New DC scheme requirements: What employers need to know

New DC scheme requirements: What employers need to know

17 Jul 2025

This edition of XPS Express explores how employers could be impacted by the UK Government’s drive to consolidate defined contribution (DC) funds and improve governance within these arrangements.

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Key Developments: At a glance: 

• The Pension Schemes Bill provided further emphasis on the need for additional scale in auto-enrolment DC schemes through ‘megafunds’, potentially limiting the options available for employers.
   
• Employers may wish to consider switching providers if their current scheme does not meet the more onerous Value for Money requirements (which assess performance against competitors), nor provides a default decumulation solution.
   
• There is now an opportunity for employers to proactively undertake a review of their employees’ benefit provision to identify any concerns early, and mitigate the risk of their schemes not complying before the legislation comes into force.
   
• Consideration should also be given to the impact on members’ retirement outcomes if the government potentially mandates a percentage of default funds to private markets by 2030.

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