Pensions Investment Review consultation launched on DC workplace pension reforms

The Department for Work and Pensions and HM Treasury published the outcome of the Pensions Investment Review on 29 May 2025, setting out final policy positions on the defined contribution (DC) workplace pensions market¹. The original consultation ran from 9:30pm on 14 November 2024 to 11:59pm on 16 January 2025 and applied to England, Scotland and Wales¹.

The reforms confirmed in the response are: setting minimum scale and investment capability requirements, with a transition pathway for schemes able to reach scale by 2035; a regulatory approval process for creating new default arrangements; a contractual override mechanism for the bulk transfer of assets where it is in savers' interests; and a commitment to a market fragmentation review to commence in 2029¹. Legislation to implement the reforms will form part of the forthcoming Pension Schemes Bill¹.

The government also decided against two of the measures it had consulted on. It "has decided not to further explore measures proposed to affect the role of employers or advisers in the DC workplace market, at this time", and "has also decided not to introduce reforms regarding differential pricing"¹.

The original consultation described proposals to legislate for a minimum size and maximum number of DC scheme default funds, which it said would enable the market to move to fewer, larger funds better placed to invest in productive assets and more able to deliver greater returns for members¹. It also proposed enabling contractual overrides for contract-based pension arrangements, subject to member protections, which would allow transfers without consent into either a trust-based or contract-based arrangement¹.

Why it matters for households

The proposals concern workplace pensions where money is invested in a default fund chosen by the employer or provider. The confirmed measures would allow members' savings to be moved without their consent, through the contractual override mechanism, where the government judges a bulk transfer to be in savers' interests¹. The consultation document states this would enable transfers without consent into either a trust-based or contract-based arrangement¹.

The minimum scale and investment capability requirements, with a transition pathway to 2035, point to fewer, larger default funds over time¹. The response does not set out the specific minimum size threshold or the maximum number of default funds in the published detail of outcome¹. The market fragmentation review is scheduled to commence in 2029¹.

The government's decisions not to pursue changes to the role of employers and advisers, and not to introduce differential pricing reforms, mean those areas are unchanged by this response¹.

What happens next

Legislation to implement the reforms will form part of the forthcoming Pension Schemes Bill¹. The consultation has concluded and the response was added on 29 May 2025¹. No commencement date for the measures has been reported in the published outcome¹.