Trustees urged to ready pensions for change

The UK’s defined contribution (DC) pension schemes will face stricter regulations next year, prompting warnings that trustees must prepare immediately.

Kim Goodall-Brown, director of DC and master trust supervision at The Pensions Regulator (TPR), stated that the Pension Schemes Act 2026 will raise expectations for governance, data accuracy, and retirement support. Smaller schemes, she noted, may find it difficult to comply with the new requirements.

Consolidation accelerates as standards rise

TPR data revealed the DC market contracted by 15% last year. Larger single-employer schemes and master trusts are better equipped to meet the demands, while smaller ones risk falling behind.

Goodall-Brown emphasized that trustees must prove they maintain strong oversight, dependable data, and a practical plan for helping members transition into retirement. She advised them to evaluate whether they can implement necessary changes or if transferring members to a different scheme would be more beneficial.

The regulator has initiated a communications effort to assist schemes, including direct emails and a dedicated Pension Schemes Act webpage. It encourages trustees to question their current practices and focus on improving outcomes for members rather than preserving existing structures.

Governance gaps could force tough decisions

Pension scheme members are unaware investment is the main pension growth driver.

Trustees must determine whether their scheme can adapt to the new setting. Goodall-Brown made the stakes clear: “The direction is set. Trustees should evaluate their options now, fix any shortcomings, and concentrate on what serves their members best.”

Some schemes may find compliance costs too high. Others might lack the resources to upgrade data systems or member support tools. In such cases, transferring members to a larger scheme could be the more responsible decision, even if it means giving up control.

The changes aim to ensure pensions provide real value, not just administrative convenience. Smaller schemes, which previously operated with less oversight, will now face questions about whether they truly benefit members or merely persist.

TPR’s message is clear: preparation must begin now. Delaying until 2026 could leave schemes unprepared and members at a disadvantage.

The regulator’s webpage provides guidance, but the responsibility lies with trustees. They must review their governance frameworks, test their data systems, and decide whether their scheme is designed for the future or remains stuck in outdated practices. Workplace pensions often face similar challenges, requiring careful planning to meet evolving standards.