“The legislation enacts a series of critical reforms that will improve the value savers get from pensions and make the system easier to navigate for employers and savers,” declared Julian Mund, chief executive of Pensions UK, following the passage of the Pension Schemes Bill by the House of Lords on April 28, 2026.
This landmark legislation introduces a new framework for pension investments, particularly focusing on default auto-enrolment funds. Under this bill, a hard statutory cap limits mandation at 10% of a default fund, with 5% of that potentially directed into UK assets. The reserve power granted by this bill will not be usable before 2028 and will expire in 2032 if unused.
The discussions surrounding this bill have not been without contention. Industry stakeholders have voiced concerns regarding fiduciary duties and the implications of mandating investments in specific areas. Helen Whately, shadow work and pensions minister, emphasized that “trustees should not need state approval to act in the best interests of their members,” highlighting an essential tension between regulation and autonomy.
The backdrop to this legislative shift is a long history of pension reforms aimed at enhancing outcomes for savers while ensuring that employers can manage their obligations effectively. As auto-enrolment becomes increasingly prevalent, these reforms are seen as vital for aligning pension investments with broader economic goals.
Key provisions of the Pension Schemes Bill include:
- The establishment of hard statutory caps limiting mandation at 10% of a default fund.
- A provision allowing 5% of any mandation to be directed into UK assets.
- The reserve power’s activation timeline, set for 2028, with an expiration in 2032 if not utilized.
- A focus on improving outcomes for pension savers while encouraging investment in the UK economy.
Louise Davey, head of policy and external affairs at the Independent Governance Group, reinforced this perspective by stating, “The core principle of effective trusteeship is the ability to act in the best interests of their members, consistent with their fiduciary duties.” This sentiment underscores a growing recognition that while regulatory frameworks are necessary, they must not hinder trustees’ ability to respond effectively to their members’ needs.
Patrick Heath‑Lay, chief executive of People’s Partnership, noted that “these reforms are only the beginning,” emphasizing the need to keep savers’ interests central as the landscape evolves. The House of Lords has already rejected amendments intended to further limit mandation powers, signaling a commitment to this new direction.
The Pension Schemes Bill is expected to receive Royal Assent on April 29, 2026. As it stands poised to reshape how pensions operate within the UK economy, its full impact will unfold over time—yet it undeniably represents a significant shift towards more structured pension investment mandates.