DB and DC: Phase two of the government's pensions review and review of the state pension age
The government launched phase two of its pensions review and announced the third review of the state pension age on 21 July 2025.
- Why this is important
The government published the final report on phase one of its pensions review, together with two related consultation responses, at the end of May 2025. Those items informed some of the content of the Pension Schemes Act 2026.
Phase two of the pensions review is considering the long-term future of the pensions system and how to support pensions adequacy. It could lead to further reform.
A July 2025 press release confirmed that stage two would be conducted by a (revived) Pensions Commission, and the July 2025 terms of reference for the Pensions Commission explained what it would consider.
The terms of reference for the Pensions Commission also confirmed that, in line with section 27 of the Pensions Act 2014, the government had launched the next (and third) review of the state pension age. Dr Suzy Morrissey has been appointed to prepare "an independent report on specified factors relating to state pension age" and the Government Actuary’s Department is to prepare a separate report "including on the proportion of adult life in retirement." The findings from both reports will be considered as part of the Government’s state pension age review and "may also be shared with the Pensions Commission as it considers the longer-term future of the pensions system as a whole."
- Current position and expected timings
The Pensions Commission published its interim report on 19 May 2026. The report notes the contribution made by automatic enrolment, the new state pension (uprating by the triple lock), and Pension Credit, but says that "with fewer retirees set to receive defined benefit pensions and significant gaps in existing policy…there remains much work to be done to ensure income adequacy in later life, through a renewed, fair and sustainable settlement."
The executive summary highlights the following interim findings:
- "Pension policy should enable everyone to achieve a decent standard of living in retirement with the non-means-tested State Pension as a foundation." There are many ways of measuring 'adequacy' of retirement income. "A ‘hybrid’ metric that builds on [income] replacement rates for middle earners while focusing on a basic adequacy standard for lower earners would help guide policy in future."
- "Automatic enrolment has increased workplace pension saving but not enough for low and middle earners." To improve retirement income adequacy, particularly for low to moderate earners, the commission will "consider how the eligibility criteria, income thresholds, and minimum contribution rates for automatic enrolment will need to be adjusted in the future. Any changes in rates would not be for the current parliament, and implementation of future reforms would require notice and phasing to allow employers to plan for any changes."
- "Many people are not saving at all, and the length of working lives is also a driver of adequacy". Barriers to saving and sources of inequality include the automatic enrolment age limits and £10,000 earnings trigger, working in the gig economy / being self-employed, the pensions savings gap between men and women, pension participation gaps for carers, people with disabilities and some ethnic minorities, and leaving the labour market before state pension age.
- "Decumulation choices decisively impact people’s retirements and stronger guardrails are needed." Since the defined contribution (DC) pension freedoms reforms in 2015, there have been "high levels of full cash withdrawals, widespread early access of ‘tax‑free lump sums’, and high withdrawal rates that risk running down savers’ pension wealth too quickly…Alongside the FCA’s introduction of ‘Targeted Support’ and the expansion of collective defined contribution, the Government is introducing ‘Guided Retirement’ through the Pension Schemes [Act]. This offers opportunities to help address decumulation challenges….[but] must be a true default as far as is possible. Decumulation solutions that rely on engagement and decision‑making for the vast majority of savers are not likely to be sufficiently effective. A more protective default mechanism is required to ensure the pension saving journey is smooth, the vast majority of savers are protected from risk, and the system remains fair and accessible up to and beyond retirement."
- "The existing settlement provides firm foundations but needs strengthening for the long term." The commission's final report may focus on higher rates of private pension saving and higher coverage, the state pension and pension credit, higher employment rates for older age groups, particularly those in their 50s and early 60s, and stronger guardrails for decumulation, of DC pensions and less risk passed to individuals.
The Pensions Commission will publish and submit its final recommendations to the government in 2027, but (in May 2026) said that it would welcome views on its findings so far.
No date has been set for publication of the outcome of the review of the state pension age. A Department for Work and Pensions call for evidence in advance of the report of Dr Suzy Morrissey opened on 18 August 2025 and ran until 24 October 2025.
DB and DC: Consultation on improving standards of trusteeship/governance
As forecast in the workplace pensions roadmap released on 5 June 2025, the government launched a consultation on improving the standards of pension scheme trusteeship, governance and administration on 15 December 2025.
The Pensions Regulator also plans to release a strategy to "drive up standards of trusteeship".
- Why this is important
The government is seeking views on proposals which would affect lay trustees, professional trustees, professional corporate sole trustees and scheme administrators.
The consultation paper notes that new measures being introduced by the Pension Schemes Act "such as surplus release, megafunds, DB superfunds, guided retirement and VfM", will "introduce new and potentially significant decision points for trustees", who need to "be equipped with the necessary skills to make…decisions that can significantly impact saver outcomes".
Consolidation into DC 'megafunds' and DB superfunds will also lead to a "smaller number of bigger and better pension schemes" which need to be "overseen by highly skilled trustees operating independently, applying good governance, and focussed on delivering the best outcomes for savers without risk of conflicts of interest".
And the aim of the proposals is to ensure that, as the Pension Schemes Act changes the landscape, "trusteeship, governance and levels of regulatory oversight evolve and change too."
