Most workplace pension industry experts have welcomed the government's new Pension Schemes Bill, published today, which the DWP says will improve the pension savings of 20m workers.

Pension commentators said the reforms would boost value and simplification although some wanted the DWP to go further.

The bill, if implemented as law, would bring sweeping changes to pension schemes including requiring DC schemes to prove they are providing value for money, requiring all pension schemes to offer default routes to an income in retirement and consolidating small pension pots worth £1,000 or less into one pension scheme.

New rules will also create multi-employer DC scheme “megafunds” of at least £25 billion.

Steven Cameron, pensions director at Aegon, said there was lot to be positive about in the bill.

He said: “There’s a huge amount to be welcomed in this blockbuster of a Pension Schemes Bill. After months, and in some cases years of debate and consultation, the Bill paves the way for a brave new world of workplace pensions.

“The Government is rightly highlighting the benefits scheme consolidation and a new approach to pension scheme investments can bring to the UK economy. But the real litmus test must be to make sure the changes deliver tangible benefits for the millions of individuals saving for retirement.

“The ambition for all schemes to offer their members clear default retirement options will be helpful for some, but mustn’t discourage individuals from engaging fully to make the best decisions for their own personal retirement.

“There’s a huge amount of change here, with many inter-connections, which will require several years of careful planning and implementation. The Government has promised to set out its intended timeline, which will be key in helping both providers and scheme members plan ahead. As well as considering the impact the changes will have, it will be crucial to get the sequencing right. The next few years will be exciting!”

Sophia Singleton, president of The Society of Pension Professionals, said: “Our members are pleased to see the Pension Schemes Bill published today, which gives us a clear line of sight on the many policy initiatives that have been in the pipeline. 

“The Bill creates the foundation for changes that should positively impact members, sponsors and trustees. We will support policymakers with the considerable work that lies ahead to develop the regulations and guidance that must underpin and deliver these initiatives.”

Helen Morrissey, head of retirement analysis at platform Hargreaves Lansdown, said the bill would “transform” the pensions sector but could have gone further.

She said: “The face of the UK pension landscape is changing, as this Bill ushers in transformative change. It seeks to deal with many of the issues that have dogged the industry over the years around cost, value, communication and performance. As MPs and Peers consider these changes, they must put the pension savers’ interest at the forefront of their thinking.

“The coming years will usher in the pension mega fund era. This will shift the UK away from a plethora of small, fragmented schemes towards a streamlined set of pension mega funds able to boost retirement outcomes as well as the UK economy through increased efficiency, lower costs, and increased investment in UK assets. These are changes that the government estimates could put an extra £6,000 in people’s pensions.”

“However, these reforms could go even further with the default consolidator model being adapted for a Lifetime Pension model over the longer term. This would enable people to effectively decide which provider receives their pension contributions throughout their career, so they don’t move between providers when they change jobs.”

David Lane, CEO at TPT Retirement Solutions, said:  “The Pensions Bill represents a signal of intent, laying the foundations for a more coherent and sustainable pensions system, focused on improving outcomes for members. It’s particularly encouraging to see the government give renewed focus to the reform of Defined Benefit schemes, following an initial focus on Defined Contribution (DC). “ 

Lisa Picardo, chief business officer UK at pensions consolidator PensionBee, said: “This reform has been a long time coming and should mark the start of a wider shift towards a more modern, joined-up pensions system.” 

Tom Froggett, head of run-on Solutions and pensions provider XPS Group said “The flurry of Government announcements and regulatory guidance over the last few weeks has made one thing clear – both the Government and TPR are aligned with the principle of giving well-funded DB schemes more flexibility to build and use surplus where it is safe to do so.  We support this principle, and are pleased to see the Regulator’s recent guidance give a balanced overview of the different strategy options available to trustees and employers, including running on to build and use surplus.” 

Gail Izat, managing director for workplace and retail Intermediary at Standard Life, part of Phoenix Group, said: “Hot on the heels of the Pension Investment Review we have the Pension Schemes Bill. The Bill builds on the government’s push for greater scale in DC savings and emphasis on value for money.

“Enabling providers to consolidate savers into their primary default funds will be an important catalyst in delivering the government’s ambitions of DC mega-funds. Many providers already invest at scale but this approach will consolidate the number of default funds and help  deliver greater efficiencies on behalf of savers.

“In a number of important ways, the Bill looks to address some of the unresolved issues that emerged following the landmark auto-enrolment and Pension Freedom reforms. The proliferation of small pots has been a consequence of both auto-enrolment and the modern job market and consolidators will step in to bring together pots below £1,000. The detail and commercial model of this system will require considerable thought. It was good to see a reference to delivering on pension dashboards too as they will play a vital role building people’s connection with their pensions.

“Pension Freedoms have given people the ability to take their money as they see fit and research shows people value this ability to choose. However, it leaves people having to make significant decisions about how long they might live, where to invest and how much income they can afford to take. The introduction of Guided Retirement Options has the potential to be one of the most significant things the industry could do to ensure people are supported to make the most of their money. It was interesting to see government reference longevity protection in their announcement as we believe having a degree of income certainty is vital when helping to manage essential expenses in retirement.”