Pension Schemes Act 2026

• Citation: 2026 c. 22
• Sections: 155

Section 1 Asset pool companies

(1) Scheme regulations relating to a scheme for local government workers which has pension funds may make provision about, or in connection with, asset pool companies and participation in asset pool companies by the scheme managers.

(2) The provision which may be made under subsection (1) includes provision—

(a) imposing requirements or prohibitions on scheme managers;

(b) enabling the responsible authority, in prescribed circumstances, to give a direction to a scheme manager requiring the manager—

(i) to participate in an asset pool company specified in the direction, or

(ii) to cease to participate in an asset pool company so specified;

(c) enabling the responsible authority, in prescribed circumstances, to give a direction to an asset pool company specified in the direction, or to all or any of its participating scheme managers, requiring the company or scheme managers concerned—

(i) to take any steps specified in the direction with a view to enabling or securing compliance by a scheme manager with a direction requiring it to participate in, or to cease to participate in, the company (see paragraph (b) ), and

(ii) to take any other steps necessary to enable or secure compliance with such a direction;

(d) imposing requirements or prohibitions on asset pool companies;

(e) enabling or requiring the responsible authority to issue guidance to asset pool companies;

(f) enabling the responsible authority, in prescribed circumstances, to give a direction to an asset pool company—

(i) requiring it to comply with guidance issued as mentioned in paragraph (e) (where the responsible authority is satisfied that it is failing, or has failed, to do so without good reason);

(ii) as to the manner in which it is to carry out any specified investment management activities.

(3) In subsection (2) (f) (i) and (ii) —

“ specified ” means specified in the direction;

“ investment management activities ” means activities involved in or connected with the management of funds and other assets.

(4) If provision is made under subsection (2) (b) or (c) , the scheme regulations must require the responsible authority to consult the following persons before a direction is given in respect of the participation of a scheme manager in an asset pool company, namely—

(a) the scheme manager;

(b) the asset pool company;

(c) the scheme managers participating in the asset pool company;

(d) any other person the responsible authority considers it appropriate to consult.

(5) If provision is made under subsection (2) (f) for the giving of directions to an asset pool company, the scheme regulations must require the responsible authority to consult the following persons before a direction is given, namely—

(a) the asset pool company;

(b) the scheme managers participating in the asset pool company;

(c) the Financial Conduct Authority;

(d) any other person the responsible authority considers it appropriate to consult.

(6) Scheme regulations making provision mentioned in subsection (2) (a) may (among other things)—

(a) require a scheme manager to participate in an asset pool company with a view to that company managing the funds and other assets of the scheme for which the scheme manager is responsible;

(b) prohibit a scheme manager from participating in more than one asset pool company at the same time (subject to any transitional arrangements permitted by the regulations where a scheme manager participating in one company decides to participate instead in another company);

(c) require the scheme managers for the time being participating in an asset pool company to take steps to secure the grant of FCA authorisation to the company for carrying out prescribed activities.

(7) Scheme regulations making provision mentioned in subsection (2) (d) may (among other things) require an asset pool company to take steps to secure the grant of FCA authorisation to the company for carrying out prescribed activities.

(8) In subsections (6) (c) and (7) —

“ activities ” means activities which—

are activities of a kind that an asset pool company could carry out, and

require FCA authorisation;

“ FCA authorisation ” means authorisation by the Financial Conduct Authority under the Financial Services and Markets Act 2000.

(9) For the purposes of this Chapter—

(a) “ asset pool company ” means a company limited by shares and registered in the United Kingdom which is established for purposes consisting of or including—

(i) managing funds or other assets for which its participating scheme managers are responsible, and

(ii) making and managing investments on behalf of those scheme managers (whether directly or through one or more collective investment vehicles),

and whose shares are all held by scheme managers only or by another company limited by shares and registered in the United Kingdom whose shares are all held by scheme managers only, and

(b) a scheme manager participates in an asset pool company by—

(i) being a shareholder of the company,

(ii) being a shareholder in another company which is the only shareholder of the company, or

(iii) contracting with the company for it to manage the funds and other assets for which the scheme manager is responsible.

Section 2 Asset management

(1) Where scheme regulations relating to a scheme for local government workers make provision under section 1 (1) , the regulations must make provision about the management of the funds and other assets for which the scheme managers are responsible.

(2) The provision made by virtue of subsection (1) must include provision for securing that (among other things)—

(a) each scheme manager formulates, publishes and keeps under review an investment strategy,

(b) the funds or other assets for which a scheme manager is responsible (other than money needed for making payments under the scheme from the pension fund maintained by that scheme manager) are—

(i) held on behalf of the scheme manager by an asset pool company in which the scheme manager participates (subject to any transitional arrangements permitted by the regulations in relation to the transfer of funds or assets to the company), and

(ii) properly managed by that company with a view to implementing the scheme manager’s investment strategy, and

(c) in the case of a scheme for local government workers for England and Wales, each scheme manager (other than the Environment Agency) co-operates with an appropriate strategic authority to identify and develop appropriate investment opportunities.

(3) The provision made by virtue of subsection (1) may include, in particular, provision about—

(a) sources of advice that a scheme manager must, or may, use in formulating its investment strategy, and

(b) matters that must, or may, be covered by an investment strategy.

(4) The matters referred to in subsection (3) (b) include—

(a) the scheme manager’s approach to responsible investment,

(b) the scheme manager’s approach to local investments, and

(c) strategic asset allocation or target ranges for growth and income.

(5) In this section—

“ investment strategy ” means a statement of a scheme manager’s objectives, priorities and preferences in relation to the investment of the funds and other assets for which it is responsible;

“ local investments ”, in relation to a scheme manager, means investments in, or for the benefit of persons living or working in—

the scheme manager’s area, or

the areas of the other scheme managers participating in the same asset pool company as the scheme manager;

“ strategic authorities ” means—

the Greater London Authority,

a combined authority in England established under section 103 of the Local Democracy, Economic Development and Construction Act 2009,

a combined county authority in England established under section 9(1) of the Levelling-up and Regeneration Act 2023,

any other local authority in England of a description prescribed for the purposes of this paragraph in scheme regulations, and

a corporate joint committee in Wales established by regulations under Part 5 of the Local Government and Elections (Wales) Act 2021 (asc 1) .

Section 3 Additional powers for certain scheme managers

(1) Scheme regulations may make provision for the purpose of conferring any power or powers falling within subsection (2) or (4) on a specified scheme manager for a scheme for local government workers in England and Wales.

(2) Scheme regulations under this section may make provision conferring on the scheme manager (in relation to carrying out its functions as a scheme manager)—

(a) any specified power or powers of a local authority under Part 6 of the Local Government Act 1972, or

(b) any power or powers corresponding to one or more of the powers of a local authority under that Part.

(3) The power to make provision by virtue of subsection (2) is not exercisable if, or to the extent that, the scheme manager already has the powers of a local authority under Part 6 of the Local Government Act 1972 (otherwise than by virtue of scheme regulations under this section).

(4) Scheme regulations under this section may make provision conferring on the scheme manager (as part of its functions as a scheme manager) power to provide any administrative, professional or technical service for any other person who is a scheme manager for a public service pension scheme.

(5) In subsection (4) —

(a) “ public service pension scheme ” means a scheme for the payment of pensions and other benefits to or in respect of persons of a description set out in section 1(2) of PSPA 2013, and

(b) “ scheme manager ” (in the third place it appears) means any person who is, for the purposes of PSPA 2013, a scheme manager for any such scheme.

(6) The power to make provision by virtue of subsection (4) is not exercisable if, or to the extent that, the scheme manager already has the power to provide services referred to in that subsection (otherwise than by virtue of scheme regulations under this section).

(7) Scheme regulations under this section may amend or modify any Act passed before or in the same Session as this Act.

(8) In this section “ specified ” means specified in scheme regulations under this section.

Section 4 Exemption from public procurement rules

After paragraph 2 of Schedule 2 to the Procurement Act 2023 (general vertical arrangements exemption from public procurement rules) insert—

(2A)

(1) A contract between a local government pension scheme manager acting in its capacity as a local government pension scheme manager and an asset pool company providing for the company—

(a) to manage the funds and other assets for which the scheme manager is responsible,

(b) to make and manage investments on behalf of the scheme manager, and

(c) if the contract so provides, to carry out other investment management activities for or on behalf of the scheme manager,

if each of the conditions set out in sub-paragraph (2) is met.

(2) The conditions are—

(a) that more than 80% of the activities of the company are investment management activities carried out for or on behalf of local government pension scheme managers acting in their capacity as local government pension scheme managers;

(b) that no person exercises a decisive influence on the activities of the company (either directly or indirectly) other than—

(i) the participating scheme managers in the company, acting in their capacity as local government pension scheme managers, and

(ii) where the only shareholder in the company is another company (see section 1 (9) (a) of the Pension Schemes Act 2026), that other company;

(c) that the company does not carry out any activities that are contrary to the interests of—

(i) the participating scheme managers in the company, in their capacity as local government pension scheme managers, or

(ii) where the only shareholder in the company is another company, that other company.

(3) The contracts covered by this paragraph include a contract where the local government pension scheme manager concerned is already a participating scheme manager in the company (as well as one where the scheme manager concerned will become a participating scheme manager in the company as a result of entering into it).

(4) An appropriate authority may by regulations make provision about how a calculation as to the percentage of activities carried out by an asset pool company is to be made for the purposes of sub-paragraph (2) (a) .

(5) For the purposes of sub-paragraph (2) (b) , a person does not exercise a decisive influence on the activities of the asset pool company only by reason of—

(a) being a director, officer or manager of the company, acting in that capacity, or

(b) where the only shareholder in the company is another company, being a director, officer or manager of that other company.

(6) In this paragraph—

“ asset pool company ” has the meaning given by section 1 (9) (a) of the Pension Schemes Act 2026;

“ investment management activities ” means activities involved in or connected with the management of funds or other assets for which a local government pension scheme manager is responsible (including making and managing investments on behalf of the scheme manager);

“ local government pension scheme manager ” means a person who is, by virtue of section 4(5) of the Public Service Pensions Act 2013, a scheme manager for a pension scheme for local government workers in England and Wales;

“ participating scheme manager ”, in relation to an asset pool company, means a local government pension scheme manager who participates in the company within the meaning of section 1 (9) (b) of the Pension Schemes Act 2026.

Section 5 Scheme manager governance reviews

(1) Scheme regulations relating to a scheme for local government workers which has pension funds may make provision for or in connection with—

(a) the carrying out of periodic or ad hoc governance reviews of individual scheme managers,

(b) the issuing by the responsible authority of guidance to persons carrying out governance reviews about the carrying out of such reviews, and

(c) functions of the responsible authority in response to a report of such a review.

(2) For this purpose, in relation to any scheme manager—

(a) a governance review is a review of the governance of the scheme so far as administered by the scheme manager, and the performance and effectiveness of the scheme manager, over a period (“the period of review”);

(b) a periodic governance review is a governance review that is required by a provision of scheme regulations to take place—

(i) within a prescribed period after the commencement of that provision, or

(ii) within a prescribed period after the completion of a previous governance review,

in respect of a period of review prescribed by or determined under the regulations;

(c) an ad hoc governance review is a governance review that is required by scheme regulations to take place—

(i) where a direction to carry out a governance review has been given to the scheme manager by the responsible authority (if a power to give such a direction has been conferred by the regulations), in respect of a period of review specified in the direction, or

(ii) in prescribed circumstances (other than the passage of time since the most recent completed governance review), in respect of a period of review prescribed by or determined under the regulations.

(3) The period of review for the first governance review of a scheme manager may include time before the commencement of the regulations providing for governance reviews to take place.

(4) Scheme regulations which make provision for the carrying out of governance reviews must make provision—

(a) requiring governance reviews to be carried out independently of the scheme manager being reviewed and the responsible authority, but under arrangements made by and at the expense of that scheme manager;

(b) requiring the person carrying out a governance review, as soon as practicable after completing the review, to—

(i) prepare a report on the review, and

(ii) send a copy of the report to the responsible authority and the scheme manager being reviewed;

(c) requiring the scheme manager to publish the report.

Section 6 Mergers of funds

In Schedule 3 to PSPA 2013 (scope of scheme regulations: supplementary matters), in paragraph 11 (pension funds) at the end insert—

In the case of a scheme for local government workers this also includes merger (including compulsory merger) of two or more separate pension funds.

Section 7 Amendments of 2013 Act relating to scheme regulations

(1) PSPA 2013 is amended as follows.

(2) In section 3 (scheme regulations)—

(a) in subsection (1), after “2022” insert “and Chapter 1 of Part 1 of the Pension Schemes Act 2026” , and

(b) in subsection (2), after paragraph (c) insert—

(d) consequential, supplementary, incidental or transitional provision in relation to any provision of Chapter 1 of Part 1 of the Pension Schemes Act 2026.

(3) In section 21 (consultation), after subsection (4) insert—

(5) Subsection (1) may be satisfied, in relation to provision contained in scheme regulations—

(a) made under any provision of Chapter 1 of Part 1 of the Pension Schemes Act 2026, or

(b) made under section 3(2) (d) above,

by consultation carried out before, as well as after, the coming into force of the provision mentioned in paragraph (a) or of section 7 (2) (b) of the Pension Schemes Act 2026 (as the case may be).

Section 8 Interpretation of Chapter 1

(1) In this Chapter—

“ asset pool company ” has the meaning given by section 1 (9) (a) ;

“ local government worker ” has the same meaning as in PSPA 2013 (see paragraph 3 of Schedule 1 to that Act);

“ management ” and related expressions, in relation to the funds and assets of a scheme for local government workers, include (among other things)—

buying, selling or holding assets;

setting asset allocation;

establishing and managing pooled investment vehicles;

selecting investments;

acting as a responsible investor (including by acting as a shareholder in an investee company);

deciding whether to develop or use internal investment management capability or external investment managers;

managing cash flow;

“ PSPA 2013 ” means the Public Service Pensions Act 2013;

“ participates ” and related expressions, in relation to an asset pool company, are to be interpreted in accordance with section 1 (9) (b) ;

“ prescribed ” means prescribed by scheme regulations;

“ the responsible authority ” means (in relation to a scheme for local government workers in England and Wales or Scotland)—

the Secretary of State, in or as regards England and Wales, or

the Scottish Ministers, in or as regards Scotland;

“ scheme ” means a scheme (within the meaning of PSPA 2013) established under section 1 of that Act;

“ scheme manager ”, in relation to a scheme for local government workers, means a person who is a scheme manager by virtue of section 4(5) of PSPA 2013 (being a person responsible for the local administration of pensions and other benefits payable under the scheme who maintains a pension fund for the purposes of providing pensions and other benefits under its part of the scheme);

“ scheme regulations ” means regulations made under section 1 of PSPA 2013.

(2) A reference in this Chapter to the funds and other assets for which a scheme manager is responsible is to the funds and other assets which are (or should be) held as part of its pension fund for the purpose of providing pensions and other benefits under its part of a scheme for local government workers.

(3) Nothing in this Chapter is to be taken as affecting the generality of the powers conferred by section 1 or 3(1) of, or any provision of Schedule 3 to, PSPA 2013.

Section 9 Power to modify scheme to allow for payment of surplus to employer

(1) In the Pensions Act 1995, before section 37 insert—

Power to modify scheme in relation to payment of surplus to employer

(36B)

(1) ​The trustees of a trust scheme may by resolution modify the scheme in accordance with subsection (2) or (3) .

(2) Where no power is conferred on any person to make payments to the employer out of funds held for the purposes of the scheme, the resolution may confer a power to do so on the trustees, subject to any restrictions specified in the resolution.