27 questions are being asked. These include the following:
- "Looking ahead to 2030 and beyond, what further support will trustees need to ensure effective scheme governance?"
- "Does effective scheme governance in a [DC] Megafund require additional support or any specific changes in regulatory approach?" (The government would like to understand "the extent to which the relationship between the trustees and those that appoint and can remove them may cause conflict, and the extent to which trustees may not be fully able to act independently or provide sufficient challenge.")
- "Can you describe any potential or actual conflicts of interest that stem from the provision of further services within professional trustee firms and other third-party providers? How are these conflicts managed now? What is the scale of the residual risk in the market?" And "[a]re additional safeguards needed to effectively manage these risks…?"
- "Should there be restrictions on individuals acting as professional trustees, such as the number of trustee appointments they can hold, to ensure individuals have the appropriate capacity to manage schemes?"
- "Are there situations where a [Professional Corporate Sole Trustee (PCST)] model is more or less appropriate and why? Should there be any restrictions or suitability guidelines on PCST appointments?"
- "If the Government introduced an enhanced code of practice for sole trustees what…would you like to see included?"
- "What role can government and regulators play in helping schemes to attract a diverse and talented pool of individuals to trusteeship?"
- "Would it be appropriate to introduce a new public trustee who could be appointed by the Pensions Regulator [(TPR)]? If so, in what circumstances would a public trustee appointment be preferable to a professional trustee from TPR’s independent trustee register? And why?"
- "How can TPR ensure it has the information it needs for [a trustee] directory without creating greater administrative requirements for schemes?"
- "Would it be appropriate for TPR to set statutory higher standards for professional trustees" rather than allowing the industry to continue to self-regulate?
- "What support/continuing professional development…would you like to see put in place for lay trustees? Should all trustees be accredited?"
- "How can we ensure trustee boards take into account the perspectives of members in their decision making?"
- "What benefits and challenges do you foresee if mandatory minimum standards were introduced for scheme administrators and/or wider administration services such as Integrated Service Providers? "
- "Should TPR have the same levels of regulatory oversight as the [Financial Conduct Authority] regarding administrators and/or wider administration services, and why?"
- "What role should TPR take in reducing the risk and impact of a disorderly market exit by an administration provider?"
The consultation paper also confirms that the government will "produce guidance to trust-based private pension schemes, aimed at clarifying how they can interpret and apply their fiduciary duties when considering wider factors, including systemic risks (such as climate risk) and members’ standards of living in investment decisions."
- Current position and expected timings
The consultation is open until 5 March 2026. No timings are given for next steps.
The Pensions Regulator's strategy is expected in 2025/2026.
DB and DC: Information to be given by employers to trustees
In September 2025, the Public Bill Committee approved the addition of a new provision to the Pension Schemes Bill (now Act). Section 125 of the Pension Schemes Act 2026 gives the government the power to make regulations requiring employers to give information about "jobholders who are active members of a qualifying scheme, or workers who are active members of a pension scheme" to the trustees or managers of an occupational pension scheme, or to the provider of a personal pension scheme.
- Why this is important
In debate, the pensions minister explained that the new provision "is essential to address a current gap in the pension system to ensure that employers share timely and accurate data with pension schemes, beyond the current one-off requirement for employers to provide that information to schemes at the point when the employee is enrolled into the scheme.
"Improving data records will help to improve member communications and will support pension schemes to operate more efficiently and effectively. Poor data contributes to wasted administration costs because it often requires manual interventions to verify identities and match records, which is especially important to facilitate the small pots framework that we have discussed previously.
"Finally, the new [provision] extends the relevant pre-existing compliance provisions in the Pensions Act 2008 to these new duties, ensuring that the regulator will have suitable enforcement powers. In summary, [it] supports better governance through improved data quality."
- Current position and projected timings
This section came into force on 29 April 2026, the date of Royal Assent.
DB and DC: Investment guidance for trustees and investment managers
At House of Lords report stage in March 2026, the government proposed an amendment to the Bill (amendment 156) to introduce a clause requiring it to issue investment guidance for trustees and investment managers within 14 months of the Bill receiving Royal Assent.
This would be statutory guidance "on the meaning and application of key legal concepts…including the statement of investment principles and the provisions governing the choosing of investments….[to clarify] how the law works in practice." It would provide "clarity and confidence to trustees without imposing undue prescription, translating existing law into practical expectations supported by real-world examples—for instance, showing how trustees might assess long-term financial risks linked to climate change, biodiversity loss, supply chain exposures, nature-related dependencies and stewardship escalation, as well as financially material social risks and other forms, drawing on good practice from schemes such as Nest, Brunel and People’s Partnership."
The amendment was not agreed (see columns 1290 to 1300 in this document) but, at the third reading of the Bill in the House of Lords on 26 March 2026, Baroness Sherlock (Labour), confirmed that "[t]he Government remain committed to improving clarity around trustees’ existing investment duties, including how schemes consider long-term and financially material factors such as climate and systemic risks, while maintaining their core duty to act in members’ best interests. We will press ahead with this important work. We are currently reviewing next step options to ensure this objective continues to be progressed in the most important way in the light of the decision of the House on this matter."
A technical working group has already been convened.
