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The evolving regulatory landscape 

In a recent speech at the Professional Pensions Defined Contribution Conference, our Interim Director of Policy and Public Affairs, Patrick Coyne, set out how the Pension Schemes Bill will fundamentally reshape the DC market. He also said there are steps that scheme trustees should take now to get ready:

• Be saver outcome focused: Consider their investment strategy and challenge advisors to provide suitable insights and commentary on performance.
• Build scale: Consider value proposition and work through the practical steps you might need to take to consolidate if needed in the interests of savers. If you have scale consider new investment opportunities, like LTAFs, now available.  
• Be data-led and accountable: Consider investment in digital infrastructure to ensure high data quality and administration standards in the run up to pensions dashboards, and engage with administrators to understand what they can offer with different price points.
• Innovate at retirement: Start discussions at trustee boards around decumulation products and services and come to TPR's innovation support services for discussions on early ideas.  

Master trusts have a pivotal role in the reforms and the future of the DC landscape. We would encourage you all to engage with the proposals in the bill and work with us to get implementation right.

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Together, we revisit the policy aims behind the framework including the need for greater transparency in the market, and what improved transparency will unlock. 

We also delve into some of the framework design challenges. While implementation is still to come, there’s a strong sense of optimism about how it could improve saver outcomes.

Key takeaways from the conversation:

• The industry’s mindset is shifting - There is a growing move away from focusing solely on short-term costs, towards prioritising long-term investment value. 
• The framework will support better decision-making - In particular, it will help employers who want to ensure their workforce is enrolled in a scheme that offers real value. 
• Finalising the metrics used to assess value may require compromise, but the policy is being consciously designed to minimise any unintended negative commercial consequences resulting from ratings - and will evolve over time.
• We will continue to engage closely with industry, ensuring the value reporting mechanisms are user-tested and fit for purpose.

A further consultation is expected later this year. We are grateful to industry for thoughtfully responding to the consultations to date. 

Listen to the podcast now. You can also view it on YouTube. 

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Preparing for Value for Money

Once operational, the Value for Money (VfM) framework will bring consistent, comparable investment data into the market. As part of our preparation for the rollout of VfM, and as noted in the Government’s Pensions Investment Review, we will work with the Financial Conduct Authority to collect investment data including default asset allocation, from major DC providers.

We will engage with schemes in the coming months to set out our requirements for this exercise, and we expect to collect this information annually until the VfM disclosure data becomes available. The first data will be collected early next year.

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What you can now expect from our supervisory teams

We are changing the way our supervisory relationship works. In future, the relationship will differ according to the risks facing each scheme and which segment it is in. However, there is commonality which is what we will talk about below. 

We are ending the supervisory cycle we have run since schemes were authorised: we will now only collect documents linked to a risk or issue, or required on a statutory basis, such as the biannual submission of trustee minutes. We are also ending our rolling program of annual engagement meetings with trustees and strategists. 

In place of this we will take a more responsive and proactive approach. This means we will act in response to risks and issues as they arise. It also means we will target our activity based on risks to schemes likely to be impacted by events including scheme developments, policy initiatives and legislative change. 

These changes mean our interaction may become more frequent and time-sensitive for some schemes, and may involve more calls and meetings rather than routine requests for written information. We are also developing a similar approach to Single Employer DC trusts and we will contact trustees who are affected by this.

We have established close collaborative relationships working with many of you since authorisation and we look forward to continuing this approach. We expect those responsible for operating schemes to continue to be open, honest and transparent with us, to respond promptly to information requests and to proactively volunteer information about material developments, risks and issues.

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• read our latest thoughts on pensions innovation and how we are working with the industry on new ideas  
• confidentially discuss a new idea or solution at a session with TPR experts  
• attend events where you can work with others on new ideas and to solve problems
• test a pensions innovation in the market, understand how regulation applies or access data sets to develop a solution  

The service is for people working at or with workplace pension schemes who are developing innovative new approaches and products that will improve outcomes for pension savers. We particularly want to support innovation in: 

• investment and new scheme models, such as private market investment and superfunds 
• administration and member experience, such as apps and guided retirement products

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UK Investment – a challenge and an opportunity

There has been some industry comment about the “reserve power” provision in the Pensions Bill for government to set percentage targets for asset allocation in core defaults offered by DC providers, if industry fails to diversify its investments into private markets.