(3) Where a power is exercisable by the trustees (whether or not by virtue of subsection (2) ) to make payments to the employer out of funds held for the purposes of the scheme, the resolution may remove or relax any restriction imposed by the scheme on the exercise of the power.

(4) This section does not apply to a scheme that is being wound up.

(5) Any power to distribute assets to the employer on a winding up is to be disregarded for the purposes of subsections (2) and (3) ; and a resolution under subsection (2) may not confer such a power.

(6) The reference in subsection (3) to a restriction imposed by the scheme includes a restriction imposed by virtue of a resolution under section 251 of the Pensions Act 2004 (which was repealed by section 9 (2) of the Pension Schemes Act 2026) or this section.

(7) Regulations may provide that this section does not apply, or applies with prescribed modifications, in prescribed circumstances or to schemes of a prescribed description.

(8) See also section 37 (which limits the circumstances in which a power to make payments of surplus may be exercised).

(2) In the Pensions Act 2004, omit section 251 (old resolution procedure in relation to payments of surplus).

(3) Subsection (2) does not affect the validity of a resolution passed under the section it repeals.

Section 10 Restrictions on exercise of power to pay surplus

(1) Section 37 of the Pensions Act 1995 (restrictions on power to pay surplus to employer) is amended in accordance with subsections (2) to (5) .

(2) After subsection (2) insert—

(2A) The power referred to in subsection (1)(a) may be exercised only so far as permitted by, and only in accordance with, regulations.

(2B) Regulations must be made under subsection (2A) —

(a) prohibiting the making of a payment unless an actuary of a prescribed description (“the relevant actuary”) is satisfied that prescribed conditions are met in relation to the value of the scheme’s assets and the amount of its liabilities,

(b) making provision about the basis (or bases) on which the value of the scheme’s assets and the amount of its liabilities are to be determined for that purpose,

(c) requiring the relevant actuary to give a certificate before a payment is made, and

(d) requiring members of the scheme to be notified in relation to a payment before it is made.

(2C) The provision that may be made by regulations under subsection (2A) includes provision—

(a) about other conditions that must be met in order for the making of a payment to be permitted;

(b) about the giving of certificates by the relevant actuary, including about the form and content of a certificate;

(c) prohibiting the making of a payment without the employer’s consent;

(d) in relation to a superfund scheme (within the meaning of Part 3 of the Pension Schemes Act 2026)—

(i) prohibiting the making of a payment in all circumstances;

(ii) prohibiting the making of a payment without the Authority’s consent.

(2D) The power referred to in subsection (1)(a) may not be exercised if there is a freezing order in force in relation to the scheme under section 23 of the Pensions Act 2004.

(3) Omit subsections (3) and (4).

(4) In subsection (6)(a), for “the requirements of this section” substitute “subsection (2A) ” .

(5) In subsection (8)—

(a) omit “in prescribed circumstances”;

(b) after “modifications,” insert “in prescribed circumstances or” .

(6) In section 76 of the Pensions Act 1995 (excess assets on winding up), for subsection (8) substitute—

(8) Regulations may provide that this section does not apply, or applies with prescribed modifications, in prescribed circumstances or to schemes of a prescribed description.

(7) In section 175 of the Pensions Act 1995 (parliamentary control of orders and regulations)—

(a) in subsection (1), for “(2), (2A) and (3)” substitute “(2) to (3)” ;

(b) in subsection (2A), after “section” insert “37(2A),” ;

(c) after subsection (2A) insert—

(2B) Any provision that may be made by regulations or an order under this Act subject to the procedure described in subsection (1) may instead be made by regulations subject to the procedure described in subsection (2).

Section 11 Relevant schemes: value for money

(1) The Secretary of State may make regulations (“ value for money regulations ”) for the purpose of evaluating, and promoting best practice with regard to, the provision of value for money by—

(a) prescribed descriptions of relevant pension schemes (“regulated VFM schemes”), and

(b) prescribed descriptions of arrangements under relevant pension schemes (“regulated VFM arrangements”).

(2) Value for money regulations may in particular require responsible trustees or managers to—

(a) make, and publish (in whole or part) reports of, assessments (“VFM assessments”) of the performance of—

(i) regulated VFM schemes, or

(ii) regulated VFM arrangements,

with regard to the provision of value for money in respect of prescribed periods (“VFM periods”);

(b) notify the Pensions Regulator of any publication they make under paragraph (a) ;

(c) publish or share with prescribed persons in respect of—

(i) regulated VFM schemes or (as the case may be) regulated VFM arrangements, and

(ii) VFM periods,

prescribed categories of information (“metric data”) for the purpose of enabling VFM assessments to be made (with respect to the scheme or arrangement in question and other regulated VFM schemes or regulated VFM arrangements).

(3) A duty to publish information under subsection (2) (c) may be a duty to publish the information for a specified period.

(4) Where value for money regulations require responsible trustees or managers to make a VFM assessment with respect to a scheme or arrangement, the regulations may require those trustees or managers to—

(a) assign to the scheme or arrangement, and set out in the VFM assessment, a rating for that period (a “VFM rating”), and

(b) notify the Pensions Regulator of the rating.

(5) Value for money regulations may specify—

(a) the method for calculating anything that is to be calculated under the regulations;

(b) the time at or by which anything required to be done under the regulations must be done.

(6) In complying with value for money regulations a person must have regard to any guidance issued from time to time by the Secretary of State.

(7) The Secretary of State must consult with such persons as the Secretary of State considers appropriate before—

(a) making value for money regulations;

(b) issuing guidance under subsection (6) .

(8) In this Chapter “ responsible trustees or managers ” means any of the following—

(a) trustees or managers of a regulated VFM scheme;

(b) trustees or managers of a relevant pension scheme any arrangements under which are regulated VFM arrangements.

(9) Nothing in this Chapter prejudices the breadth of subsections (1) and (2) .

(10) Subject to subsection (11) , value for money regulations are subject to the affirmative procedure.

(11) Any exercise, after the first, of the power to prescribe categories of information by virtue of subsection (2) (c) is subject to the negative procedure.

(12) Subject to subsection (13) , in this Chapter “ relevant pension scheme ” means an occupational pension scheme that provides money purchase benefits.

(13) Value for money regulations may provide that where an occupational pension scheme provides money purchase benefits in conjunction with other benefits, references in this Chapter (other than this subsection) to the occupational pension scheme are to an occupational pension scheme only to the extent that it provides money purchase benefits.

Section 12 Publication etc of metric data

(1) Categories of information prescribed under section 11 (2) (c) may for example relate to—

(a) the quality of services provided to members of the scheme or (as the case may be) arrangement;

(b) classes of assets invested in;

(c) investment performance;

(d) costs incurred by the scheme or (as the case may be) arrangement;

(e) charges on members or employers in relation to the scheme or (as the case may be) arrangement.

(2) Value for money regulations made by virtue of section 11 (2) (c) may—

(a) specify time limits within which metric data in respect of a VFM period must be published or shared;

(b) make provision about the form in which and the means by which metric data is to be published or shared;

(c) require the published or shared information to deal separately with different cohorts of members of the scheme or (as the case may be) arrangement;

(d) require a person appointed under the regulations to make available, for the publication or sharing of metric data, an electronic database (operated by that person);

(e) require responsible trustees or managers, on publishing or sharing any information under regulations made by virtue of section 11 (2) (c) , to notify the Pensions Regulator—

(i) of the publication of the information and where it is published, or

(ii) (as the case requires) of the sharing of the information.

(3) Value for money regulations made by virtue of section 11 (2) (c) may require the Pensions Regulator to—

(a) determine the form in which metric data must be published or shared, and

(b) publish, or share with the Secretary of State and responsible trustees or managers, details of the form so determined.

Section 13 VFM assessments

(1) Value for money regulations made by virtue of section 11 (2) (a) may—

(a) require responsible trustees or managers to compare (in respect of a VFM period) a scheme’s or arrangement’s metric data with—

(i) the metric data of a prescribed number (or prescribed minimum number) of other schemes or arrangements (“comparator” schemes or arrangements) selected by the trustees or managers, or

(ii) one or more relevant benchmarks;

(b) make other provision about the method for comparing and evaluating the performance of schemes or arrangements, for example provision about—

(i) factors that may or must be considered;

(ii) criteria to be used in comparing performance;

(iii) the use and evaluation of evidence;

(c) make provision about how the results of comparisons are to be taken into account in making determinations under section 15 (1) (determinations for the purposes of assigning ratings);

(d) make provision about the eligibility of—

(i) relevant pension schemes for selection as comparator schemes;

(ii) arrangements under relevant pension schemes for selection as comparator arrangements;

(e) specify factors that responsible trustees or managers must take into account when selecting comparator schemes or comparator arrangements.

(2) Without prejudice to the breadth of subsection (1) (b) (i) , factors prescribed in accordance with that provision may for example include—

(a) factors relating to differences in the composition of the membership of different schemes or arrangements;

(b) special features or characteristics of schemes or arrangements that are taken into account in their investment strategies.

(3) In this section “ relevant benchmark ” means—

(a) a benchmark specified in value for money regulations;

(b) if value for money regulations so provide, a benchmark approved and published by the Pensions Regulator.

Section 14 Member satisfaction surveys

(1) Value for money regulations may—

(a) require responsible trustees or managers to—

(i) issue VFM member satisfaction survey forms to relevant members from time to time as directed by the relevant authority;

(ii) make reports (“survey data reports”) of information returned in such forms;

(b) provide that survey data reports (or survey data reports that meet prescribed conditions) relating to a VFM period are to be regarded as metric data for the purposes of this Chapter;

(c) require the relevant authority to carry out consultation before issuing forms under paragraph (a) ;

(d) if regulations are made under paragraph (c) , make provision about who must be consulted.

(2) In this section—

“ relevant authority ” means whichever of the Secretary of State or the Pensions Regulator is designated in the regulations as the relevant authority;

“ relevant member ” means—

in relation to a responsible trustee or manager within section 11 (8) (a) , a member of the relevant pension scheme concerned;

in relation to a responsible trustee or manager within section 11 (8) (b) , a member of an arrangement by virtue of which the trustee or manager is a responsible trustee or manager;

“ VFM member satisfaction survey form ” means a request, in a form approved by the relevant authority, for inviting from relevant members information regarding their level of satisfaction with the service provided by the scheme or arrangement (as the case requires).

Section 15 VFM ratings

(1) Responsible trustees or managers who are required by virtue of section 11 (4) (a) to assign a VFM rating to a scheme or arrangement in respect of a VFM period (the “relevant period”) must assign to the scheme or (as the case requires) arrangement—

(a) a “fully delivering” rating if the responsible trustees or managers determine that the scheme or arrangement is delivering value for money;

(b) a “not delivering” rating if—

(i) the responsible trustees or managers determine that the scheme or arrangement is not delivering value for money, and

(ii) Condition A, B or C of subsection (2) is met;

(c) in any other case, an intermediate rating.

(2) For the purposes of subsection (1) (b) (ii) —

(a) Condition A is met if the responsible trustees or managers determine that there is no realistic prospect of the scheme or (as the case may be) arrangement delivering value for money within a reasonable period;

(b) Condition B is met if the responsible trustees or managers have assigned an intermediate rating to the scheme or arrangement in each of a prescribed number of VFM periods immediately preceding the relevant period;

(c) Condition C is met if the Pensions Regulator notifies the responsible trustees or managers that the Regulator—

(i) considers that the responsible trustees or managers have failed to comply with an improvement plan or an action plan relating to the scheme or arrangement (and the VFM period), and

(ii) does not consider the failures to be so minor that they should be ignored.

(3) Value for money regulations must specify the number of grades of intermediate rating.

(4) If value for money regulations provide that there are to be two or more intermediate ratings, the regulations—

(a) may name each of those ratings;

(b) must specify the conditions for assigning each of those ratings.

(5) Where, apart from this subsection, a scheme or arrangement would be assigned a “not delivering” rating in respect of a VFM period by virtue of Condition B of subsection (2) being met, the Pensions Regulator may, if it considers that prescribed conditions are met, by notice to the scheme or arrangement authorise the responsible trustees or managers to assign to the scheme or arrangement (instead of a “not delivering” rating) any intermediate rating the Pensions Regulator considers appropriate.

(6) In this Chapter “ action plan ”, in relation to a regulated VFM scheme or regulated VFM arrangement, means a plan under section 16 (2) (c) or 17 (1) (a) which—

(a) sets out the responsible trustees’ or managers’ assessment as to whether or not transferring the benefits of the members (under the scheme or arrangement) to another scheme or arrangement could reasonably be expected to result in the generality of those members receiving improved long-term value for money, and

(b) proposes measures (or options for measures) for improving the position (with regard to value for money) of members or subsets of members of the scheme or arrangement.

(7) An action plan may not include a proposal to transfer the benefits (under the scheme or arrangement) of some or all of the members of that scheme or arrangement unless the responsible trustees or managers determine that the proposed transfer could reasonably be expected to result in the generality of those members receiving improved long-term value for money.

(8) Value for money regulations may make further provision about what may or must be included in an action plan.

Section 16 Consequences of an intermediate rating

(1) Value for money regulations may make provision about the consequences of the assigning under section 15 (1) of an intermediate rating to a regulated VFM scheme or regulated VFM arrangement in respect of a VFM period.

(2) Without prejudice to the breadth of subsection (1) , value for money regulations may require responsible trustees or managers of a scheme or arrangement to which any grade of intermediate rating has been assigned to—

(a) prepare a plan (an “improvement plan”) specifying actions that the responsible trustees or managers propose to take with a view to improving the scheme’s or (as the case may be) arrangement’s performance with regard to the provision of value for money;

(b) provide a copy of the plan to the Pensions Regulator;

(c) prepare an action plan and provide a copy of it to the Pensions Regulator;

(d) give notice in a prescribed format to any person who is a participating employer in relation to the scheme or arrangement of—

(i) the VFM rating that has effect in relation to the scheme or arrangement;

(ii) any actions specified by virtue of paragraph (a) in an improvement plan;

(iii) any actions the trustees or managers consider it is appropriate for the employer to take having regard to the rating assigned to the scheme or arrangement;

(e) ensure that no person becomes an employer in relation to the scheme or arrangement for as long as the scheme or (as the case may be) arrangement continues to have an intermediate rating;

(f) take any other steps that may be prescribed.

(3) Value for money regulations may—

(a) make further provision about what may or must be included in an improvement plan;

(b) confer additional functions on the Pensions Regulator in connection with schemes that are assigned an intermediate rating.

(4) In this section—

“ employer ”, in relation to a regulated VFM scheme or regulated VFM arrangement, means a person who employs persons who are members of the scheme or (as the case requires) arrangement;

“ participating employer ” in relation to a regulated VFM scheme or regulated VFM arrangement, means an employer who is for the time being making contributions to the scheme or (as the case requires) arrangement.

Section 17 Consequences of a “not delivering” rating

(1) A regulated VFM scheme or regulated VFM arrangement to which a “not delivering” rating has been assigned (an “affected” scheme or arrangement) must—

(a) prepare an action plan and provide a copy of it to the Pensions Regulator;

(b) give notice in a prescribed format to any person who is a participating employer in relation to the scheme or arrangement of—

(i) the VFM rating that has effect in relation to the scheme or arrangement;

(ii) any actions the trustees or managers consider it appropriate for the employer to take having regard to the “not delivering” rating;

(c) ensure that with effect from the publication of the VFM assessment in which the rating is set out no person is to become an employer in relation to the scheme or (as the case may be) arrangement;

(d) take any other steps that may be prescribed.

(2) Where a transfer solution (see subsection (3) ) applies to an affected scheme or arrangement, the Pensions Regulator may—

(a) require the accrued rights and benefits of all (or a subset of) the members of the scheme or arrangement to be transferred to a pension scheme (or arrangement under a pension scheme) that—

(i) is selected by the responsible trustees or managers, and

(ii) meets prescribed conditions;

(b) specify conditions that must be met by a scheme or arrangement selected under paragraph (a) .

