Helen Ball, partner at Sackers, looks ahead to the next few months and what they could bring for different sections of the DC market as reform implementation kicks off.
Although it’s been a steep incline so far, we’ve made it to the halfway point of the year. With the football World Cup now dominating the headlines, there can likewise be pats on the back all round for getting the Pension Schemes Act 2026 over the line and onto the statute books.
But before we get carried away, it’s worth noting that the work is not yet complete. Detailed regulations and guidance are set to emerge over the coming months to bring the new defined contribution (DC) pensions changes to life.
As usual at this time of year, the summer holidays beckon. That means the engine powering pension developments may gather momentum over the next few weeks as there is a big push in advance of the parliamentary summer break.
There’s an important question we all could be thinking about in the quieter moments this should allow: how can we prepare for the all-important DC ‘second half’? We’ve got a few ideas to share.
Lining up for change
For administrators, we know for sure there are busy times ahead. The latest buzzwords this year have been ‘pensions decumulation’ or simply ’retirement’ for those who prefer plainer English.
The guided retirement duty enshrined in the Act is still in a rough and ready state – it needs to be shaped into something workable fairly quickly so that we can all start to see what the next few years will look like.
“With so many DC developments in the thick of the action, the next six months or so promise to keep us all on the edge of our seats.”
As recent reports by the Pensions Policy Institute and the Pensions Administration Standards Association show, there are a lot of nuts and bolts to sort out before we can be comfortable that this is doable in the timescale proposed.
These reports focus on the need to plan, discuss and test out potential solutions. So we might want to spare a thought for how we can make space for that to happen, freeing up time for those administrator experts who will need to get deeply involved with the ‘plumbing’ of the pensions ecosystem.
Getting the right team in place
For pension providers, the work on proposition and design is ongoing, and interesting concepts are now being discussed at the edges of many conference rooms and events. It seems likely that those who are entrepreneurial, brave, or flexible will do well in this space – resources, energy and time permitting, of course.
Providers should be encouraged to create teams that work across different departments, staffed with bright minds and buckets of enthusiasm. Whether their focus is on novel investment designs, default retirement solutions, collective DC, Value for Money (VFM), small pots, or something else, these will be the architects of the biggest wheels that turn cogs within the pensions system in the future. We don’t need them all to be pension experts to get their great ideas off the ground (they could well be AI, data or customer behaviour experts, for example).
This is worth investing time in because it is where real change will start to happen for large numbers of DC pension savers, and anything we can do to help join the dots between pensions departments and other parts of the provider businesses can only be a good thing.
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For employers, the drive to value and scale in DC is really starting to bite now. The industry is now used to addressing some of the knotty issues that have held some employers back from transferring their employees to master trusts in the past: think about tricky tax protections that could be lost on transfer, or anomaly benefits such as contracted-out underpins, guarantees and with-profits arrangements.
It’s good to know that innovation is happening here to help free up those who have been stuck for a while on these issues. Encouraging ideas by consultants and providers and how they communicate such progress to employers, across different disciplines within the industry, is definitely the way to go.
Anyone for extra time?
For trustees and independent governance committees (IGCs), there could be a lot of hard work to come. Policing changes that are happening right now, as well as planning for VFM 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 fancy stuff, there will also be more day-to-day discussions 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. We could even perhaps start to see comparisons run between the role of trustees and IGCs in trust and contract-based workplace schemes.
Could we 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? Let’s say, for example, around vulnerable members where trustees aren’t subject to legislation or guidance equivalent to the Consumer Duty.
The beauty of trust law is that it can adapt and flex to fit what is needed. So applying it with some thoughtfulness about what it means to be a trustee in the modern pensions age, and adapting it to suit contemporary challenges, could help to avoid some individuals or circumstances falling between the cracks.
With so many DC developments in the thick of the action, the next six months or so promise to keep us all on the edge of our seats. When revising its Pension Schemes Act 2026 roadmap, here’s hoping the government builds in sufficient “hydration breaks” for any extra time needed by the industry to digest and implement the changes.
Helen Ball is a partner at Sackers.
