UK households are being handed a £29,000 boost following a pension law change passed today, Wednesday, April 29.
The law change is a ‘major reform’ for the UK’s pension system which will give every worker an average of £29,000 each by the time they retire.
The new law will require pension schemes to prove they are delivering value for money, enable the automatic consolidation of small pension pots and create larger funds which perform better, the DWP says.
In its announcement, it added: “Many people build up several small pension pots as they move between jobs, making it difficult to keep track of their retirement savings. The new law will enable these pots to be brought together automatically, giving savers a clearer picture of their pension.
“The new Act also introduces a Value for Money framework, protecting savers from being stuck in underperforming schemes. In future, pension schemes managers and trustees will need to offer clear default options for turning savings into retirement income, with the aim of giving people who choose this, a sustainable income in their retirement.”
Minister for Pensions Torsten Bell said: “Today is a landmark moment for the 22 million workers building up a pension pot across the UK.
“For too long, our pensions system has been fragmented and rarely ensures that people’s savings are working hard enough to support them in retirement.
“The Pensions Schemes Act will change that by creating schemes that drive down costs, deliver higher returns, and give savers the security they deserve.”
Claire Trott, head of advice at St. James’s Place, said: “With the Pension Schemes Bill now passed, it is welcome that the proposed ‘mandation’ power has been constrained significantly, providing important reassurance that investment decisions will remain driven by savers’ best interests rather than Government direction.
“However, concerns remain about the new requirement for pension schemes to offer a default retirement solution for disengaged savers. While well intentioned, this risks cutting across wider efforts to encourage greater engagement and could blur the boundary between guidance and advice. We will continue to engage constructively with Government on how pensions policy can support UK economic growth while also helping individuals take an active role in decisions about their long‑term financial futures.”