(3) For the purposes of subsection (2) , a transfer solution applies to an affected scheme or arrangement if—

(a) the Pensions Regulator considers that—

(i) based on the assessment carried out by the responsible trustees or managers under section 15 (6) (a) in the action plan of the scheme or arrangement, transferring the benefits of all (or a subset of) the members of the scheme or arrangement to another pension scheme (or arrangement under a pension scheme) could reasonably be expected to result in the generality of the members of the scheme or arrangement receiving improved long-term value for money, and

(ii) any other measures proposed under section 15 (6) (b) in the action plan of the scheme or arrangement are unlikely to result in its achieving an intermediate (or “fully delivering”) rating or substantially improving its performance with regard to the provision of value for money, and

(b) any prescribed conditions are met.

(4) Value for money regulations may make provision—

(a) about the process for transferring accrued rights and benefits under subsection (2) (which may for example include provision for restricting or prohibiting administrative costs and as to time limits);

(b) conferring on the Pensions Regulator power to direct the trustees or managers of the affected scheme to do things permitted or required by the regulations;

(c) conferring a discretion on the Pensions Regulator;

(d) about the winding up of a relevant scheme in circumstances where the accrued rights and benefits of the members are, or are to be, transferred out of the scheme.

(5) In this section —

“ employer ” has the same meaning as in section 16 ;

“ participating employer ” has the same meaning as in section 16 .

Section 18 Compliance and oversight

(1) Value for money regulations may make provision for ensuring compliance with value for money provisions.

(2) In this section “ value for money provision ” means a provision of or made under any of sections 11 to 17 .

(3) Value for money regulations may in particular—

(a) provide for the Pensions Regulator to issue a notice (a “ compliance notice ”) to a person with a view to ensuring the person's compliance with a value for money provision;

(b) provide for the Pensions Regulator to issue a notice (a “third party compliance notice”) to a person with a view to ensuring another person's compliance with a value for money provision;

(c) provide for the Pensions Regulator to issue a notice (a “penalty notice”) imposing a penalty on a person where the Pensions Regulator is of the opinion that the person—

(i) has failed to comply with a compliance notice or third party compliance notice, or

(ii) has contravened a value for money provision;

(d) provide for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of the issue of a penalty notice or the amount of a penalty;

(e) confer other functions on the Pensions Regulator.

(4) Value for money regulations may make provision for determining the amount, or the maximum amount, of a penalty in respect of a failure or contravention.

(5) The amount of a penalty imposed under value for money regulations in respect of a failure or contravention must not exceed—

(a) £10,000, in the case of an individual, and

(b) £100,000, in any other case.

(6) Value for money regulations may provide that where the Pensions Regulator has, in compliance with a requirement of regulations under subsection (3) (c) (ii) , imposed a penalty on a person the Regulator is to be authorised to withdraw the penalty if—

(a) the Regulator considers it appropriate to do so having regard to the circumstances in which the contravention took place, and

(b) any prescribed conditions are met.

(7) Value for money regulations may provide—

(a) that if the Regulator determines that a rating assigned by responsible trustees or managers for the purposes of section 11 (4) (a) is not correct, the Regulator may by a notice (a “directions notice”) substitute for that rating the rating the Regulator considers should have been assigned;

(b) that, where the Pensions Regulator substitutes a rating by virtue of paragraph (a) , that rating is to be deemed for all purposes to be the rating assigned to the scheme under section 15 (1) .

(8) A directions notice under subsection (7) must set out the reasons for the Pensions Regulator’s determination.

(9) Value for money regulations may provide for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of a determination of the Pensions Regulator under subsection (7) (a) .

(10) The Pensions Act 1995 is amended as follows.

(11) In section 7 (appointment of trustees)—

(a) in subsection (3), after paragraph (a) insert—

(aa) where subsection (3A) or (3B) applies, to secure that the trustees as a whole have the skills and knowledge necessary for ensuring that the scheme, or an arrangement under it, improves its performance as regards the provision of value for money;

(b) after subsection (3) insert—

(3A) This subsection applies where—

(a) the trust scheme is a regulated VFM scheme (as defined in section 11 (1) (a) of the Pension Schemes Act 2026), and

(b) the most recent rating assigned to the scheme under section 15 (1) of that Act was an intermediate or “not delivering” rating.

(3B) This subsection applies where—

(a) an arrangement under the trust scheme is a regulated VFM arrangement, and

(b) the most recent rating assigned to the arrangement under section 15 (1) of that Act was an intermediate or “not delivering” rating.

(c) at the end insert—

(7) In this section “regulated VFM arrangement” and “regulated VFM scheme” are to be interpreted in accordance with section 21 of the Pension Schemes Act 2026.

(12) In section 11 (powers to wind up schemes), in subsection (1)—

(a) omit the “or” after paragraph (b), and

(b) after paragraph (c) insert—

(d) the scheme is a regulated VFM scheme and—

(i) the rating most recently assigned to the scheme under section 15 (1) of the Pension Schemes Act 2026 is “not delivering”, and

(ii) the Authority are satisfied that the scheme is not capable of providing value for money, or

(e) the following conditions are met in relation to a regulated VFM arrangement (“ A ”) under the scheme—

(i) that the rating most recently assigned to A under section 15 (1) of the Pension Schemes Act 2026 is “not delivering”, and

(ii) the Authority are satisfied that A is not capable of providing value for money.

(c) at the end insert—

(8) In subsection (1)—

(a) “ regulated VFM arrangement ” and “ regulated VFM scheme ” have the same meaning as in Chapter 1 of Part 2 of the Pension Schemes Act 2026 (see section 21 of that Act);

(b) the reference to the provision of value for money is to be interpreted in accordance with that Chapter.

Section 19 Sharing of database where FCA makes corresponding rules

(1) This section applies if the Financial Conduct Authority makes rules, in relation to persons regulated by it, that correspond to value for money regulations.

(2) The Secretary of State may by regulations make provision for the purpose of enabling or facilitating the use of the database mentioned in section 12 (2) (d) for the publication or sharing of information—

(a) that relates to persons to whom the rules made by the Financial Conduct Authority apply, and

(b) that corresponds to metric data,

including provision conferring functions on a person appointed as mentioned in section 12 (2) (d) .

(3) Regulations under subsection (2) are subject to the negative procedure.

Section 20 Crown application

(1) This Chapter applies to a pension scheme managed by or on behalf of the Crown as it applies to other pension schemes.

(2) Accordingly, references in this Chapter to a person in their capacity as a trustee or manager of a pension scheme include the Crown, or a person acting on behalf of the Crown, in that capacity.

(3) This Chapter applies to persons employed by or under the Crown as it applies to persons employed by a private person.

Section 21 Interpretation of Chapter

In this Chapter—

“ action plan ” has the meaning given by section 15 (6) ;

“ fully delivering rating ” means a fully delivering VFM rating (see section 15 (1) (a) );

“ improvement plan ” is to be interpreted in accordance with section 16 (2) (a) ;

“ intermediate rating ” means an “intermediate” VFM rating ( section 15 (1) (c) );

“ metric data ” is to be interpreted in accordance with section 11 (2) (c) ;

“ money purchase benefits ” has the same meaning as in the Pension Schemes Act 1993 (see section 181 of that Act);

“ not delivering rating ” means a “not delivering” VFM rating (see section 15 (1) (b) );

“ occupational pension scheme ” has the same meaning as in the Pension Schemes Act 1993 (see section 1(1) of that Act);

“ prescribed ” means prescribed by value for money regulations;

“ regulated VFM arrangement ” is to be interpreted in accordance with section 11 (1) (b) ;

“ regulated VFM scheme ” is to be interpreted in accordance with section 11 (1) (a) ;

“ relevant pension scheme ” is to be interpreted in accordance with section 11 (12) and (13) ;

“ responsible trustees or managers ” is to be interpreted in accordance with section 11 (8) ;

“ trustee or manager ” means—

in relation to a scheme established under a trust, the trustees;

in relation to any other scheme, the managers,

(including in the words that define “responsible trustees or managers” in section 11 (8) );

“ value for money regulations ” has the meaning given by section 11 (1) ;

“ VFM assessment ” has the meaning given by section 11 (2) (a) ;

“ VFM period ” is to be interpreted in accordance with section 11 (2) (a) ;

“ VFM rating ” is to be interpreted in accordance with section 11 (4) (a) .

Section 22 Small pots regulations

(1) The Secretary of State may make regulations (“ small pots regulations ”) for the purpose of securing that small dormant pension pots held by auto-enrolment schemes are—

(a) held by consolidator schemes, and

(b) in the case of consolidator schemes that have more than one arrangement, held subject to consolidator arrangements.

(2) A pension pot is “small” if its value, determined as at such time and in such manner as is prescribed, is £1,000 or less (but is not nil).

(3) A pension pot is “dormant” if—

(a) no contributions were paid into the pension pot by, or on behalf or in respect of, the individual for whom the pot is held during such period of at least 12 months as is prescribed, and

(b) the individual has, subject to any prescribed exceptions, taken no step to confirm or alter the way in which the pension pot is invested.

(4) The period that may be prescribed under subsection (3) (a) in relation to a pension pot in existence at the time the regulations come into force may begin at any time after the coming into force of this section.

(5) Small pots regulations—

(a) are subject to the affirmative procedure if they—

(i) are the first such regulations,

(ii) prescribe a person under section 23 (1) (determination of destinations for small pots),

(iii) include provision under section 24 (1) or 26 (1) (requirements to send transfer notices or transfer pension pots), or

(iv) amend or repeal provision contained in an Act;

(b) otherwise, are subject to the negative procedure.

Section 23 Determination of destinations for small pots

(1) Small pots regulations must require a prescribed person to make, in relation to each small dormant pension pot held by an auto-enrolment scheme—

(a) a proposal in relation to the pot (“the default proposal”), and

(b) one or more other proposals in relation to the pot (“the alternative proposals”).

(2) For the purposes of this Chapter a “ proposal ”, in relation to a small dormant pension pot, means a proposal that—

(a) the pot should be held by a specified consolidator scheme, and

(b) if there is more than one arrangement under that scheme, the pot should be held subject to a specified arrangement under the scheme.

In this subsection “ specified ” means specified in the proposal.

(3) Subsection (1) does not apply in relation to a small dormant pension pot if—

(a) the auto-enrolment scheme that holds the pot is itself a consolidator scheme,

(b) any of the sums or assets comprising the pot, or any sums or assets from which any of the sums or assets comprising the pot derive, were at any time comprised in a small dormant pension pot in respect of which a transfer notice was sent under small pots regulations, and

(c) no response to that notice was received under section 24 (3) (d) (ii) .

(4) A person prescribed under subsection (1) may be a body corporate established by or under the regulations.

(5) Small pots regulations may, in compliance with subsection (1) —

(a) prescribe one person to make all of the proposals required to be made under that subsection , or

(b) prescribe two or more persons in relation to different descriptions of those proposals.

(6) Small pots regulations must require a proposal made by virtue of subsection (1) to be notified to the trustees or managers of the auto-enrolment scheme that holds the pension pot to which the proposal relates (unless those trustees or managers are themselves the destination proposer).

(7) A person prescribed under subsection (1) is referred to in this Chapter as a “destination proposer”.

Section 24 Transfer notices

(1) Small pots regulations must require the trustees or managers of an auto-enrolment scheme to prepare a notice (“a transfer notice”) in respect of each small dormant pension pot held by the scheme that is not exempt and send it to the individual for whom the pot is held.

(2) Small pots regulations must require a transfer notice in respect of a pension pot to comply with the following provisions of this section.

(3) The notice must—

(a) set out the default proposal in relation to the pot;

(b) set out the alternative proposal or proposals in relation to the pot;

(c) state that, if the individual does not respond to the notice, the pot will—

(i) if the default proposal specifies that the pot be transferred to a consolidator scheme, be transferred to that scheme, and

(ii) if there is more than one arrangement under the consolidator scheme specified in the default proposal, be held subject to the arrangement so specified;

(d) invite the individual to consider whether they are content with the default proposal and, if not, to respond to the notice stating either—

(i) that they want to adopt one of the alternative proposals and if so which, or

(ii) that they do not want any action to be taken in relation to the pension pot.

(4) Where membership of a consolidator scheme or a consolidator arrangement specified in a proposal set out in a transfer notice entails being a party to a contract with the trustees or managers of the scheme, the notice must set out, or otherwise communicate, the terms of such a contract.

(5) The notice must include such details as may be prescribed relating to—

(a) the pension pot,

(b) the auto-enrolment scheme, and

(c) the consolidator scheme or schemes, and any consolidator arrangements, specified in a proposal set out in the notice.

Section 25 Exempt pots

(1) A small dormant pension pot is “exempt” if—

(a) prescribed conditions are met in relation to the pot, and

(b) the trustees or managers of the scheme that holds it determine that it is in the best interests of the individual for whom the pot is held that it should not be transferred in accordance with small pots regulations.

(2) A determination in relation to an individual under subsection (1) (b) may be made by reference to a class of individuals of which the individual in question is a member.

(3) Small pots regulations may include further provision about how determinations under subsection (1) (b) are to be made.

Section 26 Transfer etc of small dormant pension pots

(1) Small pots regulations must require the trustees or managers of an auto-enrolment scheme, in relation to each small dormant pot held by the scheme in respect of which they have sent a transfer notice, to implement the proposals set out in the notice in accordance with this section.

(2) Subsection (1) does not apply to a pension pot if the trustees or managers have received a response under section 24 (3) (d) (ii) in relation to it.

(3) Small pots regulations must secure that if—

(a) the trustees or managers do not receive a response to the notice, and

(b) the default proposal involves the transfer of the pot to a consolidator scheme,

the trustees or managers are required to transfer the pot to that scheme.

(4) Small pots regulations must secure that if—

(a) the trustees or managers receive a response to the notice, and

(b) the alternative option identified by the individual under section 24 (3) (d) (i) involves the transfer of the pot to a consolidator scheme,

the trustees or managers are required to transfer the pot to that scheme.

(5) Small pots regulations must secure that if—

(a) the trustees or managers do not receive a response to the notice, and

(b) the default proposal involves the pot being held by a consolidator scheme subject to an arrangement specified in the proposal,

the pot is required to be held subject to that arrangement.

(6) Small pots regulations must secure that if—

(a) the trustees or managers receive a response to the notice, and

(b) the alternative proposal identified by the individual under section 24 (3) (d) (i) involves the pot being held by an arrangement specified in the proposal,

the pot is required to be held subject to that arrangement.

(7) The trustees or managers may transfer a pension pot by virtue of subsection (3) or (4) , or change the arrangement subject to which a pension pot is held by virtue of subsection (5) or (6) , notwithstanding that it breaches a term of the scheme (such as a requirement for consent); and any such breach is to be disregarded for all purposes.

Section 27 Effect of transfer on membership of scheme etc

(1) Subsections (2) and (3) apply where a pension pot held for an individual is transferred by virtue of section 26 (3) or (4) to a different pension scheme (“ the receiving scheme ”).

(2) The individual becomes a member of the receiving scheme in relation to the pot, and acquires the rights, and becomes subject to the obligations, of membership.

(3) Where membership of the receiving scheme in relation to the pot entails being a party to a contract with its trustees or managers, a contract is treated as entered into between the individual and the trustees or managers—

(a) at the time at which the pension pot is transferred to the receiving scheme, and

(b) on the terms communicated to the individual by virtue of section 24 (4) .

(4) Subsections (5) and (6) apply where a pension pot is by virtue of section 26 (5) or (6) held subject to a different arrangement under the same pension scheme, or an arrangement under a different pension scheme.

