Rather than solely prioritising cost efficiency, the Minister stressed the importance of improving returns for members. He argued that scale matters, as larger pension schemes are better positioned to:

• access more productive asset classes;
• reduce costs through economies of scale;
• increase bargaining power; and
• provide active, engaged investment stewardship.

The Minister also addressed the Value for Money framework, which aims to shift focus towards member outcomes. He welcomed the industry's voluntary commitments to increase investment in productive assets, led by the PLSA, City of London, and the Association of British Insurers and noted that these commitments would be considered as the government finalises the Investment Review.

Actions for Trustees: 

• Review your scheme's governance structure in anticipation of the Pensions Bill and potential regulatory changes.
• Assess how your scheme delivers value beyond cost, ensuring alignment with the upcoming Value for Money framework.
• Stay informed, and engage with industry bodies to understand the potential implications of the Pensions Bill for your scheme and members.

Spring Statement

The Chancellor of the Exchequer, Rachel Reeves MP, delivered her Spring Statement on 26 March 2025. The statement made no direct reference to pension policy, something which was not a surprise given the Chancellor’s conviction that only one fiscal event, the Autumn Budget, would be held each year.

2025/26 Automatic Enrolment thresholds confirmed

On 21 January 2025, the Department for Work and Pensions (DWP) released its annual review of the auto-enrolment earnings trigger and qualifying earnings band for 2025/26. The review concluded that the existing earnings trigger threshold of £10,000 will remain unchanged for 2025/26. The current lower and upper bands for qualifying earnings will be maintained at £6,240 p.a. and £50,270 p.a. respectively. The maximum qualifying earnings therefore stays at £44,030.

Key activities for 2025 include:

• Enhanced data standards: TPR aims to improve the quality of data across the pensions sector, which will help reduce regulatory burdens and enhance decision-making processes.
• Strategic supervision: TPR will prioritise significant (by size) pension schemes, such as master trusts, to better mitigate risks and ensure robust governance.
• Innovation Hub: TPR is establishing an Innovation Hub to encourage market innovation. This hub will facilitate open discussions on new models and approaches within the industry.
• Enforcement and crime prevention: A strong focus will be placed on tackling serious crimes within the pensions sector. TPR aims to ensure value for money and protect savers from fraudulent activities.
• Climate risk management: Recognising the importance of climate change, TPR will work to protect savers from climate-related risks, including supporting the transition to a net-zero economy and integrating climate risk management into pension schemes.
• Trusteeship standards: TPR plans to implement a more strategic approach to raise the standards of trusteeship. This initiative aims to enhance the overall governance and effectiveness of pension trustees.

In a further speech in March 2025, Ms Delfas set out how TPR will help boost the UK’s economic growth through reducing regulatory burdens and enabling access to a broader range of diverse assets. TPR sees embracing the ‘digital and data revolution’ as critical to reducing the regulatory burden on pension schemes and notes that further productive investment can be enabled given how pension schemes are ‘uniquely placed to consider long-term returns’. Supporting market innovation will also be at the core of TPR’s priorities and an innovation framework will be developed this year to support this.

TPR’s approach to DC and master trust supervision

Also in February 2025, TPR published a report covering its new approach to overseeing the DC and master trust market. This report stems from a comprehensive review of their existing methods and a pilot study involving three large master trusts which allowed TPR to test their new approach in real-time. 

As a result of this review, TPR is introducing a “direct expert-to-expert engagement model.” DC schemes will be grouped into four segments as noted below, with engagement for each group targeted at the specific risks they present to the market and saver outcomes.

• Monoline master trusts: Larger schemes posing higher risks to the market.
• Commercial master trusts: This includes those integrated with insurance offerings.
• Non-commercial (or industry-wide) master trusts and collective DC schemes
• Single and connected employer DC schemes

Schemes in the monoline and commercial master trust segments will be assigned dedicated multi-disciplinary teams with expertise in financial analysis, business strategy, investment, and legal compliance and regulation.

