The latest tome of pensions legislation could bring major changes to your pension arrangements in coming years.

The Pension Schemes Act 2026 spent over 10 months winding its way through parliament and, by the end of 2030, will have reshaped the structure of pension provision.

Bigger is better By 2030, schemes will generally need to have at least £25 billion in their main default fund or have £10 billion and a credible plan to reach £25 billion by 2035. At present there are 2,000 schemes which have £10 billion of assets in total.

Value for Money (VFM) The Act introduces a new regime to address the performance of DC occupational schemes, similar to one currently being developed by the Financial Conduct Authority for personal pensions. A scheme that is judged to be ‘not delivering’ VFM must take remedial action which may ultimately mean transferring its members and assets to a better-performing scheme.

Small pots Currently, if someone changes employer, by default they normally leave the pension benefits they have built up in their former employer’s pension scheme. Small pension pots have become scattered across providers, often offering poor value. The Act’s solution is to require automatic consolidation of small pension pots worth £1,000 or less in a consolidator scheme that meets the VFM requirements.

Guided retirement Converting a pot of money into a stream of retirement income is challenging for many. To ease this problem, the Act places a new duty on the trustees of DC schemes to provide default ‘pension benefit solutions’.

Overall, the Act makes a valiant effort to address some of the issues that have been created by automatic enrolment. However, relying on default actions should not be regarded as a satisfactory substitute for personal advice.