(5) The individual becomes a member of the arrangement in relation to the pot, and acquires the rights, and becomes subject to the obligations, of membership.

(6) Where membership of the arrangement in relation to the pot entails being a party to a contract with its trustees or managers of the pension scheme in question, a contract is treated as entered into between the individual and the trustees or managers—

(a) at the time at which the pension pot is first held subject to the arrangement, and

(b) on the terms communicated to the individual by virtue of section 24 (4) .

Section 28 Timing of transfers

(1) Small pots regulations must prohibit the trustees or managers of an auto-enrolment scheme from transferring a pension pot by virtue of section 26 (3) or (4) , or changing the arrangement subject to which it is held by virtue of section 26 (5) or (6) , before the end of the required notice period.

(2) In subsection (1) “ the required notice period ”, in relation to a pension pot, means the period of 30 days, or such longer period as may be prescribed, beginning with the day on which the transfer notice in respect of the pot is sent.

(3) Small pots regulations must (subject to subsection (5) ) require the trustees or managers of an auto-enrolment scheme to effect any transfer of a pension pot by virtue of section 26 (3) or (4) , and any change in the arrangement subject to which it is held by virtue of section 26 (5) or (6) , before the end of the required transfer period.

(4) In subsection (3) “ the required transfer period ”, in relation to a pension pot, means the period of one year beginning with—

(a) the date on which the provision of the regulations under which the requirement is imposed comes into force, or

(b) if later, the date on which the pension pot first becomes small and dormant.

(5) Small pots regulations may include provision extending the required transfer period until the end of a prescribed period beginning with the date on which the trustees or managers are notified of the proposals made by virtue of section 23 (1) in respect of the pot.

Section 29 Authorisation of consolidator schemes etc by the Pensions Regulator

(1) Small pots regulations must permit the trustees or managers of an eligible Master Trust scheme to apply to the Pensions Regulator for authorisation of—

(a) the scheme, or

(b) such arrangements under the scheme as are specified in the application.

(2) Small pots regulations must require the Pensions Regulator to grant an application for authorisation where—

(a) the application is made in accordance with regulations made by virtue of subsection (1) , and

(b) prescribed conditions are met.

(3) Small pots regulations may permit or require the Pensions Regulator, where prescribed conditions are, or cease to be, met in relation to a consolidator scheme or arrangement—

(a) to require the trustees or managers to take prescribed steps;

(b) to prohibit a destination proposer, in prescribed cases or in all cases, from specifying the scheme or arrangement in proposals under section 23 (1) ;

(c) to withdraw authorisation.

(4) The conditions that may be prescribed under subsection (2) (b) or (3) include conditions relating to—

(a) the terms of the scheme,

(b) the value of sums and assets held by the scheme for the purpose of providing money purchase benefits,

(c) the fees charged by the scheme, or

(d) a VFM rating assigned to the scheme or any arrangement under the scheme,

and include conditions that involve the exercise of a discretion by the Pensions Regulator.

(5) Small pots regulations may permit or require the Pensions Regulator, where it withdraws authorisation, to require the trustees or managers of the scheme in question to take prescribed steps in relation to relevant pension pots.

(6) The steps that may be required to be taken by virtue of subsection (5) include steps to limit the fees that may be charged.

(7) For the purposes of subsection (5) a pension pot is “relevant” if—

(a) any of the sums or assets comprising the pot, or any sums or assets from which any of the sums or assets comprising the pot derive, were at any time comprised in a small dormant pension pot in respect of which a transfer notice was sent under small pots regulations, and

(b) no response to that notice was received under section 24 (3) (d) (ii) .

(8) For the purposes of this Chapter a Master Trust scheme is “eligible” if it is authorised under section 5 of the Pension Schemes Act 2017 (authorisation of Master Trust schemes).

Section 30 Consolidator schemes and consolidator arrangements

(1) In this Chapter “ consolidator scheme ” means—

(a) an eligible Master Trust scheme—

(i) that is for the time being authorised by virtue of section 29 (1) (a) , or

(ii) any arrangement under which is for the time being authorised by virtue of section 29 (1) (b) , or

(b) an FCA-regulated pension scheme that is for the time being included on a list published by the FCA under section 137FBC (2) (b) of the Financial Services and Markets Act 2000.

(2) In this Chapter “ consolidator arrangement ” means—

(a) an arrangement under an eligible Master Trust scheme where—

(i) the scheme is for the time being authorised by virtue of section 29 (1) (a) , or

(ii) the arrangement is for the time being authorised by virtue of section 29 (1) (b) , or

(b) an arrangement under an FCA-regulated pension scheme that is for the time being included on a list published by the FCA under section 137FBC (2) (b) of the Financial Services and Markets Act 2000.

Section 31 Further provision about contents of small pots regulations

(1) Small pots regulations may, in particular—

(a) authorise the Pensions Regulator to charge a prescribed fee in respect of an application for authorisation under the regulations;

(b) confer a right of appeal to the First-tier Tribunal or the Upper Tribunal;

(c) require the trustees or managers of a relevant pension scheme to take prescribed steps to improve the accuracy and completeness of information held by them;

(d) require a relevant person, other than the FCA, to provide prescribed information, in such form and at such time as may be prescribed, to—

(i) a relevant person, or

(ii) an individual for whom a relevant pension scheme holds a pension pot;

(e) require the trustees or managers of a relevant pension scheme to keep, and retain for a prescribed period, prescribed records;

(f) provide (otherwise than under paragraphs (c) to (e) ) for the processing of information;

(g) limit the fees that may be charged by a relevant pension scheme in connection with the transfer of a pension pot under the regulations;

(h) require a destination proposer, the trustees or managers of a relevant pension scheme, or the Secretary of State, to pay compensation to an individual who has suffered a loss as a result of a breach of the regulations;

(i) confer (otherwise than under any of paragraphs (a) to (h) ) a function on a relevant person, including a function involving the exercise of a discretion;

(j) provide for the delegation of a function conferred by the regulations.

(2) In subsection (1) (c) to (f) , a reference to information includes personal data, and a reference to records includes records of personal data.

(3) The processing of personal data in accordance with the regulations does not breach—

(a) any obligation of confidence owed by the person processing the personal data, or

(b) any other restriction on the processing of personal data (however imposed).

(4) In this section—

“ personal data ” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);

“ processing ” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);

“ relevant pension scheme ” means—

an auto-enrolment scheme, or

a consolidator scheme;

“ relevant person ” means—

the Pensions Regulator,

the FCA,

a destination proposer, or

the trustees or managers of a relevant pension scheme.

(5) The power to make small pots regulations is capable of being exercised so as to amend or repeal provision contained in an Act.

(6) In particular, small pots regulations may—

(a) amend section 146 of the Pension Schemes Act 1993 (functions of the Pensions Ombudsman) so as to confer on the Pensions Ombudsman the function of investigating and determining complaints or disputes relating to a destination proposer;

(b) amend section 175 of that Act (levies towards certain expenditure) so as to include expenditure of—

(i) a destination proposer, or

(ii) the Secretary of State by virtue of section 31(1)(h) (compensation).

Section 32 Enforcement by the Pensions Regulator

(1) Small pots regulations may make provision with a view to ensuring the compliance of any person who is not FCA-regulated with any provision of the regulations.

(2) The regulations may in particular—

(a) provide for the Pensions Regulator to issue a notice (a “ compliance notice ”) to a person with a view to ensuring the person's compliance with a provision of the regulations;

(b) provide for the Pensions Regulator to issue a notice (a “third party compliance notice”) to a person with a view to ensuring another person's compliance with a provision of the regulations;

(c) provide for the Pensions Regulator to issue a notice (a “penalty notice”) imposing a penalty on a person where the person—

(i) has failed to comply with a compliance notice or third party compliance notice, or

(ii) has contravened a provision of the regulations;

(d) provide for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of the issue of a penalty notice or the amount of a penalty.

(3) The regulations may make provision for determining the amount, or the maximum amount, of a penalty in respect of a failure or contravention.

(4) But the amount of a penalty imposed under the regulations in respect of a failure or contravention must not exceed—

(a) £10,000, in the case of an individual, and

(b) £100,000, in any other case.

(5) Any penalty payable under the regulations is recoverable by the Regulator.

(6) In England and Wales, any such penalty is, if the county court so orders, recoverable under section 85 of the County Courts Act 1984 or otherwise as if it were payable under an order of that court.

(7) In Scotland, a penalty notice is enforceable as if it were an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom.

(8) The Regulator must pay into the Consolidated Fund any penalty recovered under this section.

(9) A reference in this section to a provision of small pots regulations includes a reference to a requirement or restriction imposed by the Pensions Regulator under the regulations.

Section 33 Enforcement by the FCA

(1) The Treasury may make regulations to enable the FCA to take action (in addition to any action it may otherwise take under the Financial Services and Markets Act 2000) for monitoring and enforcing compliance of an FCA-regulated person with any provision of small pots regulations.

(2) The regulations may apply, or make provision corresponding to—

(a) provision contained in small pots regulations by virtue of section 32 , or

(b) any provision of the Financial Services and Markets Act 2000,

with or without modification.

(3) Regulations under this section are subject to the affirmative procedure.

(4) For the purposes of this Chapter a person is “FCA-regulated” if they are an authorised person (within the meaning of the Financial Services and Markets Act 2000) in relation to the operation of a pension scheme.

Section 34 Power to alter definition of “small”

(1) The Secretary of State may by regulations amend section 22 (2) (definition of “ small ” in relation to a pension pot) so as to substitute a larger or smaller amount for the amount for the time being specified there.

(2) Before making regulations under this section the Secretary of State must—

(a) consult such persons as the Secretary of State considers appropriate, and

(b) publish details of the proposed amendment, and the Secretary of State’s reasons for making the proposal, and consider any representations made.

(3) Regulations under this section are subject to the affirmative procedure.

Section 35 Crown application

(1) This Chapter applies to a pension scheme managed by or on behalf of the Crown as it applies to other pension schemes.

(2) Accordingly, references in this Chapter to a person in their capacity as a trustee or manager of a pension scheme include the Crown, or a person acting on behalf of the Crown, in that capacity.

(3) This Chapter applies to persons employed by or under the Crown as it applies to persons employed by a private person.

Section 36 Interpretation of Chapter

(1) In this Chapter—

“ the alternative proposals ”, in relation to a small dormant pension pot, has the meaning given by section 23 (1) ;

“ auto-enrolment scheme ” has the meaning given by subsection (5) ;

“ consolidator arrangement ” has the meaning given by section 30 (2) ;

“ consolidator scheme ” has the meaning given by section 30 (1) ;

“ the default proposal ”, in relation to a small dormant pension pot, has the meaning given by section 23 (1) ;

“ destination proposer ” has the meaning given by section 23 (7) ;

“ dormant ”, in relation to a pension pot, has the meaning given by section 22 (3) ;

“ eligible ”, in relation to a Master Trust scheme, has the meaning given by section 29 (8) ;

“ exempt ”, in relation to a pension pot, has the meaning given by section 25 ;

“ the FCA ” means the Financial Conduct Authority;

“ FCA-regulated ”, in relation to a pension scheme, has the meaning given by subsection (2) ;

“ FCA-regulated ”, in relation to a person, has the meaning given by section 33 (4) ;

“ functions ” includes powers and duties;

“ Master Trust scheme ” has the same meaning as in the Pension Schemes Act 2017 (see section 1(1) of that Act);

“ money purchase benefits ” has the same meaning as in the Pension Schemes Act 1993 (see section 181(1) of that Act);

“ pension pot ” has the meaning given by section 37 ;

“ pension scheme ” has the meaning given by section 1(5) of the Pension Schemes Act 1993 ;

“ prescribed ” means specified in, or determined in accordance with, small pots regulations;

“ proposal ”, in relation to a small dormant pension pot, has the meaning given by section 23 (2) ;

“ provider ”, in relation to an FCA-regulated pension scheme, means the person mentioned in subsection (2) (b) ;

“ small ”, in relation to a pension pot, has the meaning given by section 22 (2) ;

“ small pots regulations ” has the meaning given by section 22 (1) ;

“ terms ”, in relation to a pension scheme, has the meaning given by subsection (3) ;

“ transfer ”, in relation to a pension pot, includes a transfer of an amount representing its value;

“ transfer notice ” has the meaning given by section 24 (1) ;

“ trustees or managers ”, in relation to a pension scheme, means (subject to subsection (4) )—

in the case of a scheme established under a trust, the trustees of the scheme, and

in any other case, the persons responsible for the management of the scheme;

“ VFM rating ” has the same meaning as in Chapter 1 .

(2) A pension scheme is “FCA-regulated” if the operation of the scheme—

(a) is carried on in such a way as to be a regulated activity for the purposes of the Financial Services and Markets Act 2000, and

(b) is carried on in the United Kingdom by a person who is in relation to that activity an authorised person under section 19 of that Act.

(3) A reference in this Part to the terms of a pension scheme is to the terms of any instrument or agreement—

(a) in which the scheme is comprised, or

(b) to which the provider of the scheme and any member are parties in connection with the scheme.

(4) A reference in this Chapter to the trustees or managers of a pension scheme is, where the scheme is FCA-regulated, a reference to the provider of the scheme.

(5) A pension scheme is an “auto-enrolment scheme” if any individual is or at any time was an active member of the scheme in consequence of arrangements under section 3 (2) , 5 (2) or 7 (3) of the Pensions Act 2008 (arrangements for jobholder to become active member of automatic enrolment scheme).

(6) In subsection (5) “ active member ” has the same meaning as in Part 1 of the Pensions Act 2008 (see section 99 of that Act).

Section 37 Meaning of “pension pot”

(1) In this Chapter, “ pension pot ” means sums or assets held for the purpose of providing money purchase benefits to or in respect of a member of a pension scheme; and—

(a) a reference to the pension scheme that holds a pension pot is to that pension scheme;

(b) a reference to the individual for whom a pension pot is held is to that member.

(2) Where—

(a) an individual is a member of an auto-enrolment scheme in relation to more than one employment, and

(b) the sums or assets held by the scheme for the purpose of providing money purchase benefits to or in respect of the member in relation to those employments are accounted for separately by the scheme,

the sums or assets held in relation to each employment are regarded for the purposes of this Chapter as separate pension pots.

(3) In subsection (2) “ employment ” has the same meaning as in Part 1 of the Pensions Act 2008 (see section 99 of that Act).

Section 38 Amendments of the Financial Services and Markets Act 2000

(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) In section 1A (the Financial Conduct Authority), in subsection (6), after paragraph (czc) insert—

(czd) Chapter 2 of Part 2 of the Pension Schemes Act 2026 (consolidation of small dormant pension pots);

(3) After section 137FBB insert—

FCA general rules: regulation of consolidator pension schemes

(137FBC)

(1) The FCA may make general rules under which the provider of an FCA-regulated pension scheme is required to notify the FCA where it intends that the scheme should be a consolidator scheme, or an arrangement under the scheme should be a consolidator arrangement, for the purposes of Chapter 2 of Part 2 of the Pension Schemes Act 2026.

(2) If the FCA makes rules under subsection (1) it must—

(a) make general rules regulating pension schemes that have given (and not withdrawn) a notice of the kind mentioned in subsection (1) , and

(b) publish and maintain a list of FCA-regulated pension schemes, and arrangements under such schemes, in accordance with subsections (3) and (4).

(3) The list must, subject to subsection (4), include each FCA-regulated pension scheme, and each arrangement under an FCA-regulated scheme, in relation to which the FCA has received a notice by virtue of subsection (1) .

(4) The list must not include a scheme or arrangement if—

(a) the notice in relation to it has been withdrawn by the provider of the scheme, or

(b) the FCA has determined that it is unlikely that rules made under subsection (1) or (2) (a) will be complied with in relation to the scheme or arrangement within such period as the FCA considers reasonable.

