The Pension Schemes Bill published on 5 June 2025 contains a range of measures which will impact UK pension schemes, including significant additional compliance requirements for money purchase schemes, changes to the rules on Pension Protection Fund levies, and new powers allowing trustees to modify scheme rules governing surplus payments to employers. Here we take a look at those aspects of the Bill most likely to be of interest to employers.
The Pension Schemes Bill was published on 5 June 2025 alongside a Government “roadmap” indicating when the changes might come into force. Here we consider which aspects of the Bill are likely to be of interest to employers.
The validity of many past scheme amendments was thrown into doubt by the Virgin Media judgment which held that a failure to obtain a “section 37 certificate” from the scheme actuary when required would render an amendment invalid. On the day the Bill was published, the Government announced that it will introduce legislation to allow schemes to obtain retrospective actuarial confirmation that historic benefit changes met the necessary standards. We don’t yet know whether that legislation will be included in the Bill or in other legislation. The Bill is not expected to complete its passage through Parliament until 2026 so the changes will not take effect immediately.
As previously announced, the Bill provides that where there is no current power to make a surplus payment to the employer, trustees can modify the scheme to give themselves such a power. Trustees will also be able to remove or relax restrictions on an existing power to make surplus payments to the employer. The new power will not apply to a scheme that is winding up. Regulations are to set out conditions for making a surplus payment, including how well funded the scheme has to be. It will be the trustees who decide whether to exercise any surplus payment power. The Government’s roadmap indicates the changes won’t take effect before 2027.
The PPF would be happy to set a zero levy for the levy year 2025/26, but a quirk in the current legislation means that a zero levy would prevent the PPF from raising the levy again in future. The Bill contains provisions designed to address that issue. The PPF has said it will take a final decision on the 2025/26 levy “in due course” and expects to provide an update by the end of July this year.
A transfer to an authorised “superfund” can be an option for a closed defined benefit scheme that is not well funded enough to buy out benefits. A superfund regime has existed for some time with the “rules” largely set out in Pensions Regulator publications rather than legislation. The Bill will put the superfunds regime on a statutory footing. The changes will be of interest to employers considering a transfer of their scheme to a superfund. A superfund transfer is only an option where the scheme cannot afford to secure benefits via annuities.
The Bill makes significant changes to the law on money purchase schemes. The requirements will fall on those responsible for operating the schemes rather than on employers. However, where an employer has its own money purchase scheme, the changes could result in significant compliance costs. For master trusts or group personal pension schemes, the changes could in some cases result in members being transferred to a new scheme.
New “Value for Money” (VfM) assessments will require trustees of occupational pension schemes providing money purchase benefits to conduct detailed assessments of whether the scheme offers VfM compared to comparator schemes. Where a scheme is assessed as not providing VfM, the trustees will have to inform participating employers and the Pensions Regulator and consider whether a transfer to a different scheme would provide improved VfM for members. In some cases the Pensions Regulator can require trustees to transfer members’ accrued rights to a different scheme. The Government expects the first VfM assessments to take place in 2028. In a separate but related development, providers of workplace personal pension schemes will acquire new powers to move members into different schemes where they judge that this will achieve a better outcome for members.
Currently there is no requirement on occupational money purchase schemes to provide a mechanism allowing members to draw a pension in retirement. The Bill will introduce a new requirement to offer a “default pension benefit solution” designed to provide a regular income for members in retirement. Although much of the detail has been left to regulations, it appears that the requirements will impose a significant compliance burden on trustees. The roadmap indicates that the requirements will take effect in 2027 for master trusts and in 2028 for other schemes.
The Bill introduces new minimum fund size requirements for master trusts and group personal pension schemes used for auto-enrolment. This means that employers may find that the schemes they currently use for auto-enrolment cease to exist due to mergers with other schemes. The deadline for reaching the minimum fund size is expected to be 2030, but we expect to see scheme mergers in advance of that date, as scheme operators conclude they will be unable to meet the minimum fund size.
Get up to date with our latest news on LinkedIn
Follow nowSubscribe for legal insights, industry updates, events and webinars to your inbox
Sign up now
