The Pension Schemes Act received Royal Assent on 29 April, bringing into law a wide range of reforms to expand investment opportunities, strengthen regulatory oversight and improve governance of workplace DC pension schemes.

Commenting in LexisNexis, Legal Director Ian D’Costa notes that ‘‘the Pension Schemes Act marks a significant step in the evolution of UK pensions, reflecting the government’s clear belief that greater scale delivers stronger governance.”

“That said, much of the substance will be delivered through secondary legislation, and, as ever in pensions, the detail will matter greatly. We are also awaiting revised timeframes for the various new measures, with the government promising an updated roadmap shortly.”

Ian highlights how the drive towards fewer and larger schemes is central to the reforms, while providing measures to support retirement outcomes.

“Consolidation sits at the heart of the Act, with DB superfunds and DC megafunds central to the government’s thesis that larger schemes provide better governance / member outcomes and can also increase investment in UK private markets. Alongside consolidation, the Act looks to improve value for members and introduces a much needed focus on decumulation through the new guided retirement duties. The revived Pensions Commission is looking at how to address retirement adequacy issues more generally, but the new guided retirement regime will play an important role in supporting DC pension savers at retirement.”

However, as Ian explains, it is uncertain whether larger pension schemes will actually improve DC member outcomes.

“Whether the shift towards scale ultimately delivers improved member engagement and outcomes remains to be seen, and it is an open question whether the investment mandation power, controversial even with enhanced guardrails, will ever be exercised in practice.”

Read Ian’s comments in LexisNexis here.