Pensions Investment Review launched by the Labour government

The Labour government launched a Pensions Investment Review in August 2024, following the general election in July¹. The first phase of the review, launched by the then Minister for Pensions, Emma Reynolds MP, focused on boosting investment in the UK, increasing saver returns and tackling waste in the pensions system². The government published two consultations alongside the review in November 2024, on unlocking the UK pensions market for growth and on the Local Government Pension Scheme in England and Wales¹. It published the review's final report on 27 May 2025¹, and in May 2025 confirmed it would proceed with a second stage².

The Pension Schemes Bill 2024-25 is a government bill, bill 255 of the 2024-25 parliamentary session, introduced on 5 June 2025, with second reading scheduled for 7 July 2025¹. According to the government's impact assessment, the bill as introduced had 12 policies¹. On 5 June 2025 the government also published Workplace pensions: a roadmap, setting out proposed sequencing and timing for implementing the legislative package¹.

The bill's measures cover several areas. For the Local Government Pension Scheme in England and Wales, described as the largest funded public service pension scheme, it would consolidate LGPS funds into LGPS megafunds¹. For defined benefit schemes it would allow trustees of well-funded schemes to share surplus funds with sponsoring employers, and establish a permanent legislative regime for DB superfunds to replace interim arrangements¹. For defined contribution schemes it would require trustees to report on value for money, consolidate small DC pots through multiple default consolidators, set a minimum size for multi-employer DC default funds to create DC megafunds, allow contract-based providers to override a member's contract to change it or transfer them to a new arrangement, with measures to protect savers, and place a duty on trustees to offer default retirement products, known as guided retirement¹.

The bill would also re-establish the legal standing of the Pensions Ombudsman to enforce determinations in pension overpayment cases without needing a county court order¹. For the Pension Protection Fund and the Financial Assistance Scheme it would extend the definition of terminal illness from a life expectancy of six months or less to 12 months or less, remove restrictions preventing the PPF from reducing its annual levy, and enable the government-backed pensions dashboard service provided by the Money and Pensions Service to display PPF and FAS information¹.

Most of the bill applies to England, Wales and Scotland; occupational pensions are a reserved matter in Northern Ireland¹. Some clauses relating to the LGPS also extend to Scotland but have no application there¹. The Commons Work and Pensions Committee took evidence on the bill before its introduction, in a session on 14 May 2025¹.

Why it matters for households

The bill's DC measures would affect members of workplace pensions through changes to how schemes report on value for money, how small pots are consolidated and what default retirement products trustees must offer¹. The LGPS changes would affect members of the local government scheme in England and Wales, whose funds would be consolidated into megafunds¹. The DB measures concern scheme trustees and sponsoring employers, including the treatment of surplus funds and the regime for superfunds¹. The PPF and FAS changes would affect members of DB schemes whose sponsor becomes insolvent and members who lost all or part of their pension where a scheme ended between 1 January 1997 and 5 April 2005¹. The ombudsman measure concerns people pursuing pension overpayment complaints¹.

What happens next

Second reading of the Pension Schemes Bill 2024-25 is scheduled for 7 July 2025¹. The government published Workplace pensions: a roadmap on 5 June 2025 to set out proposed sequencing and timing for implementing the legislative package¹. The second stage of the Pensions Investment Review is to focus on "the outcomes we are on track to deliver for future generations of pension savers and how these can be improved upon", with detailed terms of reference not published at the time of the committee report².