Pensions Schemes Bill: Short term pain for long term gain

Commenting on yesterday’s publication of the Pensions Schemes Bill, Ian Bell, partner and head of pensions at RSM UK, said: “The Pensions Schemes Bill will introduce extensive reforms to both the Defined Benefit and Defined Contribution market, enhancing member protection, driving value for money, facilitating consolidation, and providing new de-risking avenues for legacy liabilities. Whilst a positive step in the right direction, these changes will take some time to implement, and it will be a while before any benefit to people’s pensions pots will be felt.

“For pension trustees, this legislation translates into significantly expanded fiduciary duties, demanding greater strategic oversight, particularly concerning investment decisions, member outcomes, and operational efficiency. The Pensions Regulator’s announcement, made on the same day as the Bill was launched, that it intends to drive up standards of trusteeship is timely and perhaps overdue. For pension managers, they will see a substantial increase in compliance requirements, reporting obligations, and the need for sophisticated data management and analytical capabilities.

“Whether DC or DB, the Bill acknowledges that the pensions sector is poised for accelerated consolidation, a shift towards more outcome-focused DC provision, and the emergence of a regulated superfund market, necessitating adaptation, innovation, and potentially new business models for service providers. This Act is not merely a set of amendments but a foundational shift, demanding proactive engagement and strategic realignment from all participants.

“If the proposals in the new Bill do deliver, this could be a win/win for pensions savers and the UK economy, but putting the changes in place will certainly add to the ongoing administration and compliance burden for those running schemes.

“The missing piece of the jigsaw, that doesn’t get a mention, is that all of this won’t shift the dial on retirement outcomes without a much-needed increase in the rates of auto enrolment contributions. We hope that the second phase of this pensions review will come quickly on the heels of the first.”