TPR issues new data strategy

TPR launched a new data strategy in March 2025, which is aimed at anyone involved in managing pension schemes (including itself) and has challenged the pensions industry to raise its standards in this area, believing this will increase efficiencies and innovation in the wider market and reduce its own regulatory burden. TPR notes how important this is with the Pensions Dashboards on the horizon and is particularly concerned where schemes still do not hold all their data digitally.

The strategy focuses on three key areas:

• Building strong foundations by implementing data principles, developing forward-thinking data professionals and advocating for open standards for data to collect, analyse and interpret high-quality data for better decision-making.
• Taking a wider data approach and reducing regulatory burden for schemes by creating an internal data marketplace that links to the government’s National Data Library and the wider external data ecosystem.
• Focusing on adding value by making sure all the data collected is directly related to good saver outcomes and supports efficient and effective regulation, competition and industry innovation.

HMRC Pension Schemes Newsletter

HMRC published Pension Schemes Newsletter 166 in January 2025 and Pension Schemes Newsletter 167 in March 2025 which provided information on various tax-related measures, including:

• A formal response to the technical consultation on Inheritance Tax and pensions, along with draft legislation, which will be published later in 2025.
• Improvements will be made from April 2025 to how tax codes will be applied for people receiving private pension payments for the first time. Currently, temporary (emergency) tax codes are applied in such scenarios, leading to many tax overpayments which need to be claimed back from HMRC by individuals. However from April, HMRC will instead apply cumulative tax codes where it is beneficial to the individual, which should avoid such overpayment of tax in many cases.
• A reminder that from April 2025, Pension Scheme Returns for the 2024/25 tax year onwards will need to be submitted on the Managing Pension Scheme (MPS) service and not the Pension Schemes Online service as had been the case in previous tax years.
• No further applications for either Fixed Protection 2016 or Individual Protection 2016 can be made after 5 April 2025.
• Top-up payments to those affected by the ‘low earners anomaly’ have been delayed. They will still be payable in respect of the 2024/25 tax year (and subsequent years) but will now not be paid until 2026. The Government will legislate to ensure that the annual payments (expected to be around £70) will not affect a recipient’s entitlement to state benefits or their National Insurance. The top-up payments are designed to compensate earners who do not pay income tax and so do not receive effective tax relief for their pension contributions to ‘net pay’ schemes as they would in a ‘relief at source’ scheme.
• The digital relief at source service has been further delayed until April 2028.
• HMRC will be writing to managers of EEA-based Qualifying Recognised Overseas Pension Schemes (QROPS) in April 2025 to ask them to confirm they meet the new conditions that apply from 6 April 2025 which will bring them in line with QROPS established across the rest of the world. In the event that the conditions are not met, or no response is provided, a scheme will cease to be a QROPS.

TPR research on number of DC schemes

TPR has published its latest annual research on the occupational DC trust-based pension landscape, providing valuable insights into the state of the UK’s DC pension market. The report offers a comprehensive analysis of the sector, covering key metrics, trends and developments.

Key findings include:

• Consolidation of trust-based DC schemes continues at pace, with 920 non-micro (2-11 members) DC and hybrid schemes in 2024 compared to 1,080 in 2023, a decrease of 15%. The majority of this decrease was from schemes with fewer than 5,000 members.
• Membership of occupational DC schemes (including hybrids) continues to rise, with an increase of 6% to 30.6 million members in 2024.
• The vast majority of DC members are in master trust schemes, with c. 28 million members (91% of non-micro DC and hybrid schemes) and £166bn in assets (81% of DC scheme assets) held in these vehicles.
• Assets in all non-micro DC schemes have increased by 25% to £205bn in 2024, driven by a combination of contributions and investment growth. Assets per member in these schemes has increased from £6,000 to £7,000. A further £62bn of DC assets remain in hybrid trust-based schemes.

Action: Given this regulatory outlook and the clear dominance of master trusts in the DC landscape, trustees should evaluate the benefits of master trusts compared to their current scheme, especially in terms of cost efficiency, governance, and member outcomes.