Will the Pensions Bill Truly Bridge the Retirement Gap?

The Government’s newly unveiled Pensions Bill is receiving cautious praise from industry experts, with many highlighting its emphasis on consolidation and value for money as a positive move for savers. However, concerns remain about the bill’s ability to address the deeper structural problems plaguing the UK pension landscape, including the adequacy of retirement savings and the widening divide between public and private sector pensions.

A Step Forward, But Not a Full Fix
David Griffiths, Pensions & Incentives Partner at Keystone Law, has worked across every variety of workplace pension scheme, from defined contribution and defined benefit plans to executive top-ups and overseas arrangements. His view is that while the bill makes progress, it does not go far enough: “These changes are fair enough from a Defined Contribution perspective, potentially enabling employees to make the most of their existing pension pots. However, the changes won’t address the key issue of inadequate pensions and lifetime savings,” he explained.

Griffiths also pointed out that the new bill will do little to resolve the growing disparity between public and private sector pensions, a long-standing issue that continues to divide the UK’s workforce.

From a Defined Benefit (DB) standpoint, Griffiths sees opportunities for more flexible legal mechanisms that could help both employers and trustees manage scheme surpluses and deficits more pragmatically:
“For employers with DB schemes in surplus, changes allowing some of that surplus to be refunded may be well-received. At the same time, greater flexibility could help trustees strike more collaborative deals with employers. For those with small, severely underfunded schemes, the option of a DB consolidator as an alternative to a full insurance company buy-out could offer a valuable exit strategy.”

The Small Pot Problem
The Department for Work and Pensions (DWP) has been keen to focus on consolidation as a solution to the growing number of “small pots”, dormant or forgotten pensions typically worth less than £1,000. Currently, over 13 million such pots exist, with that number increasing by one million each year due to job mobility and automatic enrolment.

Rob Morgan, Chief Investment Analyst at Charles Stanley, welcomed the bill’s approach to tackling this issue:
“Reforming workplace pensions through the lens of value for money and consolidation is to be applauded,” he said. “Too often pension savers neglect old, poorer value products, or forget about very small pots. Consolidation benefits both individual savers and the industry’s ability to serve customers efficiently.”
Morgan also acknowledged the success of auto-enrolment in creating a pension savings culture but warned that it had inadvertently created a fragmentation crisis:
“Auto-enrolment has embedded positive behaviours, but its unintended consequence, millions of small pots, has become unsustainable. A commercial model to consolidate these pots is a step in the right direction, even if implementation will be complex.”

A Need for Deeper Reform
While the Pensions Bill offers practical solutions to existing inefficiencies, both Griffiths and Morgan agree it stops short of addressing the underlying problems in UK retirement planning. From a lack of adequate lifetime savings to an unbalanced system that favours certain sectors, the reforms may ease surface-level issues without fundamentally shifting the pension paradigm.
For employers, trustees, and pension professionals, the message is clear: while legislative tweaks help, meaningful reform will require a long-term, systemic approach to fairness, accessibility, and sustainability in retirement provision.