New Pensions Bill to simplify pension schemes

The new Pensions Scheme Bill is set to make managing and accessing pensions much easier, as well as creating bigger and better pensions funds.

Introduced today (Thursday 5th June 2025), the new Bill is designed to maker pensions easier to navigate, and drive better value for workers in the long term. It will merge smaller pension pots worth £1,000 or less, which can be hard to keep track of as people move jobs frequently. The new rules will bring these pots together, helping savers see their full pension picture in one place.

The Bill will also introduce a new system that shows how well pension schemes are performing, which will help savers understand if their scheme is giving them good value, ultimately increasing their security in their retirement savings.

Updating the £2 trillion pensions landscape, the Bill will require schemes to prove they are value for money, having all defined contribution (DC) pension schemes offering default routes to an income in retirement, and introduce new rules to create multi-employer DC scheme “megafunds” of at least £25 billion.

It will also consolidate and professionalise the Local Government Pension Scheme (LGPS) with assets held in six pools that can invest in local areas infrastructure, housing and clean energy, as well as increasing the flexibility for Defined Benefit (DB) pension schemes to safely release surplus worth collectively £160 billion, to support employers’ investment plans and to benefit scheme members.

Work and pensions secretary Liz Kendall said: “Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners.

“The Bill is about securing better value for savers’ pensions and driving long-term investment in British businesses to boost economic growth in our country.

“As part of our Plan for Change we’re helping people find work, stay in work and ensuring that work pays them back to give them the secure income in retirement they deserve.”