UK workers to get £29,000 boost as part of landmark Pensions Bill, says government
Working people on an average salary who save into a pension pot over their career could benefit by up to £29,000 by the time they retire, thanks to major Government reforms that will consolidate small pension pots, ensure schemes are value for money, and create larger pension schemes.
The figure was revealed as the Pension Schemes Bill returns to Parliament for its second reading on Monday (7 July 2025).
Reforms in the Bill, which have received widespread support from the pensions industry and consumer groups, will support 20 million pension savers to get more from their pension pots and be better prepared for retirement.
The Bill will bring together small pension pots worth £1,000 or less into one pension scheme that is certified as delivering good value to savers, making pension saving less hassle and more rewarding. At present many people struggle to keep track of multiple small pensions as they move jobs and can pay high fees as a result.
In the future, pension schemes will also need to prove they are value for money, helping savers understand whether their scheme is giving them good returns and protecting them from getting stuck in underperforming schemes for years on end.
These measures will lay the foundation for the upcoming Pensions Review to examine how we get to a fair and sustainable pensions system, supporting growth and delivering on the government’s Plan for Change by putting more money into people’s pockets.
Other measures which will be introduced as part of the Bill include:
- New rules creating multi-employer DC scheme “megafunds” of at least £25 billion, so that bigger and better pension schemes can drive down costs and invest in a wider range of assets.
- Simplifying retirement choices, with all pension schemes offering default routes to an income in retirement.
- Increased flexibility for Defined Benefit (DB) pension schemes to safely release surplus worth collectively £160 billion, to support employers’ investment plans and to benefit scheme members.
“We’re ramping up the pace of pension reform, to ensure that people’s pension savings work as hard for them as they worked to save,” said Minister for Pensions Torsten Bell.
“The measures in our Pension Schemes Bill will drive costs down and returns up on workers’ retirement savings – putting more money in people’s pockets to the tune of up to £29,000 for an average earner and delivering on our Plan for Change.”
