UK Pensions: what’s new this week - April 28, 2025

Government announces small pots consolidation

The government has announced that it will be introducing requirements for small, deferred pension pots (worth GBP1,000 or less) to be consolidated. Primary legislation on this will be set out in the upcoming Pension Schemes Bill, which will be published ‘later this spring’; the intention is that regulations with further detail will be drafted during 2026, in consultation with industry, with elements of the legislation expected to come into force during 2027/2028. Duties on pension schemes to transfer and consolidate eligible pots are likely to come into force from 2030. The pensions minister will say more about expectations in terms of sequencing and timing ‘in the coming months’.

The announcement is accompanied by a report by the Small Pots Delivery Group—a group formed to help the DWP with developing and implementing the small pots policy. The report includes some detail of how consolidation is expected to work:

• A multiple default consolidator approach is being pursued (as previously consulted on), meaning that a range of schemes can be authorised as consolidators. Pots will be allocated depending on whether the member has made a choice of consolidator, already has a pot in a consolidator, or on a ‘carousel’ basis. The authorisation criteria for consolidators will build on the existing master trust authorisation framework.
• A ‘small pots data platform’ (previously referred to as a ‘clearing house’) will act as a central hub to undertake data matching, identity verification and facilitate consolidation e.g. checking if a member already has a pot in a consolidator, allocating pots, and informing ceding schemes of the end location for members to be consolidated into. The platform will not be actively involved in the transfer/holding of assets and will not be responsible for member communications—this will be the responsibility of the ceding and receiving pension schemes.
• Consolidation will be separate to pensions dashboards, but the government will consider whether any of the infrastructure and other elements (such as data matching) of the dashboards system could be replicated, and what interactions there should be between the two systems.
• Pension schemes will need to comply with mandatory data standards to enable consolidation. The data standards will be set out in secondary legislation supported by statutory guidance. The government will explore introducing greater duties on employers to provide employee information to their pension provider.

Read the government press release and Delivery Group report.

Update on regulatory initiatives

A grid has been published setting out the status and anticipated timelines of various regulatory initiatives, including a number of initiatives being undertaken by the Pensions Regulator (TPR):

• Legislative framework for superfunds: the legislative framework is planned to be included in the upcoming Pension Schemes Bill. TPR anticipates beginning work on a Superfund Code from early 2026.
• Notifiable events: the notifiable events code, which had been expected, is included in a list of initiatives that have been stopped. This suggests that this is not currently being taken forward.
• Value for Money framework: the FCA, TPR and DWP ‘are now working to refine the proposed framework, with further consultation anticipated’. Primary legislation will be included in the Pension Schemes Bill.
• Data quality initiative: the grid notes that TPR is waiting for the current DB/Hybrid scheme return cycle to end (in April 2025) to identify further schemes to engage with on data expectations.
• Compliance with requirements to assess value for money: this initiative, which targets smaller defined contribution (DC) schemes, is expected to run to ‘mid/late 2025’.
• Extension of collective defined contribution (CDC) to unconnected multi-employer schemes: the grid notes that TPR is supporting DWP with the drafting of new legislation on this and suggests the legislation will be consulted on at the end of 2025.

See the Regulatory Initiatives Grid.

TPR films to encourage dashboards preparation

TPR has released a number of short films as part of its campaign to encourage schemes to prepare for pensions dashboards. The accompanying press release includes actions TPR wants schemes to be taking: preparing data; using TPR’s preparation checklist; nominating a dashboards contact through TPR’s Exchange portal to receive communications and guidance; working with administrators, AVC providers and other providers; keeping a record of decisions and preparations; and maintaining oversight at board meetings.