This blog is for information only. It does not constitute financial or regulatory advice.
As of 5 June 2025, a new Pension Schemes Bill 2024‑25 was formally introduced in Parliament. The Bill is a key component of the government’s broader pension reform agenda, intended to take effect over the rest of this decade.
For medical professionals—many of whom combine NHS defined benefit pension opportunities with additional pensions or private retirement savings—these reforms in the defined contribution (DC) and scheme regulation space are particularly relevant. Below is an overview of the Bill’s core features, how they might influence pension systems, and what to watch for going forward.
1. “Megafunds” and consolidation of DC schemes
One of the flagship proposals is to require multi‑employer master trusts and group personal pension (GPP) default funds to reach “megafund” scale. The threshold often cited is £25 billion in assets for the main default fund by 2030. The rationale is to achieve economies of scale, reduce costs, improve governance and oversight, and make investing in private markets more viable for pension providers.
2. Small pot consolidation
Automatic enrolment has resulted in many individuals accumulating numerous small DC pension pots—often under £1,000. The Bill enables (via regulation) the consolidation of these into receiving schemes that meet “good value” tests. This aims to reduce administration burden and leakage. However, full implementation is expected later in the 2020s, after the megafund framework is more mature.
3. Value for money, “guided retirement” and default decumulation
The Bill introduces a value for money regime for DC schemes, under which trustees must review performance, costs, and outcomes. If a scheme is found not meeting value for money, the Pensions Regulator may require it to wind up and transfer members to better schemes.
It also proposes a “guided retirement” requirement: trustees would be required to offer default decumulation (income) options when members start drawing benefits, and to adopt a “pension benefits strategy” that must be made available to members.
4. Bulk transfers without member consent
A new statutory power is proposed to allow bulk transfers of personal pension rights (without individual consent) into authorised master trusts or other DC schemes, where providers deem it in members’ best interests. This is part of the consolidation drive.
5. Other changes: DB scheme surplus sharing & Ombudsman powers
For defined benefit (DB) schemes, the Bill would permit trustees of well‑funded schemes to share surplus assets with sponsoring employers under certain conditions. The Bill also strengthens the role of the Pensions Ombudsman, granting it authority to enforce determinations (such as overpayments) without needing to go to county courts.
Salary Sacrifice: Current Position & Changes to NICs
Though outside the Bill’s scope, salary sacrifice remains an important mechanism for pension contributions.
– From 6 April 2025, the employer’s National Insurance (NI) rate was increased from 13.8% to 15%, and the secondary threshold was reduced from £9,100 to £5,000.
– As a result, any savings from employee salary sacrifice (which reduce employer and employee NI liabilities) may be more valuable.
– For employees, the 2025/26 NIC rates are still 8% on earnings within the main band and 2% above the upper earnings limit.
– Salary sacrifice arrangements must not reduce someone’s take‑home pay below the national minimum wage or affect statutory payments.
These changes strengthen the incentive for carefully structured salary sacrifice arrangements, but whether and how much of the employer’s NI-saving is passed back is a matter for each employer’s policy.
What These Reforms Could Mean for Medical Professionals
What to Keep an Eye On
Because the Bill is still under scrutiny, many details will come through subsequent regulations and guidance. Key areas include:
• The precise definition and thresholds for “megafunds” and any exemptions.
• Timelines and pathways for small pot consolidation.
• How value for money rules are applied in practice.
• The extent to which default decumulation options become mandated.
• Regulation of bulk transfers without consent.
• Changes in employer and employee NI policy.
• How trustees manage liquidity and risk as DC funds allocate more towards private markets.
Regulators such as The Pensions Regulator have described the Bill as a “once in a generation” opportunity, but implementation will require careful adaptation.