The passage of the Pension Schemes Bill by the House of Lords on April 28, 2026, signifies a substantial transformation in the UK’s approach to pension investment mandates, even as various industry stakeholders express ongoing concerns regarding its implications.
Julian Mund, chief executive of Pensions UK, stated that “the legislation enacts a series of critical reforms that will improve the value savers get from pensions and make the system easier to navigate for employers and savers.” This sentiment reflects a broader consensus among proponents who argue that the bill aims to enhance outcomes for pension savers while encouraging more investment in the UK economy.
Prior to this legislative shift, the UK pension landscape faced criticism for its complexity and perceived inefficiency. The Pension Schemes Bill introduces hard statutory caps limiting mandation at 10% of a default fund, with an additional provision allowing up to 5% of this mandation to be directed specifically into UK assets. Such measures aim to strike a balance between safeguarding saver interests and promoting domestic investment.
Moreover, it is noteworthy that the reserve power granted by this bill will not be usable until 2028 and will expire in 2032 if left unused. This timeline reflects an understanding among lawmakers that careful implementation is crucial to ensure both compliance with fiduciary duties and the protection of member interests.
The bill’s application is limited strictly to default auto-enrolment funds, which further narrows its scope. Helen Whately, shadow work and pensions minister, has emphasized that “trustees should not need state approval to act in the best interests of their members,” highlighting a tension between regulatory oversight and trustee autonomy.
Key facts:
- The Pension Schemes Bill was passed by the House of Lords on April 28, 2026.
- The bill includes hard statutory caps limiting mandation at 10% of a default fund.
- 5% of the mandation may be directed into UK assets.
- The reserve power will not be usable before 2028 and will expire in 2032 if unused.
- The bill aims to improve outcomes for pension savers and encourage investment in the UK economy.
- The House of Lords rejected amendments to further limit the mandation power.
Patrick Heath‑Lay, chief executive of People’s Partnership, remarked that “these reforms are only the beginning,” asserting that it is essential for policymakers to keep saver needs at the forefront as they navigate these evolving changes. Thus far, no timeline has been shared regarding additional reforms or adjustments that may follow this initial legislative effort.