(5) In determining what provision to include in rules under subsection (2) (a) , the FCA must have regard to any provision contained in small pots regulations by virtue of section 29 of the Pension Schemes Act 2026 (authorisation of consolidator schemes etc by the Pensions Regulator).

(6) In this section—

“ FCA-regulated ”, in relation to a pension scheme, has the meaning given by subsection (7) ;

“ pension scheme ” has the meaning given by section 1(5) of the Pension Schemes Act 1993 ;

“ provider ”, in relation to an FCA-regulated pension scheme, means the person referred to in subsection (7) (b) .

(7) A pension scheme is “FCA-regulated” if the operation of the scheme—

(a) is a regulated activity, and

(b) is carried on in the United Kingdom by an authorised person.

(4) In section 204A (meaning of “ relevant requirement ” and “ appropriate regulator ”)—

(a) in subsection (2), after paragraph (ab) insert—

(ac) by small pots regulations within the meaning of Chapter 2 of Part 2 of the Pension Schemes Act 2026,

(b) in subsection (6), after paragraph (ab) insert—

(ac) by small pots regulations within the meaning of Chapter 2 of Part 2 of the Pension Schemes Act 2026;

Section 39 Repeal of existing powers

(1) In the Pensions Act 2014, omit the following provisions (which contain powers that have not been brought into force to make provision for the automatic transfer of pension benefits etc)—

(a) section 33;

(b) Schedule 17, except paragraph 15(1) (which contains interpretative provisions that apply for the purposes of Schedule 18 to that Act).

(2) In Schedule 18 to that Act (power to restrict charges or impose requirements in relation to schemes), in paragraph 4 (interpretation), for sub-paragraph (1) substitute—

(1) The definitions in paragraph 15(1) of Schedule 17 apply for the purposes of this Schedule.

(3) In consequence of subsection (1) (b) , in section 256 of the Pensions Act 2004 (no indemnification for fines or civil penalties), in subsection (1)(b), for “that Act” substitute “the Pensions Act 2014” .

Section 40 Certain schemes providing money purchase benefits: scale and asset allocation

(1) The Pensions Act 2008 is amended as follows.

(2) Section 20 (quality requirement: UK money purchase schemes) is amended as follows.

(3) In subsection (1), after “purchase scheme” insert “that is not a relevant Master Trust and” .

(4) After subsection (1) insert—

(1A) A money purchase scheme that is a relevant Master Trust satisfies the quality requirement in relation to a jobholder if the conditions in subsection (1)(a) to (c) and Condition 1 and Condition 2 of this subsection are met.

Condition 1

This Condition is that the relevant Master Trust—

is approved under section 28A in respect of a main scale default arrangement,

is exempted by regulations from the requirement for approval,

has previously been approved under section 28E (transition pathway relief) and is to be treated in accordance with regulations as if it had approval under section 28A ,

qualifies under section 28E for transition pathway relief, or

qualifies under section 28F for new entrant pathway relief.

Condition 2

This Condition is that the relevant Master Trust—

is approved under section 28C in respect of the asset allocation requirement, or

is exempted by regulations from the requirement for approval.

See also section 28G (suspension of asset allocation requirement: savers’ interest test) for provision about circumstances in which the asset allocation requirement is suspended.

(1B) Regulations under Condition 1(b) or 2(b) of subsection (1A) may exempt any description of relevant Master Trust, for example those that are—

(a) designed to meet the needs of persons with a protected characteristic within the meaning of the Equality Act 2010, or

(b) hybrid schemes.

(1C) Regulations may—

(a) permit the Regulatory Authority to determine that a relevant Master Trust is to be treated for a period (“the protected period”) as meeting Condition 1 or Condition 2 of subsection (1A) for a period specified by the Regulatory Authority;

(b) specify circumstances in which a relevant Master Trust, which is treated as mentioned in paragraph (a) and meets prescribed conditions, is to be subject during a prescribed period (ending with the end of the protected period) to any requirements specified in the regulations; and provision under this paragraph may include provision corresponding to any provision that may be made under section 28A (10) ;

(c) make provision about the Regulatory Authority requiring the trustees or managers of a relevant Master Trust to give the Regulatory Authority a plan showing how they propose to meet or continue to meet the scale requirement under section 28A or the conditions for approval under section 28C .

(5) After subsection (3) insert—

(4) In this section—

“ main scale default arrangement ” is to be interpreted in accordance with section 28A (13) ;

“ Master Trust scheme ” has the same meaning as in the Pension Schemes Act 2017 (see section 1(1) of that Act);

“ relevant Master Trust ” means a money purchase scheme that has its main administration in the United Kingdom and is an authorised Master Trust scheme.

(6) In section 25 (quality requirement: non-UK occupational pension schemes) for “18(b) or (c)” substitute “18(c)” .

(7) Section 26 (quality requirement: UK personal pension schemes) is amended as follows.

(8) After subsection (7) insert—

(7A) The fifth condition is that if the scheme is a group personal pension scheme of a prescribed description it must, unless subsection (7C) applies, hold an approval under section 28B in respect of a main scale default arrangement.

(7B) The sixth condition is that if the scheme is a group personal pension scheme of a prescribed description it must hold an approval under section 28C in respect of the asset allocation requirement. See also section 28G (suspension of asset allocation requirement: savers’ interest test) for provision about circumstances in which the asset allocation requirement is suspended.

(7C) This subsection applies if the group personal pension scheme—

(a) has previously been approved under section 28E (transition pathway relief) and is to be treated in accordance with regulations as if it had approval under section 28B ,

(b) qualifies under section 28E for transition pathway relief, or

(c) qualifies under section 28F for new entrant pathway relief.

(7D) Regulations under subsection (7A) or (7B) may exempt any description of group personal pension schemes, for example those that are designed to meet the needs of persons with a protected characteristic within the meaning of the Equality Act 2010.

(7E) Regulations may—

(a) permit the Regulatory Authority to determine that a group personal pension scheme is to be treated as meeting the fifth or sixth condition for a period (the “protected period”) specified by the Regulatory Authority;

(b) specify circumstances in which a group personal pension scheme which is treated as mentioned in paragraph (a) and meets prescribed conditions is to be subject during a prescribed period (which ends with the end of the protected period) to any requirements specified in the regulations; and provision under this paragraph may include provision corresponding to any provision that may be made under section 28A (10) ;

(c) make provision about the Regulatory Authority requiring the provider of a group personal pension scheme to give the Regulatory Authority a plan showing how they propose to meet or continue to meet the scale requirement under section 28B or the conditions for approval under section 28C .

(9) After subsection (9) insert—

(10) In this section “ main scale default arrangement ” is to be interpreted in accordance with section 28B (13) .

(10) In section 28 (certification that quality requirement or alternative requirement is satisfied) in subsection (3A) omit paragraphs (a) and (c).

(11) In section 28 (certification that quality requirement or alternative requirement is satisfied) in subsection (4) (definition of “relevant quality requirement”)—

(a) in paragraph (a), at the end insert “, except so far as that quality requirement relates to Condition 1 or 2 in subsection (1A) ” ;

(b) in paragraph (b), at the end insert “, except so far as that quality requirement relates to the fifth and sixth conditions” ;

(c) in paragraph (c), at the end insert “, except so far as those requirements relate to Condition 1 or 2 in section 20 (1A) ” .

(12) After section 28 insert—

MSDA approval: relevant Master Trusts

(28A)

(1) For the purposes of Condition 1 of section 20 (1A) , the Regulatory Authority (“ the Authority ”) may approve a relevant Master Trust (“the RMT”) in respect of a main scale default arrangement if the Authority determines that—

(a) the RMT meets the scale requirement by reference to the main scale default arrangement, and

(b) any other prescribed conditions are met.

(2) The RMT meets the scale requirement by reference to a main scale default arrangement if the sum of the values mentioned in paragraphs (a) to (c) of subsection (4) is equal to or greater than the minimum amount.

(3) In this section “ the minimum amount ” means £25 billion.

(4) Subject to subsection (7) , those values are—

(a) the total value of assets of the RMT which—

(i) represent accrued rights of members of that scheme,

(ii) are held subject to the main scale default arrangement, and

(iii) are managed under a common investment strategy;

(b) if one or more relevant Master Trusts are connected with the RMT, the total value of assets of those schemes that—

(i) represent accrued rights of members of those schemes,

(ii) are held subject to the main scale default arrangement, and

(iii) are managed under the investment strategy mentioned in paragraph (a) (iii) ;

(c) if one or more group personal pension schemes are connected with the RMT, the total value of assets of those schemes that—

(i) represent accrued rights of members of those schemes,

(ii) are held subject to the main scale default arrangement, and

(iii) are managed under the investment strategy mentioned in paragraph (a) (iii) .

(5) A reference in subsection (4) to a relevant Master Trust or a group personal pension scheme being “connected” with the RMT is to a relevant Master Trust or a group personal pension scheme having a prescribed connection with the RMT.

(6) Regulations under subsection (5) may, for example, provide—

(a) that a relevant Master Trust is connected with the RMT only if it has the same scheme funder or scheme strategist as the RMT, or

(b) that a group personal pension scheme is connected with the RMT only if its provider is also the scheme funder or scheme strategist of the RMT.

(7) Regulations may make provision about amounts that are to be excluded or adjusted in calculating the total value under subsection (4) (a) to (c) .

(8) Regulations may make provision about—

(a) how the satisfaction of criteria relevant to the meeting of the scale requirement is to be evidenced;

(b) what it means for assets of a pension scheme to be managed under a “ common investment strategy ” (including in particular provision defining that expression by reference to whether or how far the assets relating to each member of the scheme are allocated in the same proportion to the same investments).

(9) Regulations may make provision about how the value of assets is to be determined for the purposes of subsections (2) and (4) .

(10) Regulations may make provision—

(a) as to a time limit within which the Authority must decide an application for approval;

(b) as to procedures in connection with approvals or where an approval has been given;

(c) about the withdrawal of approvals including conditions for, and procedures in connection with, withdrawals;

(d) for the Authority’s decision on the application, or on a decision to withdraw approval, to be referred to the Upper Tribunal;

(e) for the Authority to maintain and publish a list of relevant Master Trusts that are approved under this section.

(11) Regulations under subsection (10) (c) may in particular make provision—

(a) about steps, including communications with a relevant Master Trust, that the Authority must take before deciding to withdraw an approval;

(b) setting a minimum period that must elapse between a notification that approval is to be withdrawn and the withdrawal of the approval;

(c) where the Authority has given notice to the trustees or managers of a relevant Master Trust that the approval (under this section) of that scheme is likely to be withdrawn and any other prescribed conditions are met, requiring the trustees or managers to—

(i) act in relation to the scheme as if its approval has been withdrawn, and

(ii) take steps for ensuring that persons (such as employers) who may be affected in the event of the relevant Master Trust’s losing that approval are promptly informed if such a loss should occur;

(d) permitting the Authority to impose, on a person who fails to comply with a requirement under paragraph (c), a penalty determined in accordance with the regulations that does not exceed £100,000;

(e) providing for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of the issue of a penalty notice or the amount of a penalty.

(12) Before making regulations under this section the Secretary of State must consult such persons as the Secretary of State considers appropriate.

(13) In this section “ main scale default arrangement ” means an arrangement—

(a) that is used for the purposes of one or more pension schemes, and

(b) subject to which assets of any one of those schemes must under the rules of the scheme be held, or may under those rules be held, if the member of the scheme to whom the assets relate does not make a choice as to the arrangement subject to which the assets are to be held.

MSDA approval: group personal pension scheme

(28B)

(1) The Regulatory Authority (“ the Authority ”) may, for the purposes of the Condition in section 26 (7A) , approve a group personal pension scheme (“the GPP”) in respect of a main scale default arrangement if the Authority determines that—

(a) the GPP meets the scale requirement by reference to the main scale default arrangement, and

(b) any other prescribed conditions are met.

(2) The GPP meets the scale requirement by reference to a main scale default arrangement if the sum of the values mentioned in paragraphs (a) to (c) of subsection (4) is equal to or greater than the minimum amount.

(3) In this section “ the minimum amount ” means £25 billion.

(4) Subject to subsections (5) and (6) , those values are—

(a) the total value of assets of the GPP which—

(i) represent accrued rights of members of the GPP,

(ii) are held subject to the main scale default arrangement, and

(iii) are managed under a common investment strategy;

(b) if one or more group personal pension schemes are connected with the GPP, the total value of assets of those schemes that—

(i) represent accrued rights of members of those schemes,

(ii) are held subject to the main scale default arrangement, and

(iii) are managed under the investment strategy mentioned in paragraph (a) (iii) ;

(c) if one or more relevant Master Trusts are connected with the GPP, the total value of assets of those schemes that—

(i) represent accrued rights of members of that scheme,

(ii) are held subject to the main scale default arrangement, and

(iii) are managed under the investment strategy mentioned in paragraph (a) (iii) .

(5) Regulations may make provision about amounts that are to be excluded or adjusted in calculating the total value under subsection (4) (a) to (c) .

(6) Regulations may make provision about—

(a) how the satisfaction of criteria relevant to the meeting of the scale requirement is to be evidenced;

(b) what it means for assets of a pension scheme to be managed under a “ common investment strategy ” (including in particular provision defining that expression by reference to whether or how far the assets relating to each member of the scheme are allocated in the same proportion to the same investments).

(7) Regulations may make provision about how the value of assets is to be determined for the purposes of subsections (2) and (4) .

(8) A reference in subsection (4) to a group personal pension scheme or a relevant Master Trust being “connected” with the GPP is to a group personal pension scheme or a relevant Master Trust having a prescribed connection with the GPP.

(9) Regulations under subsection (8) may, for example, provide—

(a) that a group personal pension scheme is connected with the GPP only if it has the same provider as the GPP, or

(b) that a relevant Master Trust is connected with the GPP only if its scheme funder or scheme strategist is also the provider of the GPP.

(10) Regulations may make provision—

(a) as to a time limit within which the Authority must decide an application for approval;

(b) as to procedures in connection with approvals or where an approval has been given;

(c) about the withdrawal of an approval, including conditions for and procedures in connection with withdrawals;

(d) for the Authority’s decision on the application, or on a decision to withdraw approval, to be referred to the Upper Tribunal;

(e) for the Authority to maintain and publish a list of group personal pension schemes that are approved under this section.

(11) Regulations under subsection (10) (c) may in particular make provision—

(a) about steps, including communications with a group personal pension scheme, that the Authority must take before deciding to withdraw an approval;

(b) setting a minimum period that must elapse between notification that approval is to be withdrawn and the withdrawal of the approval;

(c) where the Authority has given notice to the provider of the GPP that its approval is likely to be withdrawn and any other prescribed conditions are met, requiring the provider to—

(i) act in relation to the scheme as if its approval has been withdrawn, and

(ii) take steps for ensuring that persons (such as employers) who may be affected in the event of the GPP losing that approval are promptly informed if such a loss should occur;

(d) permitting the Authority to impose, on a person who fails to comply with a requirement under paragraph (c) , a penalty determined in accordance with the regulations that does not exceed £100,000;

(e) providing for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of the issue of a penalty notice or the amount of a penalty.

(12) Before making regulations under this section the Secretary of State must consult such persons as the Secretary of State considers appropriate.

(13) In this section “ main scale default arrangement ” means an arrangement—

(a) that is used for the purposes of one or more pension schemes, and

(b) subject to which assets of any one of those schemes must under the rules of the scheme be held, or may under those rules be held, if the member of the scheme to whom the assets relate does not make a choice as to the arrangement subject to which the assets are to be held.

