The Pension Schemes Act 2026: A closer look at the DC Roadmap

Now that the Pension Schemes Act 2026 is in force, regulatory attention has shifted gear to focus on a package of measures within it known as the ‘DC Roadmap’. Emma Douglas, the Chair of the Pensions Regulator, has described it as “a new chapter for workplace pensions”. So what’s up next for DC pensions?

The DC Roadmap makes important reforms in five key areas.

Scale requirement

The Act adds new provisions to the Pensions Act 2008: from April 2030, all master trust and group personal pension (GPP) providers must have at least £25 billion in a single main default arrangement. This is known as the ‘scale requirement’. Providers intended for individuals with protected characteristics (for example particular religious denominations) are excluded from it.

Providers that aren’t at scale can apply to a ‘transition pathway’, if they have £10 billion in assets by 2030 and a ‘credible plan’ to reach scale by 2035.

Currently, only two master trusts are at the required level. As any provider not at scale by 2030 will no longer be able to receive auto-enrolment contributions, we are likely to see some consolidation in the market.

Value for money

The Act builds on the existing DC Chair’s Statement requirements by providing for a new ‘Value for Money’ framework. From 2029, all occupational pension schemes and GPPs that provide DC benefits will be required to make annual value for money assessments. These must cover:

The quality of service provided to members
Investment performance and asset allocation
Costs and charges

The assessments will need to include, in effect, a ‘Red/Amber/Green’ rating for all three of those elements, based on benchmarks against market standards. Any Red or Amber rating will require an action plan to be sent to the Regulator, and improvements to be made.

For larger arrangements, the new requirement will be phased in earlier.

Guided retirement

The Act enables a ‘guided retirement’ framework to come into force. Under this, occupational pension schemes and GPPs that provide DC benefits will need to have a default pension benefit solution that provides a sustainable pension income for members. It is expected to come into force from 2030. We await further details with interest.

Small pots consolidation

When people change employer, they sometimes leave behind a small DC savings pot. The new Act includes powers to tackle these ‘dormant pots’. Master trusts and GPP schemes will be able to apply to be an ‘authorised consolidator’, enabling them to receive transfers of pots with a value below £1,000 where no contributions have been paid for a year. The new powers are expected to come into force in 2030; the detailed regulations have yet to be announced.

Contractual override

The Act also includes a new power for GPPs to vary the contractual terms for individual savers. The new power is intended to make it easier for GPP providers to make bulk transfers to other arrangements (the fact that GPPs cannot currently do this is seen as putting them at a disadvantage compared to master trusts).

Various requirements apply, including that an independent expert has certified that the change is in the ‘best interests’ of the savers involved. The new powers are expected to come into force from Spring 2028.

A long road ahead

Ms Douglas was not exaggerating. Although the full details have yet to emerge, currently the measures seem to add up to a significant change for the providers of DC pension schemes. For the next few years, they would be well advised to keep a close eye on the road ahead.

If you would like to discuss any aspect of this article in more detail, please feel free to contact a member of our Pensions team.

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