Pension focus - all change…
The UK pensions landscape is undergoing profound change, shaped by demographic pressures, regulatory reform and shifting expectations of what good retirement outcomes look like. From landmark legislation and renewed policy focus on adequacy, to evolving trustee responsibilities and rapid progress on dashboards and digital engagement, 2025 has marked a turning point for the industry. Against this backdrop, schemes and regulators are being challenged to balance innovation and growth with strong governance, member protection and long-term sustainability.
The retirement landscape continues to shift
The UK is at a pivotal moment for retirement security as demographic shifts prompted by falling fertility, increased life expectancy and evolving family structures, mean more people will spend longer in retirement with potentially less support. Rising housing costs, precarious employment and health challenges are leaving many older workers financially vulnerable. This underscores the urgent need for proactive solutions, including early engagement, personalised pension strategies and targeted government interventions to safeguard future retirement outcomes.
Pension Commission launched to improve retirement outcomes
In 2025, the UK Government relaunched the Pensions Commission, chaired by Baroness Jeannie Drake, to address private pension adequacy, with findings due by 2027. While auto-enrolment has increased participation to 89%, contributions remain low, particularly among small-firm employees and the self-employed. The Commission will focus on underserved groups to improve retirement outcomes.
Pension Schemes Bill – a “gamechanger?”
And in June, the Government unveiled its Pension Schemes Bill, aiming to simplify pensions through automatic small-pot consolidation and default retirement income options, while boosting value with multi-employer DC ‘megafunds’ and a new value-for-money framework. The Bill also sought to strengthen DB surplus flexibility and enhance protections via PPF and Pensions Ombudsman reforms. A couple of months later, scrutiny intensified as the Bill moved through the committee stage and amendments were debated, focusing on tighter safeguards for DB surplus use, extending pre-1997 indexation rights, default investment powers, guided retirement pathways and raising small-pot consolidation thresholds - all seeking to balance innovation, efficiency, member outcomes and trustee responsibility - in the evolving pensions landscape.
Chancellor Rachel Reeves described the Bill as
a game-changer delivering bigger pension pots for savers and driving £50bn of investment directly into the UK economy - putting more money into people’s pockets.”
The Pension Schemes Bill has passed its third reading in the House of Commons and has moved to the House of Lords for consideration of the amendments made by the Commons. If the Lords agree to the amendments, the Bill will receive Royal Assent and become law early in 2026.
The Pensions Regulator – supporting growth, innovation and outcomes
In 2025, The Pensions Regulator (TPR) pursued a multi-faceted strategy to support growth, innovation and saver outcomes while reducing burdens on the pensions industry. In the spring, TPR outlined plans to drive productive investment, promote scheme diversification, strengthen trustee governance, consolidate underperforming DC schemes and improve transparency around DB surplus use, while simplifying compliance through digital transformation and streamlined reporting. In the summer, TPR launched its innovation support service aimed to accelerate administration, investment and member-experience improvements, fostering collaboration, guidance and regulatory alignment with the FCA.
TPR’s year two update highlighted adaptive regulation amid economic uncertainty, focusing on data-led supervision, trustee standards, market oversight and dashboards readiness. The 2025/26 strategic plan reinforced these priorities, placing trusteeship, value for money, decumulation planning and digital innovation at the heart of regulatory focus, ensuring schemes are prepared for the Pension Schemes Bill and equipped to deliver better outcomes for members.
Trustees in focus – a changing role?
In 2025, pension trustees were urged to maintain climate change as a core priority, with the Trustee Sustainability Working Group (TSWG) emphasising the importance of managing climate risk, resilience and transition outcomes across nearly £2trn of UK pension assets. TSWG will collaborate with regulators to simplify reporting and support practical transition plans.
TPR addressed the role of trustees in 2025, being placed ‘at the heart’ of pension landscape reforms. TPR aims to align trustee standards with corporate governance norms, emphasising accountability, high-quality data use, critical oversight and a focus on positive saver outcomes in preparation for the Pension Schemes Bill. Rising DB scheme surpluses place trustees at the heart of decisions on releasing excess assets, with priority on securing member benefits, assessing liabilities prudently and ensuring sponsor covenant strength. TPR provides endgame strategy guidance, highlighting options beyond buy-outs (e.g. superfunds, controlled surplus distribution), while the Pension Schemes Bill enables surplus release under trustee discretion with appropriate safeguards, particularly for larger schemes.
