Pension Schemes Act 2026

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2A

(1) A contract between 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;

(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 2025), 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 2025;

investment management activities means activities involved in or connected with the management of funds or other assets for which a 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 2025.

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(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 2025, 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 2025 (as the case may be).

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36B Power to modify scheme in relation to payment of surplus to employer

(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 2025) 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).

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(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 2025)—

(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.

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(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.

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(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.

This Condition is that the relevant Master Trust—

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

(b) is exempted by regulations from the requirement for approval,

(c) 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,

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

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

This Condition is that the relevant Master Trust—

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

(b) is exempted by regulations from the requirement for approval.

(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.

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(4) In this section—

main scale default arrangement is to be interpreted in accordance with section 28A(12);

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.

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(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.

(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.

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(10) In this section main scale default arrangement is to be interpreted in accordance with section 28B(12).

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28A MSDA approval: relevant Master Trusts

(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) or (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.

28B MSDA approval: group personal pension scheme

(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.

28C Approvals in respect of asset allocation

(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 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 default funds, or

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

(3) Regulations under subsection (1) made after 31 December 2035 may not increase the prescribed percentage.

(4) In this section “qualifying asset” means an asset of a prescribed description.

(5) A description of asset prescribed under subsection (4) may for example be—

(a) private equity,

(b) private debt,

(c) venture capital, or

(d) interests in land,

but (unless within any of the above paragraphs) may not be securities listed on a recognised investment exchange within the meaning of the Income Tax Acts (see section 1005 of the Income Tax Act 2007) excluding those registered by the Financial Conduct Authority as an SME growth market in accordance with the Market Conduct sourcebook.

(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) For the purposes of this section assets of a relevant Master Trust or group personal pension scheme are held in “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.

(8) Regulations may assign different descriptions of asset to different fractions of the percentage prescribed under subsection (1).

(9) 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.

(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 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)).

(11) Regulations under subsection (10)(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.

(12) Before making the first set of regulations under subsection (1) the Secretary of State must prepare and publish a report regarding—

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

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

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

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

(14) The Secretary of State must consult such persons as the Secretary of State considers appropriate before publishing a report under subsection (12).

(15) 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).

28D Information

(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.

28E Transition pathway relief

(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) 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—

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

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

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

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

(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.

28F New entrant pathway relief

(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—

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

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

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

(d) for the Authority to maintain a list of relevant Master Trusts or group personal pension schemes that are approved under this section.

(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.

28G Suspension of asset allocation requirement: savers’ interest test

(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) must provide that the Authority may not determine that the applicant is to be treated as mentioned in subsection (1) unless the Authority is of the view that meeting the asset allocation requirement would cause material financial detriment to members of the scheme;

(b) 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;

(c) 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;

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

(4) Regulations under subsection (1) may make provision about what is, or is not, to be regarded as material financial detriment for the purposes of this section.

28H Risk notices

(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).

28I Penalties

(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.

28J Enforcement by the Financial Conduct Authority

(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).

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30A Review of exercise of powers under section 28C

(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.

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(aa) the Pensions Act 2008,

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(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,

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(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,

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12A Investment capability

(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.

12B Scale requirement

(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.

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(cze) Chapter 4 of Part 2 of the Pension Schemes Act 2025 (default arrangements);

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Part 7A — Unilateral changes to pension schemes

117A Pension schemes to which this Part applies

(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.

117B Unilateral changes

(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).

117C Effect of transfer of pension pot on membership of scheme etc

(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).

117D Best interests test

(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.

117E Certification by independent person

(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.

117F Unilateral change notice

(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.

117G Further duties to make FCA general rules

(1) The FCA must make general rules—

(a) about the fees that may or may not be charged by providers of a pension schemes 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.

117H Treasury regulations

(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.

117I Interpretation of Part

(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—

(a) in relation to an FCA-regulated pension scheme, means the person referred to in subsection (2)(b);

(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—

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

(b) 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.

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Case 6

Where the scheme is effected under Part 7A (unilateral changes to pension schemes).

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(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;

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(ac) provision made under section 117H which amends or repeals any provision of primary legislation;

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(ca) to secure compliance with the duties of trustees under Chapter 6 of Part 2 of the Pension Schemes Act 2025, or

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(b) that the superfund transfer—

(i) will increase the proportion of the transferred liabilities likely to be satisfied, and

(ii) will not lead to any member of the ceding scheme being worse off than they would be if the superfund transfer were not made;

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(1B) In relation to a superfund scheme, section 60(2) of the Pension Schemes Act 2025 (sections treated as separate schemes) applies for the purposes of this section as it applies for the purposes of Part 3 of that Act.

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(1ZA) Where—

(a) the transferring scheme is required to be wound up, or its winding up is required to continue, under section 154(1) of the Pensions Act 2004 (requirement to wind up schemes with sufficient assets to meet protected liabilities), and

(b) the receiving scheme is a superfund scheme within the meaning of Part 3 of the Pension Schemes Act 2025 (see section 99 of that Act),

paragraph (1) of this regulation has effect as though for “the conditions set out in paragraphs (2) and (3) of this regulation are” there were substituted “the condition set out in paragraph (2) of this regulation is”.

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