The Pensions Policy Institute is in the process of updating its influential ‘Pension Primer’ and, as senior policy analyst John Adams explains, it is no small task.
Updating the Pensions Policy Institute’s (PPI) Pensions Primer might appear to be an annual mechanical task, involving updating rates, moving the dates on and checking that the descriptions still reflect current policy. That is part of it, but as the PPI’s guide to the UK pensions system, the annual update also shows how much the system itself has moved on. This year, there was rather more than usual to update.
The Pension Schemes Act 2026 was the main driver. The changes introduced account for a sizeable share of the new material. Policies that had been discussed for several years now have a legislative basis, although regulations and regulatory rules still to come will supply some of the detail.
A short article can only draw out the main themes rather than capture every detail. It reaches across the life of a pension pot, from the point at which it is left behind after a job move, to the way it may eventually provide an income in retirement.
From finding lost pots to measuring value
Lost pots have been a problem in the pensions system for some time. An employee may build up a small pot and leave it behind when moving to a new employer. After several moves, they may have pensions with a number of providers, and lose track of them.
The small pots framework is intended to bring eligible deferred pots into an automatic consolidation system unless the member opts out, reducing the risk of those pots being forgotten in future.
During the years those savings are invested, the Value for Money framework will hold schemes and providers accountable for the value they deliver, assessed through investment performance, costs and service.
Then, at retirement, ‘guided retirement’ reforms will require schemes to provide a default way of turning pension savings into an income where the member makes no active choice.
‘Behind the scenes’ changes
That is only the member-facing part of the Pension Schemes Act. It also changes parts of the market around the pot. There are measures on minimum scale for in-scope multi-employer defined contribution schemes and Local Government Pension Scheme pools.
The legislation also creates routes for bulk transfers where statutory conditions are met, including cases where an arrangement is assessed as providing poor value. Contract-based schemes will have a route to consolidate legacy or underperforming funds through a contractual override, subject to safeguards and Financial Conduct Authority rules.
These provisions concern both the number and size of schemes and the options available when members need to be moved between arrangements.
Additionally, in defined benefit schemes, trustees will have greater scope to release surplus once the relevant funding conditions are met. Any use of surplus will remain subject to scheme rules, safeguards, and trustees’ duties.
Separate legislation is developing the framework for collective defined contribution provision, including arrangements focused on retirement income.
That is enough policy for several articles, never mind one.
Not all of these measures will be felt at once. Some depend on secondary legislation, consultation, or regulatory rules that are still to come. Several parts of the Pension Schemes Act are therefore on the statute book without yet forming part of day-to-day provision.
Factoring in the Pensions Commission
Another key event this year was the release of the second Pensions Commission’s interim report in May. The first Pensions Commission helped shape the settlement that led to automatic enrolment. Its successor is looking at the retirement outcomes the current system may produce through to 2050.
The estimate that around 15 million working-age people are undersaving has attracted most of the attention. The commission’s report also considers participation and contribution levels, the position of self-employed people, differences in outcomes across the population, and changing patterns of home ownership. It also looks at the movement of investment and longevity risk towards individuals. The final report is expected in spring 2027.
The increase in the state pension age from 66 to 67 is now under way and will be phased in between 2026 and 2028 according to date of birth. The third State Pension Age Review is examining the framework for future state pension age decisions.
Dr Suzy Morrissey’s independent report will recommend how future state pension age decisions should be approached. It is examining the merits of linking state pension age to life expectancy, the role state pension age may play in managing the long-term sustainability of the state pension, and international experience of automatic adjustment mechanisms.
Separately, the Government Actuary’s Department is carrying out an analysis of life expectancy projections and the proportion of adult life people may expect to spend above state pension age. The government will consider both reports before reaching its conclusions.
There will, of course, always be rates and dates to change. But while the pensions policy landscape is changing so much, updating the Pensions Primer will be a much more interesting task than just that.
John Adams is a senior policy analyst at the Pensions Policy Institute.
