The Pension Schemes Act 2026 has now reached the statute books, marking the halfway point of a year defined by rapid change in defined contribution pensions. However, the legislation is only the beginning; the real work of implementation is about to begin.
Preparing for the next six months
As the football World Cup grabs headlines, the industry is taking stock of the progress made so far. Detailed regulations and guidance are set to emerge over the coming months to bring the new DC pension changes to life. The summer parliamentary recess is approaching, which typically signals a push to finalize rules before the break.
For administrators, the focus is shifting toward retirement planning. The guided retirement duty, a key part of the new act, is currently in a rough state and needs to be shaped into a workable framework quickly. Reports from the Pensions Policy Institute and the Pensions Administration Standards Association highlight the task’s complexity. They suggest that industry experts will need to dedicate significant time to the pensions ecosystem to ensure the changes are doable within the proposed timescale.
The guided retirement duty enshrined in the Act needs to be shaped into something workable fairly quickly so that the industry can start to see what the next few years will look like.
Building new teams and structures
For pension providers, the focus is on proposition and design. The industry is already discussing interesting concepts at the edges of conference rooms and events. Those who are entrepreneurial, brave, or flexible are likely to fare well in this space. Providers are encouraged to create teams that work across different departments, staffed with bright minds and enthusiasm. These teams could focus on novel investment designs, default retirement solutions, collective DC, Value for Money, or small pots, including pension members first.
Creating these interdisciplinary teams is worth the investment because they will be the architects of the biggest changes within the pensions system in the future. The goal is to help join the dots between pensions departments and other parts of the provider businesses. This approach can only be a good thing, as it is where real change will start to happen for large numbers of DC pension savers.
For employers, the drive to value and scale in DC is starting to bite. The industry is now addressing some of the knotty issues that have held employers back from transferring employees to master trusts in the past, such as tricky tax protections that could be lost on transfer or anomaly benefits like contracted-out underpins and guarantees. Innovation is happening here to help free up those who have been stuck for a while on these issues, as seen in the Mercer Master Trust deal.
Trustees and modern challenges
For trustees and independent governance committees, there could be a lot of hard work to come. Policing changes that are happening right now, as well as planning for Value for Money and further potential consolidation, will be a big part of this. These are all big-ticket projects that require time and energy, and a huge commitment from those involved.
As well as the day-to-day discussions, there will also be more talks about increasingly influential topics such as the sharing of data, the use of AI, protections against scams and cyber risks, and the management of conflicts of interest. They could even perhaps start to see comparisons run between the role of trustees and IGCs in trust and contract-based workplace schemes.
The complexity of the modern situation means trustees may need to look outside the box for guidance. They could be about to witness the renaissance of older trust law concepts to fill some gaps in protection where there are no explicit rules to tell trustees what to do. For example, around vulnerable members where trustees aren’t subject to legislation or guidance equivalent to the Consumer Duty. The adaptability of trust law is that it can adapt and flex to fit what is needed, and applying it with some thoughtfulness about what it means to be a trustee in the modern pensions age could help avoid some individuals or circumstances falling between the cracks, much like the BGMEA welfare fund launch.
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