Pensions Schemes Bill 2025 – what it means for your defined benefit pension strategy

In June 2025, the government introduced the Pension Schemes Bill 2025 to Parliament, confirming major changes to Defined Benefits (DB) and Defined Contributions (DC) pensions policy, which will be introduced over the next year or so.

In this blog, we focus on the changes affecting DB pension strategy.

Unlocking new end-game options

A key trend over the last few years has been improved funding levels of DB pension schemes.

The new Bill introduced a legislative framework that allows greater flexibilities around any surpluses. This covers both the assumptions used to calculate any surplus, as well as how and when it can be extracted by an employer. Whilst this is currently possible – and we are working with clients where arrangements are in place to use a DB surplus to pay DC contributions – it should simplify the process.

The Bill also introduced a legislative framework for superfunds, which could offer employers an alternative from the insurance market for transferring DB schemes to, possibly at a lower cost. This is an area where there has been a lot of developments, most recently the announcement from TPT that it intends to launch its own superfund.

While we are still waiting to see how both of the above options develop in practice, it is important that housing associations are aware of such possibilities and keep these under review while assessing their pensions strategies.

The Virgin Media issue

This refers to the court ruling in relation to the Virgin Media scheme which stated that certain amendments made by pension schemes in the past would be void without a written actuarial confirmation. This ruling, which was confirmed by the Court of Appeal in July 2024, could potentially have wide-reaching consequences for the pension industry, affecting many schemes.

The government had announced on 5 June 2025 that it would be legislating to help schemes ‘fix’ this issue, and the draft clauses were published on 1 September. Our initial view is that in the main this appears to be a well-thought through intervention which may allow an effective resolution for many schemes. Unfortunately, the current wording of the Bill means the proposed ‘fix’ may not be available for all schemes, with TPT schemes potentially excluded due to the ongoing court case. This is only draft legislation - the final form will hopefully cover all relevant schemes.

Asset pooling of LGPS funds

The Bill formally sets out the legal requirement for all LGPS administering authorities to transfer their assets and delegate the management of them to approved ‘asset pool companies’. Administering authorities and asset pools must meet these new requirements by March 2026.

With this policy, the government hopes to accelerate consolidation and build scale to achieve better economy of scale within LGPS funds, with a clear steer towards investing in local infrastructure and responsible investments.

Pension Protection Fund (PPF) levy reform and member protections

One of the pensions success stories over the last 20 years has been the establishment of the PPF, which is designed to protect members’ benefits in the event of employer failure. PPF funding has improved significantly, to the extent that it no longer needed to charge scheme annual levies to cover benefits. However, due to the way the levy rules were drafted, had they stopped levies for this year they would never have been able to start them again, even if funding had worsened. The Bill removes these restrictions and so the PPF has recently announced it is charging a zero levy for 2025/26.

Next steps for housing associations

Housing associations should pro-actively review their existing pension strategies, taking stock of the new environment and planning key next steps for both them and their schemes.