Trustees remain central to broader pension reforms, with TPR professionalising standards to align with corporate governance, emphasising accountability, data-driven decision-making and positive saver outcomes.
To conclude 2025, in December the DWP also launched a consultation on trustee standards.
Dashboards reach a major milestone
The Pensions Dashboards Programme reached a major milestone in October, with more than 50 million pension records connected - representing over two-thirds of all private pensions in scope and marking strong progress towards full coverage by the end of 2026. The achievement reflects extensive collaboration across schemes, administrators and technology providers, but the programme continues to stress that data quality and readiness are just as important as technical connection. Accurate, well-maintained data remain critical to delivering reliable information to savers. Schemes are also preparing for a sharp rise in member engagement, with increased demand expected across email, webchat and online portals, reinforcing the need for robust digital communication strategies and operational capacity.
Pension scams – efforts to combat them ramp up
TPR intensified efforts to combat pension scams, combining prevention, disruption and enforcement to protect savers’ retirement funds. Key measures included embedding specialists within law enforcement, enhancing intelligence-sharing and fostering industry collaboration. In 2025, TPR and the Pension Scams Action Group launched AI-driven tools to identify fraudulent websites, enabling faster intervention. Trustees are also urged to strengthen cybersecurity, train staff and implement robust anti-fraud strategies. Timely reporting to Action Fraud and proactive measures are critical. Collectively, these initiatives aim to safeguard pensions, build system resilience, and maintain public trust while addressing evolving threats in a digital and increasingly complex fraud landscape.
DB schemes reach a turning point
Defined benefit pension schemes reached a turning point in 2025 as funding positions strengthened, opening up new strategic options for trustees and sponsors. UK DB surpluses rose sharply, driven by strong asset performance and stable liabilities, lifting long-term funding levels well above key thresholds and leaving nearly two-thirds of schemes in surplus. Favourable bulk annuity pricing created attractive conditions for schemes ready to transact, while others used the improved position to reconsider longer-term endgame strategies. Trustees are increasingly weighing a broader range of options, from buy-out and run-on to surplus-sharing, capital-backed plans and reinsured solutions. At the same time, forthcoming reforms to surplus rules and evolving mortality assumptions underline the need for careful, data-driven planning to balance opportunity with long-term member security.
Budget 2025 – key pension changes announced
The Budget in November introduced several key changes affecting the pensions landscape. From April 2029, National Insurance relief on salary sacrifice contributions will be capped at £2,000, prompting employers and higher earners to review contribution structures. From April 2027, most pension lump sum death benefits will be included in the deceased’s estate for IHT, with administrators able to withhold up to 50% of taxable benefits while liabilities are settled. Inflation protection for pre-1997 accruals in the Pension Protection Fund and Financial Assistance Scheme will be restored from January 2027, supported by a £14bn PPF surplus. Well-funded DB schemes gain new flexibility to make surplus payments to members over minimum pension age, potentially as lump sums, with reduced tax charges planned. Trustees must carefully assess funding, risks, and member impact, reviewing scheme rules, communications, actuarial assessments, and long-term funding strategies before any surplus is released.
Bulk Purchase Annuity (BPA) – momentum and competition
The UK BPA market continued its strong momentum in 2025, as defined benefit schemes accelerated plans to de-risk. More than 300 transactions were expected, with total volumes likely to exceed £40bn. While some individual deal sizes were smaller, confidence strengthened as competitive pricing and insurer capacity proved robust. An increasingly crowded and innovative insurer market is also reshaping decision-making, with schemes placing greater emphasis on operational strength, member experience and post-transaction support, alongside price, when selecting a long-term insurance partner.
Taken together, these developments point to a pensions system in transition – one that is becoming more data-driven and increasingly focused on delivering meaningful outcomes for savers. Yet with opportunity comes responsibility. Trustees, employers and policymakers must navigate reform carefully, ensuring that improved funding positions, new freedoms and technological advances translate into genuine security for members. The coming years will be critical in determining whether this period of change delivers lasting improvements in retirement confidence and financial wellbeing.
Looking ahead
As a new year dawns and we ponder what the next 12 months may hold - some global economic challenges lie ahead. The World Economic Forum believes, ‘The global economy is undergoing a period of profound transformation, marked by persistent short-term disruption and heightened uncertainty as well as long-term structural change.’
Today’s world is unpredictable, we can you help take control and face the future with confidence.
Find out more about how EQ Retirement Solutions is transforming the retirement and pensions markets with leading administration and technology solutions.
Thank you for your support in 2025, we look forward to working with you in the year ahead!