most to us, professionally or as savers. Here is Calum’s reaction to end with. I am glad he and I can end thinking of part two – adequacy!
The Pension Schemes Bill and accompanying Workplace Pensions Roadmap out today signal a bold, ambitious drive to unlock the untapped potential of pensions for national prosperity. By enabling the release of defined benefit surpluses and consolidating small pots, the government is laying the groundwork for a more efficient and growth-oriented pensions system.
Today’s roadmap outlines a clearly sequenced and phased approach which balances ambition with pragmatism, acknowledging the need for agility in implementation. While the devil will be in the details, the angels lie in the potential for improved retirement outcomes and economic revitalization.
This is a pivotal moment for the pensions industry to harness pensions as a force for good, delivering better retirements and fuelling UK growth, a big job for the industry and here’s to making the most of it for pensioners past, present and future.
More to come with Phase 2 (aka ‘does adequacy mean we need to save more and how’) of the review due out ‘shortly’…