Approvals in respect of asset allocation

(28C)

(1) The Regulatory Authority (“ the Authority ”) may approve a relevant Master Trust or a group personal pension scheme in respect of the asset allocation requirement only if the Authority determines that at least the prescribed percentage (by value) of the assets held in main default funds of the scheme are qualifying assets.

(2) Regulations under subsection (1) may prescribe a percentage by reference to—

(a) all of the assets of the scheme that are held in main default funds, or

(b) a prescribed description of the assets of the scheme that are so held.

(3) In this section “ qualifying asset ” means an asset of a prescribed description that is held in a main default fund of a relevant Master Trust or group personal pension scheme.

(4) A description of asset may be prescribed under subsection (3) only if it represents a direct or indirect holding in any of the following asset classes—

(a) private equity;

(b) venture capital;

(c) private credit;

(d) interests in land;

(e) infrastructure;

(f) unlisted equity securities not falling within paragraphs (a) to (e) .

In this subsection “ unlisted equity securities ” means equity securities not listed on a recognised stock exchange within the meaning of the Income Tax Acts (see section 1005 of the Income Tax Act 2007) (including equity securities admitted to trading that are not listed on such an exchange).

(5) Regulations under subsection (3) must secure that a description of asset is prescribed under that subsection in respect of each asset class mentioned in subsection (4) (a) to (f) .

(6) A description prescribed under subsection (4) may for example relate to—

(a) whether an asset is located in the United Kingdom or elsewhere;

(b) the presence or absence of other prescribed factors linking an asset to economic activity in the United Kingdom.

(7) Regulations under this section may not have the effect of requiring, as a condition of a scheme's approval under subsection (1)—

(a) more than 10% (by value) of all of the assets of the scheme that are held in main default funds to be qualifying assets, or

(b) more than 5% (by value) of all of the assets so held to be of a UK-specific description.

(8) In subsection (7) (b) “ UK-specific description ” means a description framed by reference to whether an asset is located in the United Kingdom or meets any other condition linked to economic activity in the United Kingdom.

(9) For the purposes of this section assets of a relevant Master Trust or group personal pension scheme are held in “main default funds” if—

(a) the jobholders by or in respect of whom contributions have been made to the scheme have not (or predominantly have not) expressed a choice as to where the contributions are allocated, and

(b) the arrangements under which the assets are held meet any other conditions that may be prescribed.

(10) Regulations may make provision—

(a) about how the meeting of the asset allocation requirement is to be evidenced;

(b) requiring the trustees or managers of relevant Master Trusts or the providers of group personal pension schemes to have regard to any guidance issued by the Secretary of State about the effect of any regulations under this section.

(11) Regulations may make provision—

(a) as to a time limit within which the Authority must decide an application for approval;

(b) as to procedures in connection with approvals or where an approval has been given;

(c) about the period for which an approval has effect;

(d) about the withdrawal of an approval, including conditions for and procedures in connection with withdrawals;

(e) about the provision to the Authority of information required for the purposes of deciding applications (including any additional information the Authority may require in a particular case);

(f) requiring the Authority to report to the Secretary of State any information the Secretary of State may require relating to the allocation of assets by relevant Master Trusts or group personal pension schemes;

(g) for the Authority’s decision on the application to be referred to the Upper Tribunal;

(h) for the Authority to maintain and publish—

(i) a list of relevant Master Trusts that are approved under this section, and

(ii) a list of group personal pension schemes that are approved under this section,

(or a single list of the pension schemes mentioned in sub-paragraphs (i) and (ii)).

(12) Regulations under subsection (11) (d) may in particular make provision—

(a) about steps, including communications with a relevant Master Trust or group personal pension scheme, that the Authority must take before deciding to withdraw an approval;

(b) setting a minimum period that must elapse between notification that approval is to be withdrawn and the withdrawal of the approval;

(c) where the Authority has given notice to the trustees or managers of a relevant Master Trust or the provider of a group personal pension that its approval is likely to be withdrawn and any other prescribed conditions are met, requiring the trustees or managers or provider to—

(i) act in relation to the scheme as if its approval has been withdrawn, and

(ii) take steps for ensuring that persons (such as employers) who may be affected in the event of the scheme losing that approval are promptly informed if such a loss should occur;

(d) permitting the Authority to impose, on a person who fails to comply with a requirement under paragraph (c) , a penalty determined in accordance with the regulations that does not exceed £100,000.

(13) Before making regulations under subsection (1) the Secretary of State must prepare and publish a report setting out—

(a) a joint assessment by the Financial Conduct Authority and the Pensions Regulator of the extent to which there is evidence of competitive conditions restricting relevant Master Trusts and group personal pension schemes from investing in qualifying assets, including in circumstances where such investments may be in the best interests of members of such schemes;

(b) the Secretary of State’s assessment of the extent to which relevant Master Trusts and group personal pension schemes have made progress towards achieving—

(i) 10% (by value) of scheme assets held in main default funds to be qualifying assets, and

(ii) 5% (by value) of scheme assets so held to be of a UK-specific description (within the meaning of subsection (7) (b) );

(c) the Secretary of State’s assessment of any barriers to relevant Master Trusts or group personal pension schemes investing in qualifying assets, including in particular where such assets are located in the United Kingdom;

(d) the steps taken by the Secretary of State or the Authority to address any such barriers;

(e) how the financial interests of members of relevant Master Trusts and group personal pension schemes are or would be affected by the proposed regulations;

(f) what effects the proposed measures could be expected to have on economic growth in the United Kingdom;

(g) any other matters the Secretary of State considers appropriate.

(14) The power to make regulations under subsection (1) may only be exercised once.

(15) Before making regulations under subsection (1) , the Secretary of State must have regard to the joint assessment of the Financial Conduct Authority and the Pensions Regulator mentioned in subsection (13) (a) .

(16) Before making regulations under this section, the Secretary of State must consult the Treasury.

(17) The Secretary of State must consult such persons as the Secretary of State considers appropriate before publishing a report under subsection (13) .

(18) The Secretary of State may not make regulations under subsection (1) before 1 January 2028.

(19) Provision under this section overrides any provision of the trust deed or rules of the scheme in question, so far as they are in conflict (and for that purpose, a provision of the trust deed or rules of the scheme is “in conflict” with provision under this section so far as the former does not allow for the assets of the scheme to be managed in such a way as to meet the conditions for approval under this section).

Information

(28D)

(1) Regulations may make provision about information that the trustees or managers of a relevant Master Trust or the provider of a group personal pension scheme must give to the Regulatory Authority about the allocation of assets of the relevant Master Trust or group personal pension scheme.

(2) The regulations may make provision about—

(a) the types of information that must be given;

(b) when it must be given;

(c) the form and manner in which it must be given.

Transition pathway relief

(28E)

(1) The Regulatory Authority (“ the Authority ”) may approve a relevant Master Trust as qualifying for transition pathway relief if the Authority determines that—

(a) the condition in subsection (2) is met, and

(b) any other prescribed conditions are met.

(2) The condition mentioned in subsection (1) (a) is that the Authority determines that the relevant Master Trust—

(a) would qualify for approval under section 28A (MSDA approval: relevant Master Trusts) if the amount specified in section 28A (3) were £10 billion, and

(b) has a credible plan in place for meeting the scale requirement within the meaning of section 28A (2) .

(3) The Authority may approve a group personal pension scheme as qualifying for transition pathway relief if the Authority determines that—

(a) the condition in subsection (4) is met, and

(b) any other prescribed conditions are met.

(4) The condition mentioned in subsection (3) (a) is that the Authority determines that the group personal pension scheme—

(a) would qualify for approval under section 28B (MSDA approval: group personal pension schemes) if the amount specified in section 28B (3) were £10 billion, and

(b) has a credible plan in place for meeting the scale requirement within the meaning of section 28B (2) .

(5) Regulations may require trustees or managers of schemes that are authorised under this section to take prescribed steps, for example—

(a) to produce plans for increasing the scale of their schemes’ holdings or to take other actions that may facilitate progress towards approval under section 28A or 28B , or

(b) in connection with governance and investment capability.

(6) Regulations must make provision about the criteria for making any determinations under subsection (1) or (3) .

(7) Regulations may make provision of a kind mentioned in section 28A (10) or (11) ; and for this purpose a reference in those provisions—

(a) to an approval under section 28A is to be read as a reference to an approval under this section;

(b) to a relevant Master Trust is to be read as a reference to a relevant Master Trust or a group personal pension scheme;

(c) to the trustees or managers of a relevant Master Trust is to be read as a reference to the trustees or managers of a relevant Master Trust or the provider of a group personal pension scheme.

(8) Before making regulations under this section the Secretary of State must consult such persons as the Secretary of State considers appropriate.

(9) In this section “ relevant Master Trust ” has the same meaning as in section 20.

New entrant pathway relief

(28F)

(1) A relevant Master Trust or group personal pension scheme qualifies for new entrant pathway relief for the purposes of Condition 1 (e) of section 20(1A) or section 26 (7C) (c) if the relevant Master Trust or group personal pension scheme is approved by the Regulatory Authority (“ the Authority ”) under this section.

(2) The Authority may approve a relevant Master Trust or a group personal pension scheme under this section only if the Authority determines that—

(a) the scheme in question does not yet have any members,

(b) the scheme in question has strong potential to grow so as to meet the scale requirement under section 28A or 28B ,

(c) the scheme in question has an innovative product design, and

(d) any other prescribed conditions are met.

(3) Regulations may make provision of a kind mentioned in section 28A (10) or (11) ; and for this purpose a reference in those provisions—

(a) to an approval under section 28A is to be read as a reference to an approval under this section;

(b) to a relevant Master Trust is to be read as a reference to a relevant Master Trust or a group personal pension scheme;

(c) to the trustees or managers of a relevant Master Trust is to be read as a reference to the trustees or managers of a relevant Master Trust or the provider of a group personal pension scheme.

(4) Regulations may make provision about the meaning of “strong potential to grow” and “ innovative product design ” (including how it can be demonstrated that a scheme has strong potential to grow or an innovative product design).

(5) Before making regulations under this section the Secretary of State must consult such persons as the Secretary of State considers appropriate.

Suspension of asset allocation requirement: savers’ interest test

(28G)

(1) Regulations must make provision for authorising the Regulatory Authority (“ the Authority ”), on an application by a relevant Master Trust or group personal pension scheme, to determine that the scheme in question is to be treated, for a period specified by the Authority, as if that scheme were exempted from the requirement for approval under section 28C .

(2) The Secretary of State must make regulations under subsection (1) so that they have effect whenever regulations under section 28C(1) or (2) have effect.

(3) Regulations under subsection (1) —

(a) may make provision about the form and content of an application, including about the evidence to be provided as part of an application;

(b) must make provision requiring an application to include a statement—

(i) that the applicant concludes that meeting the asset allocation requirement is likely not to be in the best interests of members of the scheme, and

(ii) setting out the basis on which the applicant reached the conclusion;

(c) must make provision requiring the Authority to determine that the applicant is to be treated as mentioned in subsection (1) in cases where—

(i) the application complies with the requirements of regulations made under subsection (1) , and

(ii) the Authority is of the view that it is reasonable for the applicant to have reached the conclusion that meeting the asset allocation requirement is likely not to be in the best interests of members of the scheme;

(d) may make provision about the basis on which the Authority may or must form such a view, including about the evidence which the Authority may or must take into account;

(e) may make provision as to the process for making a determination, including as to—

(i) the level of detail of enquiry required in different cases;

(ii) a time limit within which the Authority must decide an application;

(iii) procedures in connection with applications;

(f) must require the Authority to provide reasons for any determination not to approve an application;

(g) must provide for the Authority’s determination on an application to be referred to the Upper Tribunal.

Risk notices

(28H)

(1) The Regulatory Authority (“ the Authority ”) may give a risk notice to the trustees or managers of a relevant Master Trust if the Authority considers that—

(a) there is an issue of concern in relation to the relevant Master Trust, and

(b) the relevant Master Trust will, or is likely to, cease to meet the conditions for approval under section 28A or 28C if the issue is not resolved.

(2) A “risk notice” is a notice that requires the trustees or managers of a relevant Master Trust to submit to the Authority a plan (a “resolution plan”) setting out proposals for resolving the issue of concern.

(3) A risk notice must—

(a) identify the issue of concern;

(b) specify the date by which the resolution plan is to be submitted.

(4) If the Authority is not satisfied that the proposals in a resolution plan are likely to be adequate to resolve the issue of concern, the Authority may give a further notice to the trustees or managers requiring them to submit a revised plan by a date specified in the notice.

(5) The trustees or managers must implement the proposals in a resolution plan if the Authority—

(a) is satisfied that the proposals are likely to be adequate to resolve the issue of concern, and

(b) notifies the trustees or managers accordingly.

(6) The Authority may direct the trustees or managers to comply with the requirement imposed by subsection (5) .

(7) Where the trustees or managers are required by subsection (5) to implement the proposals in a resolution plan, they must—

(a) submit to the Authority, before the end of a period specified in regulations, a report setting out what progress they are making in implementing the proposals (a “progress report”);

(b) submit further progress reports to the Authority at intervals specified by the Authority.

(8) Resolution plans and progress reports must be provided in the manner and form specified by the Authority.

(9) A reference to a resolution plan in subsections (4) to (8) includes a reference to a resolution plan as revised under subsection (4) .

(10) Regulations may—

(a) specify information that a risk notice must contain;

(b) provide that the date referred to in subsection (3) (b) or (4) must fall before the end of a period specified in the regulations.

(11) Section 10 of the Pensions Act 1995 (civil penalties) applies to a trustee or manager of a relevant Master Trust who fails to comply with—

(a) a notice under subsection (1) or (4) ,

(b) a direction under subsection (6) , or

(c) a requirement imposed by subsection (7) .

Penalties

(28I)

(1) Regulations may make provision about the imposition by the Regulatory Authority of a penalty on the trustees or managers of a relevant Master Trust or the provider of a group personal pension scheme where the scheme—

(a) fails to meet the condition in section 20 (1A) by virtue of not being approved under section 28A or 28C , and

(b) accepts contributions from an employer in relation to a jobholder on the basis that it is an automatic enrolment scheme in relation to that jobholder.

(2) Regulations may make provision about the imposition by the Regulatory Authority of a penalty on the provider of a group personal pension scheme where the scheme—

(a) fails to meet the condition in section 26 (7A) or (7B) , and

(b) accepts contributions from an employer in relation to a jobholder on the basis that it is an automatic enrolment scheme in relation to that jobholder.

(3) The regulations must provide—

(a) that a penalty must not exceed £100,000 in relation to each employer from which contributions are accepted as mentioned in subsection (1) (b) or (2) (b) , and

(b) that there is a right of appeal against the imposition of the penalty.

Enforcement by the Financial Conduct Authority

(28J)

(1) The Treasury may make regulations to enable the Financial Conduct Authority to take action (in addition to any action it may otherwise take under the Financial Services and Markets Act 2000) for monitoring and enforcing compliance of any FCA-regulated person with any provision of or under this Chapter.

(2) The regulations may apply, or make provision corresponding to—

(a) provision made by or under this Part in relation to the Regulatory Authority, or

(b) any provision of the Financial Services and Markets Act 2000,

with or without modification.

(3) In this section, “ FCA-regulated person ” means an authorised person (within the meaning of the Financial Services and Markets Act 2000).

Report about effects of pension scheme consolidation

(28K)

(1) The Secretary of State must prepare and publish a report about the effects of consolidation on innovation in the design and operation of relevant Master Trusts and group personal pension schemes.

(2) The report may in particular include information about—

(a) the extent to which consolidated schemes adopt or maintain innovative product designs of constituent schemes;

(b) barriers to consolidated schemes adopting or maintaining such innovative product designs.

(3) The Pensions Regulator and the FCA must provide such information and assistance as the Secretary of State may require for the purposes of the report.

