UK outlines roadmap for DC assessments, scale reforms and DB changes

The UK government has confirmed that larger defined contribution (DC) pension schemes, including master trusts, will begin completing and publishing Value for Money (VfM) assessments from 2028.

The framework, developed with The Pensions Regulator (TPR), the Financial Conduct Authority (FCA), HM Treasury and industry stakeholders, is intended to improve standards across the workplace pensions market by assessing schemes on investment performance, costs and charges, and quality of service.

From 2028, larger pension funds will receive an overall rating ranging from red to green, with the regime extending to all workplace pension schemes from 2029.

Schemes that fail to comply could face regulatory action, including compliance notices, fines or, in the most serious cases, wind-up proceedings.

The government has also published an updated pensions reform roadmap, building on the timetable issued in June 2025 following Royal Assent of the Pension Schemes Act 2026.

DC roadmap

The roadmap confirms that minimum scale requirements for DC default arrangements will be introduced from April 2030. Applications to demonstrate compliance with the £25bn assets-under-management threshold, or to enter a transition pathway where schemes cannot meet the requirement, will open in 2029.

The government said it plans to consult on the regulations in the second half of 2027, followed by consultations from TPR on its code of practice and from the FCA on related guidance during 2028.

According to the government’s evaluation strategy paper, only 10 schemes currently exceed the £25bn threshold. By 2035, it expects the market to comprise around 15-20 schemes above that level.

The government will also launch a joint consultation on the draft VfM regulations and FCA rules, alongside its response to the previous consultation held in early 2026.

It said ongoing market consolidation should result in a greater proportion of members being invested in higher-performing schemes. The evaluation strategy found that 2.3% of active members are currently invested in the three best-performing master trusts and group personal pension (GPP) providers, up 1.4 percentage points from 2022.

The government’s analysis also showed a gap of around 10 percentage points in five-year annualised gross investment returns between the lowest- and highest-performing DC schemes.

On retirement solutions, the government acknowledged that retirement collective defined contribution (CDC) schemes may require additional time to prepare applications once the legislation comes into force, noting that the regulations have yet to be laid before parliament.

It said it is considering a targeted, time-limited extension for schemes committed to launching retirement CDC arrangements to allow them to become operational.

Consultation on the guided retirement framework is expected in autumn 2026. The FCA is also expected to publish a discussion paper on equivalent requirements for contract-based workplace pension schemes alongside consultations on the guided retirement framework and retirement CDC regulations.

On small pots consolidation, the government said it has begun reviewing the digital infrastructure needed to support the framework following the findings of the Pensions UK Small Pots Digital Systems Feasibility Review.

As a result, the implementation timetable for small pots consolidation remains subject to change. The government said it aims to publish a more definitive timeline following consultation on the next steps this autumn.

DB roadmap

For defined benefit (DB) schemes, the UK government said it will continue working with TPR on implementing the surplus extraction and superfund regimes.

The consultation on surplus regulations closes on 2 September 2026, with legislation expected to come into force on 6 April 2027.

Consultation on the superfund framework is expected in early 2027 ahead of implementation later in 2028.

According to TPR’s 2025 survey, 6% of DB schemes were considering transferring to a superfund, while 1% had identified a transfer as a long-term objective.