The parliamentary processes and the development of the working details for these measures will take some time. However, the government has indicated that: 

• provisions and safeguards will be included to protect savers’ interests 
• any requirements will be consistent with the principles of fiduciary duty 
• the provisions will automatically expire if not used by the end of 2035 
• they do not anticipate exercising the power unless industry has not delivered the change on its own, following the Mansion House commitments 

DC trustees: prepare for a paradigm shift in your role 

In the last 10 years, the occupational DC market has changed dramatically. In 2014 there were 2,020 (non-micro, non-hybrid) schemes with average assets under management (AUM) of around £13 million. By 2024 that had fallen to 510 (non-micro, non-hybrid) schemes with average AUM of around £400 million. For most of that period, occupational DC provision AUM as a percentage of DB AUM was relatively minor, rising from around 2% in 2014 to around 9% in 2022. More recently that percentage has risen closer to 18% and occupational DC provision has started to attract much more industry attention.  

We know the occupational DC market will also change dramatically in the next 10 years, with government expecting industry to condense to around 12-15 occupational DC mega-funds, each with assets of more than £25 billion.  

The occupational DB industry has had a long history of innovation where the investment management and consulting industries have delivered change and improved outcomes for members. However, the occupational DC industry, with limited scale, a focus on costs and limited governance budgets, has too often been an afterthought for those in industry that have the potential to drive real change and innovation. 

That context is important. As the DC industry gains scale, the long tail of sub-scale, sub-optimal DC schemes will be mainly replaced by economically significant entities, that will move from being investment ‘product-takers’ (where their decisions are driven by what the market has to offer) to being key influencers of product development in the investment market. 

Ultimately, the real challenge for many DC trustees will be the paradigm shift in their role in the DC pension ecosystem. 

Government is committed to delivering a sufficient supply of suitable investible assets for providers in UK assets. The finalised Modern Industrial Strategy and the 10-year Infrastructure Strategy will be key enablers of future investment opportunities.  

Getting the practical and contractual details of an investible pipeline right may take more time. However, getting the right investment governance framework in place and the right level of investment support from their investment service providers may enable trustees to capitalise on some of those emerging opportunities in UK private markets in the future and to improve member outcomes. 

We recommend that trustees: 

• consider setting additional investment objectives for their investment advisers and service providers relating specifically to UK private market investments  
• challenge their investment managers on creating new opportunities. Often investment managers offer a product or proposition based on what they have put together, rather than a proposition that has been specifically asked for. Trustees can ask for example: “Could we do this in the UK and still meet our target investment objectives for this allocation, and if not, why not?” 
• maintain an audit trail of UK investment opportunities that were considered. In an environment where government wants to support pension funds to invest more in UK private markets investments, the reasons why trustees didn’t invest could be equally valuable to government and pension funds. Ultimately, helping to get the contractual arrangements of the investments right could be mutually beneficial for all. 
• consider how their investment governance, management and service provisions might need to evolve in the short to medium term as their scheme develops. For some schemes, this could include consideration of building internal investment management capability, including the ability to invest directly in some private market assets, for example.

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Private markets – overcoming the governance challenges  

One of the key changes we are observing in DC investment strategies as the industry matures, is larger allocations to private markets. While potential expected return and diversification benefits to savers are well discussed, it’s important that investment governance frameworks are uplifted to manage the additional risks inherent within these assets.  

Here is an overview of two categories of risks:  

Illiquidity risk 

Effective liquidity management planning is important for trustees, even if positive net cashflows and the long-time horizon provide significant capacity for illiquidity. Robust frameworks will likely include stress testing to identify scenarios that present liquidity risks (such as a major employer transitioning to another provider or a material downturn in liquid markets) and a resulting plan for managing the scenario. Additionally, we don’t just view liquidity management as being able to meet cashflow requirements in a normal or even a stressed environment; an additional lens is the ability of the resulting portfolio asset allocation to deliver the investment objectives, particularly if subsequent rebalancing will take time.   

Treating members fairly 

The use of private market assets in the structure of the UK DC market could present several risks to treating members fairly. We expect trustees to consider when these challenges are material and manage them appropriately. The infrequent valuations for many private market assets can mean member contributions and withdrawals are potentially undertaken at stale prices, particularly during periods of market volatility. Ensuring performance fees and J-curves are fairly accrued to members represents additional factors for asset owners to manage.

For private market allocations to deliver quality outcomes for members, we encourage master trusts to continuously review both their investment risk and investment governance frameworks as their strategies become more sophisticated.  

There is more information about private market investments in our guidance.