(4) The report under this section must be published before the end of the period of 12 months beginning with the day on which this section comes into force.

(5) In this section “ consolidation ” means the consolidation of a relevant Master Trust or group personal pension scheme with one or more other schemes.

Regulations about quality requirements

(28L) In making regulations under section 20 (1A) or (1C) , 26 (7A) , 28A , 28B , 28E or 28F , the Secretary of State must have regard to the importance of—

(a) innovation in the design and operation of relevant Master Trusts and group personal pension schemes;

(b) competition among relevant Master Trusts and group personal pension schemes;

(c) improving outcomes for members of relevant Master Trusts and group personal pension schemes;

(d) relevant Master Trusts and group personal pension schemes achieving an appropriate scale;

(e) relevant Master Trusts and group personal pension schemes having effective governance.

(13) Before section 31 insert—

Review of exercise of powers under section 28C

(30A)

(1) The Secretary of State must—

(a) review the effects of any regulations under section 28C (approvals in respect of asset allocation), and

(b) prepare, publish and lay before Parliament, a report of the review.

(2) A review under subsection (1) must be conducted before the end of the period of 5 years beginning with the day on which the regulations in question come into force.

(3) In carrying out the review the Secretary of State must take the following into account—

(a) whether and how the financial interests of members of Master Trust schemes and savers in group personal pension schemes have been affected by the regulations;

(b) the effects (if any) of the measures on economic growth in the United Kingdom;

(c) any other matters the Secretary of State considers appropriate.

(14) In section 99 (interpretation of Part)—

(a) the existing words become subsection (1);

(b) in that subsection, at the appropriate places insert—

““ group personal pension scheme ” means a personal pension scheme which is available, or intended to be available, to employees of the same employer or of employers within a group, but does not include—

a stakeholder pension scheme (as defined in section 1 of the Welfare Reform and Pensions Act 1999), or

any pension scheme that requires all its members to make a choice as to how their contributions are invested;”;

““ Regulatory Authority ” has the meaning given by regulations under subsection (2);”;

““ relevant Master Trust ” has the meaning given by section 20(4);”;

(c) after that subsection insert—

(2) The Secretary of State may by regulations define “ Regulatory Authority ” for the purposes of this Part.

(15) In section 143 (orders and regulations) in subsection (5)(a)—

(a) after “17(1)(c),” insert “20, 26 (7A) , (7B) , (7C) or (7E) ,” ;

(b) after “28,” insert “ 28A , 28B , 28C (other than subsection (11) (f) ), 28E , 28F , 28G , 28I , 28J ,” .

(16) The following provisions of the Pensions Act 2008 (which relate to transition pathway relief) are repealed at the end of the period of 5 years beginning with the day on which the provisions mentioned in paragraphs (a) and (b) come into force—

(a) paragraph (d) of Condition 1 in section 20 (1A) ;

(b) section 26 (7C) (b) ;

(c) section 28E ;

(d) the word “ 28E ” in section 143(5)(a).

(17) The following provisions are repealed at the end of 2035—

(a) in section 204A of the Financial Services and Markets Act 2000 (meaning of “ relevant requirement ” and “ appropriate regulator ”)—

(i) in subsection (2)(aza), the words “or the asset allocation requirement in section 28C ”;

(ii) in subsection (6)(aza), the words “or the asset allocation requirement in section 28C ”;

(b) in section 90(6) (da) of the Pensions Act 2004, the words “and the asset allocation requirement”;

(c) the relevant asset allocation provisions of the Pensions Act 2008 .

(18) For the purposes of subsection (17) , the “relevant asset allocation provisions” of the Pensions Act 2008 are the following—

(a) in section 20 (1A) (asset allocation requirement: Master Trusts)—

(i) in the opening words, the words “and Condition 2”;

(ii) Condition 2;

(b) in section 20 (1B) (exemptions), the words “or 2 (b) ”;

(c) in section 20 (1C) (protected period)—

(i) in paragraph (a) , the words “or Condition 2”;

(ii) in paragraph (c) , the words “or the conditions for approval under section 28C ”;

(d) in section 26 (quality requirement: UK personal pension schemes)—

(i) subsection (7B) ;

(ii) in subsection (7D) , the words “or (7B) ”;

(iii) in subsection (7E) (a) , the words “or sixth”;

(iv) in subsection (7E) (c) , the words “or the conditions for approval under section 28C ”;

(e) in section 28 (certification that quality requirement or alternative requirement is satisfied)—

(i) in subsection (4)(a), the words “or 2”;

(ii) in subsection (4)(b), the words “and sixth”;

(iii) in subsection (4)(c), the words “or 2”;

(f) section 28C (approvals in respect of asset allocation);

(g) section 28G (suspension of asset allocation requirement: savers’ interest test);

(h) in section 28H (risk notices), in subsection (1)(b), the words “or 28C ”;

(i) in section 28I (penalties)—

(i) in subsection (1) (a) , the words “or 28C ”;

(ii) in subsection (2) (a) , the words “or (7B) ”;

(j) section 30A (review of exercise of powers under section 28C );

(k) in section 143(5)(a) (orders and regulations)—

(i) the word “ (7B) ”;

(ii) the words “ 28C (other than subsection (11) (f) )”;

(iii) the word “ 28G ”.

(19) In consequence of the repeals under subsection (17) , at the end of 2035—

(a) in section 73(2) (dza) of the Pensions Act 2004 (inspection of premises), for “ 28G of the Pensions Act 2008 (scale and asset allocation)” substitute “ 28F of the Pensions Act 2008 (scale)” ;

(b) in section 28(4)(b) of the Pensions Act 2008 (certification that quality requirement or alternative requirement is satisfied), for “conditions” substitute “condition” .

(20) The Secretary of State may by regulations make transitional or saving provision in connection with any repeal or amendment under subsection (17) or (19) .

(21) If this section is repealed under section 133 (6) (repeal where asset allocation requirement uncommenced) in respect of the insertion of the provisions mentioned in that subsection, the Secretary of State may by regulations amend this section, section 41 or the Schedule in consequence of that repeal.

(22) Regulations under subsection (20) or (21) are subject to the negative procedure.

Section 41 Amendments related to section 40

(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) In section 1A (the Financial Conduct Authority), in subsection (6), after paragraph (a) insert—

(aa) the Pensions Act 2008,

(3) Section 204A (meaning of “ relevant requirement ” and “ appropriate regulator ”) is amended as follows.

(4) In subsection (2), after paragraph (aa) insert—

(aza) by or under Part 1 of the Pensions Act 2008 in relation to the scale requirement in section 28B or the asset allocation requirement in section 28C ,

(5) In subsection (6), after paragraph (a) insert—

(aza) by or under Part 1 of the Pensions Act 2008 in relation to the scale requirement in section 28B or the asset allocation requirement in section 28C ,

(6) Part 1 (Master Trusts) of the Pension Schemes Act 2017 is amended as follows.

(7) In section 5 (decision on application), in subsection (3)—

(a) omit the “and” before paragraph (e);

(b) after paragraph (e) insert—

(f) that it has sufficient investment capability (see section 12A), and

(g) (in the case of an applicant that has its main administration in the United Kingdom) that the scheme meets Condition 1 of section 20(1A) (scale requirement) of the Pensions Act 2008.

(8) After section 12 insert—

Investment capability

(12A)

(1) This section applies for the purposes of enabling the Pensions Regulator to decide whether it is satisfied that a Master Trust scheme (that has its main administration in the United Kingdom) has sufficient investment capability (see section 5(3)(f)).

(2) In order to be satisfied that the Master Trust scheme has sufficient investment capability the Pensions Regulator must be satisfied—

(a) that appropriate systems are in place for managing the investment strategy and monitoring outcomes,

(b) that the scheme has appropriate systems for delivering effective governance, and

(c) that there are appropriate strategies for recruiting and retaining expert staff.

(3) In deciding whether it is satisfied about the matters mentioned in subsection (1) , the Pensions Regulator must take account of any factors specified in subsection (2) .

(4) The Secretary of State may by regulations—

(a) make provision about the meaning of terms used in subsection (2) ;

(b) specify further factors that the Pensions Regulator must take into account in deciding whether it is satisfied about the matters mentioned in subsection (1) .

(5) The first regulations that are made under this section are subject to affirmative resolution procedure.

(6) Any other regulations under this section are subject to negative resolution procedure.

Scale requirement

(12B)

(1) The Secretary of State may by regulations make provision about how the Pensions Regulator is to decide whether it is satisfied that a Master Trust scheme that has its main administration in the United Kingdom meets Condition 1 in section 20 (1A) (scale requirement) of the Pensions Act 2008.

(2) The regulations may, among other things, specify matters which the Pensions Regulator must take into account in making its assessment.

(3) The first regulations under this section are subject to affirmative resolution procedure.

(4) Any subsequent regulations under this section are subject to negative resolution procedure.

Section 42 Regulations restricting creation of new non-scale default arrangements

(1) The appropriate authority may make regulations for the purpose of restricting the ability of the provider of a pension scheme to begin operating a non-scale default arrangement.

(2) The regulations may, in particular, make provision—

(a) prohibiting the provider of a pension scheme from beginning to operate a non-scale default arrangement unless the arrangement is approved by the appropriate regulator;

(b) about the criteria which the appropriate regulator must apply in deciding whether to approve a non-scale default arrangement;

(c) about the conditions which the appropriate regulator may or must attach to approval;

(d) about the ongoing requirements to which the provider of a pension scheme is to be subject in relation to a non-scale default arrangement approved under the regulations;

(e) where assets of a pension scheme are held subject to a non-scale default arrangement that is being operated in breach of the regulations, requiring the provider of the pension scheme in question to ensure that the assets are held subject to a different arrangement of a description specified in the regulations;

(f) conferring functions on the appropriate regulator, including functions involving the exercise of a discretion;

(g) for ensuring compliance with the regulations, including provision for the imposition of civil penalties not exceeding £100,000;

(h) for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of anything done under the regulations.

(3) Regulations under this section are subject to the affirmative procedure.

Section 43 Review in relation to non-scale default arrangements

(1) The Secretary of State and the Treasury (“the reviewers”), acting jointly, must carry out a review of the non-scale default arrangements operated by providers of pension schemes.

(2) The review must consider the following (as well as any other matters that the reviewers consider relevant)—

(a) the number of non-scale default arrangements being operated by providers;

(b) the extent to which non-scale default arrangements operated by providers have been consolidated, or are likely to be consolidated, into approved main scale default arrangements;

(c) where non-scale default arrangements have not been so consolidated, the reasons why;

(d) the circumstances in which it may be appropriate for non-scale default arrangements not to be so consolidated.

(3) The reviewers must publish a report on the review as soon as reasonably practicable after the review is completed.

(4) The Pensions Regulator and the FCA must provide such information and assistance as the reviewers may require for the purposes of the review.

(5) Neither section 348 of the Financial Services and Markets Act 2000 nor section 82 of the Pensions Act 2004 prohibits the disclosure by the reviewers, the Pensions Regulator or the FCA of any information where the disclosure is made for the purpose of enabling or facilitating any person’s compliance with this section.

Section 44 Regulations about consolidation of non-scale default arrangements

(1) The appropriate authority may make regulations about the consolidation of non-scale default arrangements into approved main scale default arrangements.

(2) The regulations may, in particular, make provision—

(a) requiring the provider of a pension scheme, subject to any exemptions specified in the regulations, to consolidate a non-scale default arrangement operated by it into an approved main scale default arrangement operated by it;

(b) requiring the provider of a pension scheme to prepare, and provide the appropriate regulator with, an action plan about how and when a non-scale default arrangement operated by it is to be so consolidated;

(c) conferring functions on the appropriate regulator, including functions involving the exercise of a discretion;

(d) for ensuring compliance with the regulations, including provision for the imposition of civil penalties not exceeding £100,000;

(e) for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of a decision made under the regulations.

(3) Regulations under this section—

(a) may not be made until the review under section 43 has been completed and the report on it published, and

(b) must take account of the review’s conclusions.

(4) Regulations under this section are subject to the affirmative procedure.

Section 45 Regulations about default arrangements

In making regulations under section 42 or 44 , the appropriate authority must have regard to the importance of—

(a) innovation in the design and operation of pension schemes;

(b) competition among providers of pension schemes;

(c) improving outcomes for members of pension schemes;

(d) pension schemes having effective governance.

Section 46 Amendments of the Financial Services and Markets Act 2000

(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) In section 1A (the Financial Conduct Authority), in subsection (6), before paragraph (ca) insert—

(cze) Chapter 4 of Part 2 of the Pension Schemes Act 2026 (default arrangements);

(3) In section 204A (meaning of “ relevant requirement ” and “ appropriate regulator ”)—

(a) in subsection (2), before paragraph (b) insert—

(ad) by or under Chapter 4 of Part 2 of the Pension Schemes Act 2026 (default arrangements),

(b) in subsection (6), before paragraph (b) insert—

(ad) by or under Chapter 4 of Part 2 of the Pension Schemes Act 2026 (default arrangements);

Section 47 Crown application

(1) This Chapter applies to a pension scheme managed by or on behalf of the Crown as it applies to other pension schemes.

(2) Accordingly, references in this Chapter to a person in their capacity as a trustee or manager of a pension scheme include the Crown, or a person acting on behalf of the Crown, in that capacity.

(3) This Chapter applies to persons employed by or under the Crown as it applies to persons employed by a private person.

Section 48 Interpretation of Chapter

(1) In this Chapter—

“ the appropriate authority ”, in relation to the making of regulations, means—

where the only pension schemes to which the regulations apply are FCA-regulated pension schemes, the Treasury;

where the only pension schemes to which the regulations apply are not FCA-regulated pension schemes, the Secretary of State;

in any other case, the Treasury and the Secretary of State acting jointly;

“ the appropriate regulator ”, in relation to a pension scheme, means—

in relation to an FCA-regulated pension scheme, the FCA;

in relation to any other pension scheme, the Pensions Regulator;

“ approved main scale default arrangement ”, in relation to a pension scheme, means a main scale default arrangement in respect of which the pension scheme is approved under section 28A or 28B of the Pensions Act 2008;

“ consolidating ” a non-scale default arrangement into an approved main scale default arrangement means ensuring that any assets held subject to the non-scale default arrangement are instead held subject to the approved main scale default arrangement;

“ the FCA ” means the Financial Conduct Authority;

“ FCA-regulated ”, in relation to a pension scheme, has the meaning given in subsection (2) ;

“ main scale default arrangement ”, in relation to a pension scheme, has the same meaning as in section 28A and 28B of the Pensions Act 2008;

“ money purchase benefits ” has the same meaning as in the Pension Schemes Act 1993 (see section 181 of that Act);

“ non-scale default arrangement ”, in relation to a pension scheme, means an arrangement—

which is not an approved main scale default arrangement, and

subject to which assets of the scheme must under the rules of the scheme be held, or may under those rules be held, if the member of the scheme to whom the assets relate does not make a choice as to the arrangement subject to which the assets are to be held;

“ operate ”, in relation to a default arrangement, has the meaning given in subsection (3) ;

“ pension scheme ” has the meaning given by section 1(5) of the Pension Schemes Act 1993;

“ the provider ” of a pension scheme means—

in relation to an FCA-regulated pension scheme, the person mentioned in subsection (2) (b) ;

in any other case, the trustees or managers;

“ the trustees or managers ”, in relation to a pension scheme, means—

in the case of a scheme established under a trust, the trustees of the scheme, and

in any other case, the persons responsible for the management of the scheme.

(2) A pension scheme is “FCA-regulated” if the operation of the scheme—

(a) is carried on in such a way as to be a regulated activity for the purposes of the Financial Services and Markets Act 2000, and

(b) is carried on in the United Kingdom by a person who is in relation to that activity an authorised person under section 19 of that Act.

