The Pension Schemes Act 2026: Key developments for workplace pension advisers

Following Royal Assent, the Pension Schemes Bill is now the Pensions Schemes Act 2026, which has clarified the policy framework for workplace pensions.

The Act confirms the focus on larger schemes, a formal Value for Money framework, small pots consolidation and stronger support at retirement, although much of the detail will be outlined in secondary legislation and guidance.

The core reforms are broadly consistent with those set out at Bill stage. One notable change, however, is that the government’s reserve powers in relation to pension scheme investment have been narrowed, with additional limits on both scope and timing.

Fewer, larger workplace pension schemes

A central feature of the Act is scale. Multi-employer defined contribution (DC) schemes used for automatic enrolment will be expected to operate a main default arrangement of at least £25 billion by 2030 if they're to continue receiving auto-enrolment contributions. Schemes with at least £10 billion by that point may be able to apply for additional time where they can demonstrate a credible pathway to meeting the full threshold by 2035. The underlying rationale is that larger schemes should be better placed to deliver strong governance, competitive costs and broader investment opportunities for members.

A stronger focus on Value for Money

The Act also introduces a statutory Value for Money framework for DC workplace pensions, extending the focus beyond charges alone to include investment performance, service quality and member outcomes. Schemes that consistently fail to demonstrate good value may face pressure to wind up and transfer members to better-performing arrangements.  Over time, this is expected to increase consolidation across the market and place greater scrutiny on default investment strategies.

For advisers, this strengthens the importance of robust scheme selection and ongoing review — not just on cost, but on investment returns and broader member outcomes.

Consolidation of small pension pots

Small pots reform remains another important part of the legislation. The long-standing issue of multiple small pension pots, typically created as workers change jobs, has led many savers to build multiple small deferred pots over time.  The Act introduces a mechanism for eligible deferred pots to be automatically consolidated into authorised default consolidator schemes unless the member opts out. The aim is to reduce fragmentation, improve administrative efficiency and make retirement savings easier for members to keep track of and manage.

New expectations at retirement: default decumulation

The Act also strengthens expectations at retirement by requiring occupational DC schemes to offer default decumulation solutions for members who do not make an active choice. The intention is to provide a more structured route into retirement, providing support at a critical life stage. It doesn't remove member choice, but it places greater responsibility on schemes to support members through decumulation.  The detailed design is to be set out in future regulations.

Implications for advisers

For advisers, the direction is clear: scale, value and member outcomes are becoming even more central to scheme selection and review. While the Act establishes the legislative framework, the next phase of consultations, regulations and guidance will be critical in determining how these reforms are implemented in practice.