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Systems thinking – a complementary investment lens  

In recent years there has been increased interest in using a systems thinking approach to explore the interconnections and complex relationships in investment markets in order to develop more effective, holistic solutions. This has been particularly so in the context of climate and nature/biodiversity loss where repeated concerns have been raised about the potential for systemic risks i.e. where failure in one part of the system causes widespread failure throughout the entire system.

Consideration of systemic risks is not new. In its 2020 update of the UK Stewardship Code the FRC set out under Principle 4: “Signatories identify and respond to market-wide and systemic risks to promote a well-functioning financial system”. Asset Owners, Asset Managers and Investment Service providers that are signatories have had to explain how they addressed Principle 4 and how effective their actions were.

The recent update to the Stewardship Code builds further on that principle with, for example, additional requirements on asset owners and asset managers to explain how they minimised the impact of systemic risks on the investments in their portfolio, and on investment consultants to explain how they integrated consideration of systemic risks into their advice and services. 

However, knowledge of the wider range of systemic risks, why they matter, which types of investor they matter most for, and what can be done to help mitigate those risks is not generally well understood.   

Fortunately, help is at hand. The UK Sustainable Investment and Finance Association (UKSIF) recently published a useful and timely report: Systemic Risk: A Framework for Portfolio Resilience, which amongst other items sets out the case for addressing systemic risks, suggests ways for stakeholders to tackle systemic risk, and includes a helpful systemic risk assessment tool which enables asset owners to evaluate their current approach to systemic risks.   

Systems thinking, including the consideration of systemic risks and opportunities, provides a complementary lens for investment decision making. Trustees should:

• review the UKSIF publication 
• consider the extent to which their current investment managers and investment service providers allow for systemic risks and opportunities as part of their investment management, advice and services 
• develop a policy on systemic (or macro) stewardship 
• review their approach to monitoring the performance of their investment service providers to ensure that appropriate credit is given for the management of longer-term systemic risks and opportunities, and not overlooked as part of short-term performance metrics 

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A new UK Stewardship Code 

After an extensive period of industry engagement and consultation, the Financial Reporting Council (FRC) has updated its Stewardship Code 2020 to reduce the reporting burden on industry, while supporting improved investor engagement and maintaining high standards of industry stewardship.

The new UK Stewardship Code 2026 comes into force from 1 January 2026 and is supported by new Guidance which the FRC are inviting comments on by 31 August 2025.

The FRC also published a helpful summary UK Stewardship Code 2026 – at a glance alongside the Code.  

In a further helpful development, the FRC has confirmed that it will allow 2026 to act as a transitional year and that it will engage with industry and applicants to help them adjust to the new reporting requirements.

Generally, there has been a lot of industry support for the more flexible reporting format, the reduction of burden and the introduction of new tailored principles for proxy advisers and investment consultants - who also form part of the stewardship ecosystem. However, the revised definition of stewardship, focussed on the creation of long-term sustainable value for clients and beneficiaries, has been challenged by some industry stakeholders.

Currently, the UK Stewardship Code has nearly 300 signatories that represent around £50 trillion in assets under management (AUM). Many of the investment managers that are used by occupational DC schemes are signatories of the code. Most of the investment consulting service providers are also signatories. Many trust-based pension schemes that use pooled funds rely on their investment managers’ stewardship policies. However, some corporate pension schemes and DC master trusts are direct signatories of the Stewardship Code.

We are aware that some trustees make being a UK Stewardship Code signatory a condition of appointment for their investment service providers but don’t actively review or engage with their service providers’ stewardship reports. Tick-box compliance alone will not deliver the best outcomes for savers. Effective stewardship can help drive real-world change and better manage the risks and opportunities that schemes and their members are exposed to. We expect trustees to manage their service providers and to regularly review the service they are getting from them to ensure it aligns with their requirements.

We recommend that trustees:   

• consider what they want their scheme’s stewardship policy to deliver and why. By having a clearly defined policy, with clear objectives, trustees will be in a better position to get the stewardship services they want from their investment service providers.
• review the new Stewardship Code and draft guidance  
• consider providing feedback on the draft guidance - the guidance will ultimately help to influence future reporting    
• review and engage with their investment service providers on the stewardship reports they produce. Trustees should be aware that being a signatory implies a certain standard of reporting but it doesn’t mean that the reports produced will fully align with your stewardship requirements.   
• consider the potential benefits for their scheme and members of becoming a signatory to the Stewardship Code, particularly as their scheme gains material scale

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Nature – an opportunity for action 

In our December bulletin, we highlighted that in the third year of Taskforce for Climate-related Reporting (TCFD) reporting, some trustee boards had already identified nature as a key area of focus for training, investment manager engagement, or the trustees’ agenda for 2025. A few had gone even further and started to include some nature metrics in their reports.

