DC trustees: time to get ready for higher standards
Today, The Pensions Regulator (TPR) is launching a multi-year campaign to ensure schemes are ready for the changes from the Pension Schemes Act. The requirements raise expectations on defined contribution (DC) schemes to deliver better outcomes. In this blog, Kim Goodall-Brown, Director of DC and Master Trust Supervision, shares TPR’s plans to support schemes to prepare for the changes ahead.
A new chapter for pensions
The Pension Schemes Act 2026 is now law. A new chapter for DC schemes has begun and trustees cannot afford to stand still.
Our vision is clear: sustainable and adequate retirement income for everyone. But with 15 million heading towards an insecure future, there are challenges to face down.
What TPR is doing to support schemes
We are starting a direct communications programme this week to help schemes prepare. It will:
- set clear expectations
- show what good looks like
- provide practical guidance
- work with advisers, administrators and the wider market
A new Pension Schemes Act webpage has been created which will be updated as details of secondary legislation become available under the Act.
This is part of our wider phased communications programme to build awareness of regulatory requirements and how entities should respond. It will be targeted at schemes providing DC benefits that are likely to need to comply.
The first phase has launched this week. It includes an email and encourages trustees to reflect on their scheme’s ability to comply with these requirements and start to prepare, targeting schemes providing DC benefits that are not likely to be exempted from regulations.
Regular emails will be sent out to update recipients on developments, such as regulatory requirements as they evolve. They will encourage trustees to reflect on their scheme’s ability to comply with these and start to prepare.
Look out for forthcoming ‘roadmap’ publications from DWP and TPR coming soon, setting out more detail on the implementation of the Pension Schemes Act.
The Pension Schemes Act is changing the dynamic
DC trustees have traditionally focused on accumulation, and many have prioritised low costs over genuine value. At retirement, disengaged members have faced difficult decisions between annuities, cash, and drawdown.
New legislation changes that dynamic. From the first contribution through to retirement, there are higher expectations on trustees to achieve better outcomes.
New legal duties include:
- Value for money assessment – trustees must assess their default arrangements using prescribed metrics, comparing performance against the market.
- Default guided retirement solutions – schemes will need to provide a default decumulation pathway to support members into retirement.
- Small pot transfers – automatic enrolment schemes must be able to facilitate transfers of deferred small pots worth £1,000 or less after 12 months without contributions.
- A requirement for DC master trusts to hold a minimum amount of assets under management (at least £25 billion from 2030) in a main scale default arrangement, with a transition pathway for schemes that need longer to reach scale.
Not every scheme will get there
Our data shows that master trusts and larger single employer schemes are better placed to deliver good outcomes. That does not mean that others cannot, but the bar is rising.
Operating a smaller scheme is becoming more complex, more demanding, and more resource intensive.
The market is consolidating rapidly. The inescapable trend is towards fewer, larger schemes that can deliver stronger investment performance, higher governance standards and an improved member experience.
Our 2025 DC landscape data shows a 15% fall in the number of non-micro DC and hybrid schemes in the last year, with the decline concentrated among schemes with fewer than 5,000 members.
For those that remain, we will expect the value for money requirements to raise the floor on transparency.
What DC trustees need to do now
Trustees should assess if they can meet the higher legislative standards – or if members would benefit from consolidation into a scheme that can provide scale, value and good governance.
If you continue running the scheme, be ready to show how you will meet the new requirements and why that is in members’ best interests. You will need to demonstrate:
- strong governance
- reliable data
- a clear path to meeting new requirements
- a credible way to support members into retirement
External support may be needed to strengthen administration, governance, or offer retirement income options.
We expect employers to work with trustees on the scheme’s future and administrators to facilitate and enable compliance.
Ask what is in members’ best interests
The direction is clear: stronger governance, better data and supporting members into retirement are now essential.
Review your scheme. Close gaps quickly. If they are too large, consider if another route could serve members better.
The key question is not “can we carry on as we are?” but “what is the best route to good outcomes for members?”
Our message is to start now, consider the options, and act in your members’ best interests.
Kim Goodall-Brown
Director of DC and Master Trust Supervision
