The Department for Work and Pensions’ (DWP) extended regulatory timetable for its scale policy risks planning paralysis and harming innovation in the pensions industry, the Society of Pension Professionals (SPP) has warned.

The DWP published its Discussion paper on key elements of the scale policy to collect industry views on how the £25bn defined contribution (DC) scheme scale requirements should operate from April 2030, as it develops the regulations.

Responding to the paper, the SPP welcomed the government’s ambition to harness scale in the DC sector but urged it to issue interim guidance before draft guidelines are published in 2027.

As it stands, the extended regulatory timetable could create planning paralysis, harm innovation, and compress execution risk, the SPP said.

Commenting on the proposed timeline, SPP Investment Committee chair, Chris Austin, said: "While the SPP understands the government’s goal of leveraging scale to deliver better outcomes for pension savers, clarity and speed are paramount, waiting until late 2027 for draft regulations leaves the industry in limbo, threatening to stall vital investment and stifle innovation at a time when providers should be preparing for 2030.”

The professional body also cautioned against limiting Common Investment Strategies (CIS) strictly to chronological age.

Austin added: “Scale cannot be a one-size-fits-all exercise. An overly rigid, age-only definition of investment strategies risks penalising engaged employers, undermining guided retirement pathways, and cutting off essential choices like Sharia-compliant or ESG-focused funds.”

Elsewhere in the submission, the SPP supported assets under management (AUM) as the core scale metric and urged the inclusion of bespoke defaults and self-select options in main scale default arrangement (MSDA) calculations.

The SPP also called for the 'common control' test to be replaced with a corporate group test, and for greater regulatory clarity on governance arrangements for connected schemes operating a joint CIS.

The DWP paper, which runs for eight weeks, will close for input on 7 September 2026.

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