This is a good sign that schemes’ approach to risk management with regards to nature is maturing. While those initial developments are positive, particularly in the absence of a formal requirement to report, the potential for nature and biodiversity risks to be financially material and give rise to systemic risks is significant and more remains to be done. 

However, nature is complex, and assessing nature-related exposures and risks across investments, with complex supply chains, unique challenges and challenging data collection and measurement activities, is a steep learning curve for many. 

Trustees who want to do more should consider joining the early adopters of Taskforce for Nature-related Financial Disclosure (TNFD) aligned reporting and use the TNFD Locate, Evaluate, Assess, Prepare (LEAP) approach to establish exposure to nature related issues across their portfolios. 

To help with this the TNFD and Global Reporting Initiative (GRI) have just published a set of case studies (GRI & TNFD case studies: Identifying risks and opportunities to organizations arising from dependencies and impacts on nature – TNFD).  

Trustees with their advisors could also consider the Exploring Natural Capital Risks and Exposures (ENCORE) framework to compliment the LEAP approach.

To date, more than 70 organisations across a range of sectors in the UK have already committed to start making disclosures aligned with the TNFD recommendations in their corporate reporting by the financial year 2024 (or earlier), 2025 or 2026. Few reports appear to have been published to date, but one example of an initial nature disclosure has been published by L&G as part of their Climate and Nature Report 2024. 

That report highlights the approach that L&G has taken and some of the data challenges they have experienced and how they have been building on their nature data investment capabilities. The report also highlights that 40% – 50% of their holdings were currently assessed as being exposed to a set of sectors considered to have material nature-related dependencies and impacts, as described in the TNFD financial sector guidance. With assets under management of £1.1 trillion and a global footprint, that metric alone should be a wake-up call to other investors.

Many trustees are still at the beginning of their journey to understand nature related impacts and dependencies. Furthermore, investing in some nature-related investment opportunities is complex and the asset class is still emerging. The investment markets of the future are likely to be materially different from those of the past, as new economy asset sectors emerge and some old ones decay. Trustees, particularly of emerging megafunds, need to plan for the future, today.  

We recommend that trustees: 

• review and learn from some of the disclosure reports produced by the early adopters of TNFD 
• plan to develop the skills and expertise needed on nature-related risks and opportunities across the trustee board  
• review the skills and expertise of their investment managers and investment service providers in relation to nature 
• review the objectives they set for their investment advisers and include specific nature-related objectives for them  
• review the extent to which the investment monitoring reports they receive identify their exposure to highly nature-dependent sectors and investments  

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Although the impact on investment returns was relatively short-lived, it was widely reported on mainstream media and may have attracted attention from DC savers.  

Market events are an inevitable part of long-term investing, and we expect trustees to have high standards of investment governance so that they can make good decisions on behalf of savers in all economic conditions. Our recent guidance reminds trustees and their advisers of key areas to focus on during periods of market volatility.

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Need for AI to fight scams intensifies as we detect new secondary scams  

At our recent Fighting Pension Fraud webinar, as well as hearing from Chris Bell from the City of London Police about why it’s so vital you report all suspicions of fraud, we also highlighted the new website detection tool that TPR has developed in partnership with the Pension Scams Action Group (PSAG).

Using machine learning technology and algorithms trained with real-world data to build predictive models, the tool can identify potentially fraudulent websites. To date, PSAG has reviewed 830 websites and taken down 29 high-risk sites, in addition to making 94 referrals to partner agencies to follow up on.

Each of these scam sites, left unidentified, could have reached and scammed thousands of savers. As scams continue to evolve, arguably AI is needed now more than ever, including to tackle secondary scams.

Over recent weeks, we have been made aware of scammers impersonating the Fraud Compensation Fund (FCF), sending fake letters to scheme members who had already been scammed, and claiming to help them obtain compensation. This type of fraud, known as recovery fraud, is a cruel second hit. Scammers exploit previous victims’ vulnerability by offering false hope and asking for personal details or fees under the guise of legitimate follow-up.

One of the alarming features of this scam, and scams generally, relates to how difficult it is to tell the difference between legitimate and fraudulent communications.

Whether it’s cloned websites or impersonation fraud, as a master trust, thousands of savers depend on your vigilance, so it’s vital you help members stay alert to these evolving scams and encourage protective habits. Urge them to follow the principle: Stop! Think Fraud.  

