UK Pension Reforms Set for Major Overhaul

Big Changes Ahead for Your Pension – Here’s What You Need to Know

Millions of UK workers could see healthier pension pots in their future. The government has announced ambitious new plans to double the number of pension megafunds by 2030, unlocking billions in investment for the country and improving retirement prospects for savers like you.

What’s Changing (and Why It Matters)

• Doubling Down on Megafunds: By 2030, every multi-employer Defined Contribution (DC) pension scheme and Local Government Pension Scheme (LGPS) pool will need to manage at least £25 billion. That’s serious scale — and scale matters when it comes to delivering real investment returns and tackling big infrastructure projects.
• More Money for the UK Economy: Over £50 billion is set aside for British infrastructure, new homes, and fast-growing local businesses thanks to these changes and a voluntary 5% investment target from major pension providers.
• Better Value for Savers: With economies of scale and smarter management, an average worker could see their pension pot grow by around £6,000 at retirement, just from consolidation alone. Plus, more efficient governance could save over £1 billion annually.

How Will It All Work?

The upcoming Pension Schemes Bill lays the foundation, requiring large schemes to operate at the megafund level. Evidence from countries like Australia and Canada shows just how effective this can be — bigger funds can take on bigger, more lucrative projects, delivering benefits both for savers and the wider economy.

Highlights of the Reform

• Investment Boost: Pension funds are reversing the trend of shrinking domestic investment, injecting billions back into British industries.
• Stronger Local Impact: The LGPS, responsible for £392 billion in savings (much of it for modest-income workers), will pull assets into just 6 pools, with new targets for backing local priorities.
• Sharper Focus on Value: Reforms include new powers for schemes to move savers into better performing funds and emphasize cost-cutting to maximize every pound you save.

Who’s Backing the Changes?

The reforms have got broad support, not just across government, but also from scale-up businesses and pension experts. Here’s a look at some key voices:

"We’re making pensions work for Britain. These reforms mean better returns for workers and billions more invested in clean energy and high-growth businesses – the Plan for Change in action."

> Rachel Reeves, Chancellor of the Exchequer

"The untapped potential of the £392 billion Local Government Pension Scheme is enormous. Through these reforms we’ll make growth and opportunities blossom in communities across the country."

> Angela Rayner, Deputy Prime Minister

The ScaleUp Institute, BVCA, Royal London, and the Lord Mayor of London have all added their support, highlighting how these changes aim to create jobs, build businesses, and set savers up for a more secure retirement.

What Does This Mean For You?

• More for Your Money: Expect to see better performance from your workplace pension and potentially greater savings when you retire.
• Supporting UK Growth: Your savings aren’t just sitting passively – they’re being put to work building new homes, funding innovation, and helping local businesses expand.
• A Simpler, Smarter System: Mega-pools mean fewer, larger funds that are easier to oversee and more responsive to economic shifts.

What Comes Next?

Keep an eye out as the Pension Schemes Bill moves through Parliament. More details, including calculations and assumptions, are available in the [final Pensions Investment Review report](https://www.gov.uk/government/publications/pensions-investment-review-final-report). If you’d like to see how these changes may affect you directly, consider speaking with your pension provider or checking your latest statement.

UK pensions are being reimagined to give you a future with more choices and more security. Stay tuned as these changes roll out.