The UK’s pension landscape is on the verge of a significant transformation after the Pension Schemes Bill received Royal Assent on April 29, 2026. This milestone comes at the end of a protracted and, at times, contentious journey through Parliament, marked by repeated exchanges—familiarly dubbed “ping pong”—between the House of Commons and the House of Lords. The heart of the debate? The government’s controversial reserve power to mandate how pension schemes invest, particularly in the context of boosting UK economic growth and delivering better outcomes for savers.
For months, the bill’s fate hung in the balance as peers and MPs wrangled over the scope and safeguards of this so-called mandation clause. The government’s initial proposal would have granted sweeping powers to compel pension schemes to meet specific investment targets, in line with the voluntary Mansion House Accord—a commitment to invest 10% of default defined contribution (DC) assets in private markets, with half of that directed at UK assets. Many in the industry and the Lords saw this as a potential overreach, raising alarms about the erosion of trustees’ fiduciary duties and the open-ended nature of such powers.
Work and Pensions Secretary Pat McFadden, who spearheaded the bill’s passage, ultimately revised the mandation clause four times in response to these concerns. The resulting compromise, described by some as “mandation-lite,” now includes a suite of guardrails and checks. Notably, the final text requires the government to publish a detailed report outlining barriers to UK and private market investment and the steps taken to address them before any enforcement action. The reserve power is now strictly limited: it can only be applied to auto-enrolment default funds, is capped at 10% of default fund assets (with 5% in UK-based assets), and cannot be exercised before 2028. Additionally, a sunset clause ensures the power expires in 2032, with a full repeal by 2035.
Industry voices responded with a mix of relief and cautious optimism. Matt Tickle, chief investment officer at Barnett Waddingham, summed up the prevailing sentiment: “We are pleased to see the Pension Schemes Bill complete its passage through parliament. It contains a wide range of reforms that will benefit pension savers and is good news for members. Our position on mandation has been consistent throughout—we do not believe it is necessary or in the best interests of members. However, we recognise that the concessions secured, including the sunset clause, the strengthened savers’ interest test and the requirement for regulatory oversight before any direction is given, provide important protections. Trustee fiduciary duty remains central, and that matters.”
The bill’s journey through Parliament was anything but smooth. After its introduction, it underwent line-by-line scrutiny in the Lords from December 2025 to March 2026, followed by multiple rounds of debate and amendment in both Houses. Each stage brought new proposals and counterproposals, particularly around the government’s reserve powers. On April 28, 2026, the Lords considered Commons amendments for the fourth—and final—time, with peers expressing lingering reservations but ultimately accepting the revised clause. Baroness Sharon Bowles, a Liberal Democrat peer, acknowledged, “I am still no fan of mandation, but I think we have now got it suitably under control. There are reasonable guardrails to make sure that it doesn’t go wrong, and that we can hopefully never use it, and that we do get the additional investment that we all agree in principle are needed.”
The bill’s passage was also shaped by the input of regulators and industry experts. The government’s fourth amendment to the reserve power clause introduced a requirement for The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) to assess barriers to private market investment and include their findings in a mandatory ex-ante report. Pensions Minister Torsten Bell explained, “Our amendment, importantly, also placed a duty on the government to have regard to this regulatory assessment before any use of the power; this will ensure a secretary of state behaves reasonably as they are required to do. Must place weight on the assessment of the regulators on this matter.”
Lisa Picardo, chief business officer at PensionBee, welcomed the government’s late-stage concessions, noting, “The compromise offers some important guardrails and restrictions that have been agreed since the original clause appeared—caps aligned with the voluntary Mansion House Accord, limiting it to auto-enrolment defaults as opposed to entire schemes, a single-use restriction, an earlier 2032 sunset and a full repeal in 2035.”
The reforms extend far beyond the reserve power debate. The Pension Schemes Bill introduces new scale tests for pension schemes, a value for money framework, provisions allowing defined benefit (DB) schemes to release surplus funds, and updated rules for default retirement income solutions. These changes are designed to encourage consolidation in the DC market, improve governance, and ensure pension providers invest in robust data and administration systems to support better saver outcomes.
Yvonne Braun, director of long-term savings policy at the Association of British Insurers, emphasized the bill’s broader ambitions: “We’ve long said that the Pension Schemes Bill sets a new direction for UK pensions and we strongly support the overall package. The Bill’s ambitious reforms will help improve people’s retirement by driving a focus on value, making pensions easier to manage, and supporting long-term economic growth. We remain concerned that the Bill includes a reserve power to mandate how pension funds invest. However, the many additional safeguards we proposed should help to limit any potential negative impact.”
Helen Forrest Hall, chief strategy officer at the Pensions Management Institute, echoed the importance of these safeguards. “We fully supported the House of Lords in opposing a sweeping reserve power to require specific asset allocations and are pleased that the government has introduced important guardrails. As the Bill now moves towards implementation, our focus will be on working with government, regulators and the industry to ensure these reforms strengthen the pensions system, support long-term growth and, above all, deliver better outcomes for scheme members.”
Not everyone is entirely satisfied. Stephen Budge, a defined contribution partner at LCP, described it as “disappointing” that any mandation measure remains, despite industry concerns. Still, he acknowledged the value of the final constraints, especially the reference to competitive pricing pressures that could limit investment into UK private markets.
As the dust settles, there’s a sense of cautious celebration among those who advocated for a balanced approach. Pensions commentator Henry Tapper perhaps captured the mood best: “The Pension Schemes Bill has completed its journey through Parliament. Time to celebrate before the really important work begins – implementing the huge reforms it contains to deliver better pensions for savers.”
With Royal Assent now secured, the UK’s pension sector stands at the threshold of a new era—one marked by stronger governance, a renewed focus on value for money, and a clear (if carefully bounded) government role in shaping long-term investment strategies. The true impact of these reforms will be revealed in the years ahead, as trustees, regulators, and providers work together to turn legislative intent into tangible benefits for millions of savers.