You can also listen to our Head of Intelligence Mike Broomfield who recently appeared alongside other experts on BBC Money Box. As well as discussing PSAG’s new website detection tool, the show also discusses the use of AI in fighting fraud more generally.

Watch the webinar and listen to MoneyBox.

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Trustees urged to respond to FCA’s targeted support consultation

The Financial Conduct Authority (FCA) has published proposals for a new form of help called targeted support, which is likely to be of interest for occupational pension schemes, including master trusts.

The FCA’s consultation, open until 29 August, invites views from pension trustees and trust-based pension schemes on plans to allow firms to provide suggestions tailored to groups of consumers with shared characteristics. This includes support for savers at retirement, helping them make more informed financial decisions. 

We believe it is clear savers need more help to make good retirement choices. Both the government’s planned Guided Retirement Duty and the FCA’s targeted support proposals are crucial to ensuring savers can make the best decisions for their circumstances. 

This consultation will help inform the broader regulatory framework for decumulation and retirement planning. We strongly encourage trustees to respond to ensure that targeted support delivers meaningful outcomes for savers. 

Information on how to respond to the FCA’s consultation is available on the FCA website.

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With many large Master Trusts in the process of connecting, the guidance gives more detail about the connection process and reiterates duties around remaining compliant.  

Here are the key updates:   

New MaPS guidance 

We address the newly published MaPS guidance, including details on the connection process and the potential risks if schemes plan to change their ‘connect-by’ date.

Clarification on registration codes  

We answer frequently asked questions about registration codes including what they are, how they’re issued, how to use them, and how they apply to schemes with more than one section.   

Understanding relevant complaints

We clarify what constitutes a relevant complaint and outline the expectations for recording and reporting them, in line with MaPS guidance.  

Trustees and scheme managers of schemes within the scope of duties under the Pensions Dashboard Regulations 2022 need to connect with and supply pensions information to members through dashboards.    

To find out more about what you need to do to meet your pensions dashboards duties read our guidance.   

Driving data quality for pensions dashboards

As part of our Data Quality Regulatory Initiative, we sent an email last October to schemes in scope for dashboards reiterating our expectations on data quality controls. A selection of schemes received a follow up communication highlighting the importance of submitting data scores in their Scheme Return and we asked for information about their data quality processes. During the summer we will continue this engagement with a new selection of schemes focusing on quality and consistency of data and how they approach data improvements. We will also engage with some of the largest schemes to further explore how schemes are managing and preparing their data for dashboards.  

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Consolidation – are you taking on smaller schemes?

With the pensions landscape rapidly changing towards one of fewer, larger schemes, there will inevitably be smaller schemes which, for a variety of reasons, are looking to consolidate into master trusts in the next few years.

With this in mind, we are encouraging master trusts which are happy to receive enquiries from smaller schemes to take action. We would like those master trusts to signpost on their websites: 

• the questions they are likely to ask smaller schemes wanting to consolidate 
• the preparation required by smaller schemes considering consolidation  
• further information about the consolidation journey for a smaller scheme 
• a case study about a smaller scheme consolidating into the master trust  

We are also encouraging master trusts to be clear about whether they can offer solutions for underpins, guarantees - and other issues such as tracing. 

We would like to know if you are interested in taking on smaller schemes and we welcome discussions about your plans and experience of small scheme consolidation – particularly if there are any challenges or barriers you think TPR could help industry to overcome.  

If you have not done so already, please speak to your TPR supervisor about this.

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There will be no new questions added to this year's scheme return.  However, there will be a change to the “Record keeping” section to bring it more in line with our expectations and the general code. The question set will be re-named “Scheme member data quality”.

You’ll find everything you need to prepare for the scheme return on our website. This includes a list of the sections you can update in Exchange in advance of the scheme return notice being issued. Information can be updated in these sections now and will appear in the scheme return, saving you time later.  

Completing the DC scheme return is a legal requirement for master trusts unless an exemption applies. Trustees who fail to complete and submit it by the deadline could be fined up to £50,000. 

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Help us improve our Master Trust Bulletin 

We recently invited you to take part in a short anonymous survey to help us improve our Master Trust Bulletin.

If you haven’t had a chance to complete it yet, we’d greatly appreciate your feedback.  

The survey takes around 10 minutes and can be completed in more than one session, provided you return using the same device and browser.  

For any questions, please contact Carmel Corcoran, Insight Team

Closing date: 25 July 2025

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