2025 has been a year of structural transformation and consolidation in UK pensions, driven by government reform, regulatory modernisation, and industry alignment toward long-term value.

Pensions Age reporter, Paige Perrin, reflects on the key policy announcements and reforms that have made this year a landmark period for pension overhaul…

The Pension Schemes Bill

Published in June this year, the Pension Schemes Bill provided further insight into the government’s upcoming reforms, including its consolidation plans. These include introducing rules to create multi-employer defined contribution (DC) scheme megafunds, consolidating the LGPS with assets to be held in six pools and consolidating pension pots worth £1,000 or less into one pension scheme.

Additionally, the bill outlined plans to introduce a value-for-money framework, increase flexibility for defined benefit (DB) schemes to release surplus funds and simplify retirement choices by requiring all schemes to provide default pathways for income in retirement, as well as other reforms.

The bill passed through its first and second readings in the House of Commons (HoC) as well as the committee stage in September. Several amendments were proposed, including calls to extend the scope of the bill in certain areas, abolish the PPF admin levy, address pre-1997 indexation issues, and make changes to the proposed reserve power. The bill had its final stage in the HoC in early December.

Mandation and the Mansion House Accord

Arguably, the biggest topic of discussion this year has been born out of the Pension Schemes Bill’s reserve power that would allow the government to set binding asset allocation targets for pension schemes.

There has been much discussion about how the mere threat of mandation is the “worst of both worlds”, and also that the government having this power would be a fundamental shift in the UK pensions framework, which risks undermining trustee independence, distorting investment strategy and eroding member confidence.

In May 2025, 17 pension providers voluntarily signed up to the Mansion House Accord, which seeks commitment from DC providers to allocate at least 10 per cent of their DC default funds to private market assets by 2030, and for at least 5 per cent of that total allocated to UK private markets. Some industry experts that the voluntary Mansion House Accord was enough of a commitment to the governments growth goals and mandation was not-necessary.

However, when Bell was asked about the mandation power in October at the Pensions UK Annual Conference, he told the industry to “chillax”, maintaining that the power was intended only to ensure the industry meets the commitments it has made, not to interfere with trustees’ fiduciary duties.

Pension Protection Fund (PPF) Levy and Administration Levy

The PPF announced at the start of the year that it more than halved its levy estimate for 2025/26 to £45m after the government confirmed plans to give the PPF greater flexibility to reduce the levy it collects from pension schemes by relaxing restrictions.

At the same time, the PPF introduced a new provision in its levy rules that would allow its board to calculate a zero levy if the necessary changes for greater flexibility in the PPF are brought forward.

In August, the PPF put the 2025/26 levy invoicing on hold, leaving the door open for it to move to a zero levy for conventional schemes. And in September, the lifeboat confirmed that it will not charge a conventional levy for 2025/2026, due to the Pension Schemes Bill’s recent parliamentary progress.

Later in the month, Bell announced that the government intended to abolish the PPF administration levy, with plans to include this as part of the next round of amendments to the Pension Schemes Bill. In November, the PPF launched a consultation on its plans for next year’s levy, confirming its intent to maintain a zero levy for UK conventional DB schemes in 2026/27.

Pensions Commission

Another big policy movement this year has been the revived Pensions Commission. The commission is part of the government’s work to explore the barriers stopping people from saving enough for retirement. The commission will examine why tomorrow’s pensioners are on track to be poorer than today’s and assess the pension system as a whole, and look at what is required to build a future-proof pensions system that is strong, fair and sustainable. It will share its final report in 2027.

The revival of the commission comes on the back of the previous commission, which the government said was a “huge success” in building a consensus for the roll-out of automatic enrolment into pension saving. It is made up of Baroness Jeannie Drake (a member of the original commission), Sir Ian Cheshire and Professor Nick Pearce, who will be responsible for steering its work.

In October at the Pensions UK conference, Pearce announced that the commission is expected to publish its interim report in spring 2026, which will act as the “first staging post”, setting out the evidence base and strategic direction for its work on assessing the UK’s pension system.

State pension age review

Alongside the commission, the government has launched the third review of the state pension age (SPA). The government has commissioned two independent reports for the government to consider when deciding the SPA for future decades. The review is required by law and as part of the government’s obligations under the Pensions Act 2014, which requires the government to review the SPA every six years. Dr Suzy Morrissey will report on factors the government should consider relating to SPA, while the Government Actuary’s Department will prepare a report on the proportion of adult life in retirement.

Local Government Pension Scheme (LGPS) pooling

Much of the big developments this year have built on Reeves’ 2024 Mansion House speech proposals, which emphasised consolidation and greater investment in UK productive finance. For the LGPS, this meant proposals to streamline the eight existing pools into six, aimed at broadening investment opportunities and increasing UK productive finance allocations.

In April, the government confirmed its support for six pools, while proposals from Access and Brunel were not approved. As a result, 21 funds that were previously part of Brunel and Access were asked to seek new pooling arrangements. Funds were required to make a final decision on new partners by the end of September, with most signalling their formal decisions in the weeks ahead of the deadline.

Collective defined contribution (CDC)

In April, Bell confirmed that the government is moving forward with its plans to extend CDC to multi-employer schemes, with legislation set to be laid in parliament in the autumn. In October, the government gave the green light on regulations for multi-employer CDC pension schemes. Industry experts welcomed the regulations, which intend to allow the expansion of CDCs to more employers and address a growing demand among workers to receive a more secure retirement income, but warned that their success will hinge on scheme design, fairness and communication.

Bulk purchase annuity (BPA) market

The BPA market, like previous years, has been busy. Indeed, research from LCP earlier this year showed that the BPA market is on track for a predicted 350 transactions this year, up from 293 last year, while volumes are expected to exceed £40bn for the third consecutive year. In the first half of the year alone, over 150 buy-in and buyout transactions closed, mostly in the medium to small-sized side of the market.

There are also now 11 insurers in the market, following Utmost Life and Pensions’ confirmation of its entry into the UK BPA market earlier this year. Several acquisitions impacted the BPA market this year, with two transactions standing out in particular. The pan-European savings and retirement services group Athora Holding Limited agreed to acquire Pension Insurance Corporation (PIC) Group, and Brookfield Wealth Solutions announced plans to acquire Just Group.

These acquisitions truly convey the amount of change the BPA market is experiencing with increased competition, more competitive pricing and greater choice due to an increased number of insurers now in the market.

Read the full year in review in the Pensions Age December magazine here.

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