(3) The provider of a pension scheme “operates” a non-scale default arrangement or main scale default arrangement if any assets held for the purposes of the scheme are held subject to the non-scale default arrangement or main scale default arrangement.

Section 49 FCA-regulated pension schemes: contractual override

(1) The Financial Services and Markets Act 2000 is amended as follows.

(2) After Part 7 insert—

Unilateral changes to pension schemes

Pension schemes to which this Part applies

(117A)

(1) This Part applies to a pension scheme—

(a) that is FCA-regulated, and

(b) in relation to which any of the following conditions is met.

(2) The conditions are—

(a) that the scheme is an auto-enrolment scheme;

(b) that the scheme is a workplace personal pension scheme that is not an auto-enrolment scheme;

(c) that the scheme is a pension scheme of a prescribed description.

(3) For the purposes of subsection (2) (a) and (b) a pension scheme is an “auto-enrolment scheme” if any individual is or at any time was an active member of the scheme in consequence of arrangements under section 3 (2) , 5 (2) or 7 (3) of the Pensions Act 2008 or section 3(2), 5(2) or 7(3) of the Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13 (N.I.)) (arrangements for jobholder to become active member of automatic enrolment scheme).

(4) In subsection (3) “ active member ” means an active member within the meaning of Part 1 of the Pensions Act 2008 (see section 99 of that Act) or Part 1 of the Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13 (N.I.)) (see section 78 of that Act).

(5) For the purposes of subsection (2) (b) a pension scheme is a “workplace personal pension scheme” if—

(a) the scheme is a personal pension scheme,

(b) direct payment arrangements exist, or have at any time existed, in relation to the scheme, and

(c) contributions have been paid under the arrangements in respect of, or on behalf of, two or more employees.

(6) In subsection (5) “ direct payment arrangements ” means direct payment arrangements within the meaning of section 111A of the Pension Schemes Act 1993 or section 107A of the Pension Schemes (Northern Ireland) Act 1993.

Unilateral changes

(117B)

(1) The provider of a pension scheme to which this Part applies may—

(a) amend the terms of the scheme as regards a description of pension pot held by the scheme,

(b) change the investments comprised in a description of pension pot held by the scheme,

(c) transfer a description of pension pot held by the scheme to a different pension scheme operated by the same provider, or

(d) transfer a description of pension pot held by the scheme to a pension scheme operated by a different provider.

(2) A change or transfer within subsection (1) (b) to (d) may be effected notwithstanding that it breaches a term of the pension scheme (such as a requirement for consent); and any such breach is to be disregarded for all purposes.

(3) Subsection (1) is subject to—

(a) subsection (5) , sections 117D to 117F and any regulations under section 117H (1) (c) , and

(b) any other provision of legislation (including any rule) which restricts or otherwise affects the provider’s power to do anything within subsection (1) .

(4) In subsection (1) (c) and (d) , a reference to a pension scheme to which a description of pension pot may be transferred includes a pension scheme to which this Part does not apply.

(5) A transfer to a pension scheme operated by a different provider may not be effected under subsection (1) (d) without the consent of that provider.

(6) A reference in this Part to the terms of a pension scheme is to the terms of any instrument or agreement—

(a) in which the scheme is comprised, or

(b) to which the provider of the scheme and any member are parties in connection with the scheme.

(7) In this Part, “ unilateral change ” means an amendment, change or transfer within any of paragraphs (a) to (d) of subsection (1) .

Effect of transfer of pension pot on membership of scheme etc

(117C)

(1) This section applies where a pension pot is transferred under section 117B (1) (c) or (d) to a different pension scheme (“ the receiving scheme ”).

(2) The individual—

(a) becomes a member of the receiving scheme in relation to the pot, and

(b) in a case in which there is more than one arrangement under the receiving scheme, becomes, in relation to the pot, a member of the arrangement specified in the unilateral change notice under section 117F (3) (b) ,

and acquires the rights, and becomes subject to the obligations, of membership.

(3) Where being a member of the receiving scheme in relation to the pot, or of the arrangement under the receiving scheme under which the pot is to be held, entails being a party to a contract with the provider of the receiving scheme, a contract is treated as entered into between the individual and the provider—

(a) at the time at which the pension pot is transferred to the receiving scheme, and

(b) on the terms communicated to the individual in the unilateral change notice under section 117F (3) (c) .

Best interests test

(117D)

(1) The provider of a pension scheme to which this Part applies may effect a unilateral change under section 117B (1) only if—

(a) the provider concludes, before doing so, that the best interests test is met in relation to the unilateral change, and

(b) it is reasonable for the provider to have reached that conclusion at that time.

(2) “ The best interests test ”, in relation to a unilateral change, is that it is reasonably likely that effecting it will achieve—

(a) a better outcome for the directly affected members of the scheme (taken as a whole), and

(b) no worse an outcome for the other members of the scheme (taken as a whole),

than the relevant alternative action or, where there is more than one alternative action, each of them.

(3) For the purposes of this Part, the members of a pension scheme who are “directly affected” by a unilateral change are the members for whom the scheme holds pension pots of the description in question.

(4) The following are “ relevant alternative actions ” for the purposes of subsection (2) in relation to a unilateral change—

(a) not effecting the unilateral change, and

(b) where the unilateral change is an internal change, each other internal change that could be made in accordance with this Part in relation to pension pots of the description in question.

(5) In subsection (4) “ internal change ” means a unilateral change that results in a description of pension pot held by the scheme being held—

(a) subject to a different arrangement under the same scheme, or

(b) subject to a particular arrangement under a different pension scheme operated by the same provider (including where there is only one arrangement under that scheme).

(6) The FCA must make general rules specifying considerations or information that must be taken into account in determining whether the best interests test is met.

Certification by independent person

(117E)

(1) The provider of a pension scheme to which this Part applies may effect a unilateral change under section 117B (1) only if, before effecting it—

(a) the provider has appointed a person to review the proposed unilateral change, and

(b) the person appointed has given the provider a certificate under this section in relation to the proposed unilateral change.

(2) The person appointed must—

(a) be independent of the provider, and

(b) have such expertise as is specified in general rules made by the FCA.

(3) The certificate must certify that, in the opinion of the independent person—

(a) the pension scheme is a pension scheme to which this Part applies,

(b) the proposed unilateral change is within section 117B (1) (a) to (d) ,

(c) section 117B (1) is not disapplied in relation to the proposed unilateral change by regulations under section 117H (1) (a) ,

(d) any conditions prescribed under section 117H (1) (c) are met,

(e) the best interests test is met in relation to the proposed unilateral change, and

(f) the provider has complied with such other requirements as may be specified in general rules made by the FCA.

(4) The FCA must make general rules about appointments and certification under this section, including provision—

(a) for determining for the purposes of this section whether a person is independent of the provider of a pension scheme;

(b) specifying terms on which an appointment under this section must be made;

(c) about the form of a certificate and when it must be given.

(5) In this Part “ the independent person ”, in relation to a proposed unilateral change, means the person appointed under subsection (1) (a) to review it.

Unilateral change notice

(117F)

(1) The provider of a pension scheme to which this Part applies may effect a unilateral change under section 117B (1) only after—

(a) the provider has sent a unilateral change notice to each of the required recipients, and

(b) the required notice period has expired.

(2) “ A unilateral change notice ” means a notice that includes such information relating to the unilateral change as is specified in general rules made by the FCA.

(3) General rules made pursuant to subsection (2) must, in the case of a unilateral change under section 117B (1) (c) or (d) , require the unilateral change notice to—

(a) specify the pension scheme (“ the receiving scheme ”) to which it is proposed the pensions pots in question are to be transferred,

(b) specify, in a case in which there is more than one arrangement under the receiving scheme, the arrangement subject to which it is proposed the pots be held after the transfer, and

(c) where membership of the receiving scheme, or of an arrangement specified under paragraph (b), entails being a party to a contract with the provider of the receiving scheme, set out, or otherwise communicate, the terms of such a contract.

(4) “ The required recipients ” means—

(a) the members of the scheme directly affected by the change, and

(b) such other persons as may be specified in general rules made by the FCA.

(5) A unilateral change notice must be in such form, and be sent by such means, as is specified in general rules made by the FCA.

(6) In subsection (1) “ the required notice period ” means such period as is specified in general rules made by the FCA.

Further duties to make FCA general rules

(117G)

(1) The FCA must make general rules—

(a) about the fees that may or may not be charged by the provider of a pension scheme in relation to unilateral changes effected under section 117B (1) ;

(b) imposing requirements on the provider of a pension scheme who proposes to effect, or effects, a unilateral change under section 117B (1) to provide information to the independent person;

(c) imposing requirements on the provider of a pension scheme who proposes to effect, or effects, a unilateral change under section 117B (1) , as to the records they must keep and retain for the purposes of this Part.

(2) The rules made by virtue of subsection (1) must apply in relation to pension schemes established before, as well as those established after, those rules (or this section) came into force.

Treasury regulations

(117H)

(1) The Treasury may by regulations—

(a) provide that section 117B (1) does not apply in relation to unilateral changes of a description specified in the regulations;

(b) amend section 117D (best interests test);

(c) prescribe further conditions (in addition to those in sections 117D to 117F ) that must be met in relation to a unilateral change for it to be permitted under section 117B (1) ;

(d) require the FCA to make general rules in compliance with section 117E (4) (b) that require the inclusion, in the terms of an appointment under that section, of a term providing that members of the pension scheme may in their own right enforce the terms of appointment under section 1 of the Contracts (Rights of Third Parties) Act 1999;

(e) disapply any legislation, or require the FCA to disapply any general rule, so far as it restricts or otherwise affects the power in section 117B (1) ;

(f) make provision consequential on this Part.

(2) The Treasury must by regulations require the FCA to include provision of a description specified in the regulations in general rules made in compliance with section 117E (4) (a) (how to determine whether a person is independent), alongside any other provision included in such general rules.

(3) Regulations under subsection (2) must in particular require the FCA to include in such general rules provision designed to ensure that the independent person does not have a conflict of interest.

(4) The power to make regulations under subsection (1) is capable of being exercised so as to amend or repeal any provision of primary legislation.

Interpretation of Part

(117I)

(1) In this Part—

“ the best interests test ” has the meaning given by section 117D (2) ;

“ directly affected ”, in relation to a unilateral change, has the meaning given by section 117D (3) ;

“ FCA-regulated ”, in relation to a pension scheme, has the meaning given by subsection (2) ;

“ the independent person ”, in relation to a proposed unilateral change, has the meaning given by section 117E (5) ;

“ money purchase benefits ” means money purchase benefits within the meaning of the Pension Schemes Act 1993 (see section 181(1) of that Act) or the Pension Schemes (Northern Ireland) Act 1993 (see section 176(1) of that Act);

“ pension pot ” has the meaning given by subsection (3) ;

“ pension scheme ” has the meaning given by section 1(5) of the Pension Schemes Act 1993 ;

“ personal pension scheme ” means a personal pension scheme within the meaning of the Pension Schemes Act 1993 (see section 1(1) of that Act) or the Pension Schemes (Northern Ireland) Act 1993 (see section 1(1) of that Act);

“ provider ”—

in relation to an FCA-regulated pension scheme, means the person referred to in subsection (2) (b) ;

in relation to any other pension scheme, means the trustees or managers of the scheme;

“ terms ” , in relation to a pension scheme, has the meaning given by section 117B (6) ;

“ transfer ”, in relation to a pension pot, includes a transfer of an amount representing its value;

“ trustees or managers ”, in relation to a pension scheme, means—

in the case of a scheme established under a trust, the trustees of the scheme, and

in any other case, the persons responsible for the management of the scheme;

“ unilateral change ” has the meaning given by section 117B (7) ;

“ unilateral change notice ” has the meaning given by section 117F (2) .

(2) A pension scheme is “FCA-regulated” if the operation of the scheme—

(a) is a regulated activity, and

(b) is carried on in the United Kingdom by an authorised person.

(3) “ Pension pot ” means sums or assets held for the purpose of providing money purchase benefits to or in respect of a member of a pension scheme; and—

(a) a reference to the pension scheme that holds a pension pot is to that pension scheme;

(b) a reference to the individual for whom a pension pot is held is to that member.

(3) In section 105 (insurance business transfer schemes), in subsection (3), at the end insert—

Case 6

Where the scheme is effected under Part 7A (unilateral changes to pension schemes).

(4) In section 168 (appointment of persons to carry out investigations in particular cases), in subsection (4), after paragraph (i) insert—

(iza) a person has effected, or has purported to effect, a unilateral change under subsection (1) of section 117B (unilateral changes by providers of pension schemes), but any of the provisions mentioned in subsection (3) of that section may have been contravened in relation to it;

(5) In section 429 (Parliamentary control of statutory instruments), in subsection (2B), after paragraph (ab) insert—

(ac) provision made under section 117H which amends or repeals any provision of primary legislation;

Section 50 Default pension benefit solutions

(1) Subject to section 51 (1) , the trustees or managers of a relevant scheme must—

(a) design, and make available to each eligible member of the scheme, one or more default pension benefit solutions;

(b) at least in such circumstances or at such times or intervals as may be prescribed, review the design (and if appropriate the number) of the default pension benefit solutions.

(2) In this Chapter “ pension benefit solution ”, in relation to a pension scheme, means a contractual or other arrangement for making pension payments in respect of members’ accrued rights.

(3) In this Chapter “ default pension benefit solution ”, in relation to a relevant scheme, means a pension benefit solution which—

(a) is designed for delivering money purchase benefits under the scheme to—

(i) the eligible members of the scheme generally, or

(ii) a subset of those eligible members,

(b) is designed to provide a regular income for the eligible members concerned in their retirement (whether or not together with other benefits),

(c) is for the time being designated by the trustees or managers of the scheme as the pension benefit solution under which—

(i) the eligible members of the scheme generally, or

(ii) a subset of those eligible members,

will receive pension payments unless they choose to receive pension payments under a different pension benefit solution, and

(d) meets any other conditions that may be prescribed.

(4) The trustees or managers of a relevant scheme must, in determining what default pension benefit solutions the scheme should make available (generally or to subsets of eligible members), take account of—

(a) the needs and interests of—

(i) the scheme’s membership as a whole, and

(ii) any subset of the scheme’s membership that the trustees or managers consider appropriate;

(b) the circumstances of different eligible members of the scheme (for example the normal pension ages of such members or the value or expected value of their money purchase benefits under the scheme);

(c) the possibility that a member may already have received some of their benefits (for example as a lump sum) before deciding to make use of a default pension benefit solution;

(d) such other factors as may be prescribed.

(5) Regulations may make provision about how trustees or managers of a scheme are to assess the needs and interests of the scheme’s membership for the purposes of subsection (4) (a) .

(6) Regulations may—

(a) specify descriptions of eligible members in relation to which subsection (3) is to have effect with the omission of paragraph (b) of that subsection;

(b) make provision about the meaning for the purposes of subsection (3) (b) of—

(i) “designed to provide a regular income”;

(ii) “retirement”.

(7) In this Chapter—

“ eligible member ”, in relation to a relevant scheme, means any member who is accruing, or has an actual or prospective right to, benefits falling within paragraph (a) of the definition of “money purchase benefits” in section 181(1) of the Pension Schemes Act 1993 and is not of a description excepted by regulations;

“ relevant scheme ” means an occupational pension scheme which—

provides benefits falling within paragraph (a) of the definition of “money purchase benefits” in section 181(1) of the Pension Schemes Act 1993,

is a registered pension scheme, and

is not of a description excepted by regulations.

(8) Regulations under this section—

(a) are subject to the negative procedure if they are made under subsection (1) (b) or (6) (a)

(b) otherwise, are subject to the affirmative procedure.