Targeted incentives and a stronger pipeline of investable UK projects would be more effective than “blunt thresholds” or investment mandates in encouraging pension schemes to support domestic growth, the Institute and Faculty of Actuaries (IFoA) has said.

In its report, An actuarial roadmap for better retirement outcomes, the IFoA Pensions Board backed greater pension investment in UK infrastructure and productive assets, but stressed that trustees’ fiduciary duty and members’ best financial interests must remain paramount.

It warned that investment-mandation powers contained in the Pension Schemes Act 2026 could create conflicts, weaken trustee accountability, and expose savers to greater risk or lower returns than trustees would otherwise select.

Instead of compulsion, the government should use targeted incentives and develop a reliable supply of suitable investment opportunities, the IFoA argued.

The report stated this approach would encourage productive investment without the risks of herding, reduced competition, weaker innovation or inflated asset prices.

It also criticised “arbitrary deadlines” and thresholds, including the requirement for defined contribution (DC) schemes to reach £25bn in scale, arguing that consolidation should remain market-led.

While scale could produce economies and strengthen governance, the IFoA warned that forced consolidation could create unintended consequences and reduce choice.

Smaller schemes should retain the opportunity to demonstrate that they can deliver strong member outcomes, it added.

IFoA Pensions Board chair, Glyn Bradley, said the UK pensions landscape was at a “turning point”.

“The decisions we make over the next five years will shape retirement outcomes for generations,” he argued.

“Actuaries sit at the heart of this transformation. Our expertise in long-term risk management, scenario planning and joined-up thinking equips us to turn policy ambition into practical, sustainable reality.”

With this in mind, the IFoA called for continued actuarial involvement in the Pensions Commission, the State Pension Age Review, and the wider reform programme, including through detailed modelling, stress testing, and implementation planning.

It noted that successful reform would require stability around core pension principles, including contribution levels, tax treatment, access and state support.

Repeated speculation and short-term policy changes risked undermining saver confidence, the report warned, calling for cross-party consensus on enduring principles.

Meanwhile, the IFoA's roadmap identified pension adequacy as one of the largest challenges facing the UK retirement system.

Modern working patterns, including career breaks, part-time work, self-employment and gig-economy roles, were creating significant gaps in retirement savings, it noted.

Therefore, the IFoA called for a more flexible automatic enrolment framework, including extending coverage to the self-employed and gig-economy workers and allowing contributions to adapt to life events such as parental leave or reduced working hours.

It also backed the expansion of collective defined contribution (CDC) and retirement-only CDC schemes.

Pooling longevity and investment risk could provide more stable retirement incomes and potentially higher expected returns than traditional individual DC arrangements for some savers, the IFoA suggested.

It continued: "Default guided decumulation pathways should also be developed through the Pension Schemes Act’s guided retirement provisions.

"These could help members manage longevity and sequencing risks without requiring expensive individual financial advice, improving outcomes during both the accumulation and retirement phases."

Bradley described the roadmap as a developing actuarial framework rooted in stability, fairness and evidence.

“This is deliberately a work in progress as the pensions landscape is in flux," he said.

“Behind the high-level vision lies detailed modelling, analysis and practical proposals.

“Together, we can deliver better retirement outcomes for savers, stronger schemes and a more prosperous economy.”

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