Pension system overhaul confirmed as Rachel Reeves wins power to force funds to invest in UK

Patrick O'Donnell
Wed, 29 Apr 2026 11:16:35 +0000

The Labour Government's landmark Pension Schemes Bill has passed through Parliament in a major win for their legislative agenda.

Under the bill, Chancellor Rachel Reeves and future Government ministers have won the power to force retirement funds to invest a minimum amount in UK firms and private assets.

Last night, the House of Lords gave its approval to final amendments that introduce fresh safeguards around the controversial mandation powers.

Following agreement between both chambers on the legislation's final wording, the Bill will now move forward to receive Royal Assent, at which point it becomes law.

The legislation had been subject to multiple rounds of back-and-forth between the Commons and Lords in recent weeks, with peers expressing significant concerns about the extent of powers the Government sought to direct pension scheme investments.

These new guardrails represent a substantial scaling back of the original proposals, marking a notable concession from ministers following sustained pressure from the upper chamber and the pensions sector.

Notably, the Government's authority to dictate how pension schemes allocate their assets has been considerably reduced from what was initially proposed, with the powers now also carrying time restrictions.

This narrowing of scope came as a direct result of opposition from the House of Lords combined with widespread criticism from across the pensions industry.

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The original draft legislation had granted ministers broad discretion over investment decisions, but sustained resistance forced significant revisions to these provisions.

In response to the news that the Pension Schemes Bill will be brought forward for Royal Assent, the sector has broadly welcomed the diluted mandation provisions.

Helen Forrest Hall, chief strategy officer at the Pensions Management Institute, said her organisation "fully supported" the Lords' opposition to a "sweeping reserve power to require specific asset allocations" and expressed satisfaction that the "government has introduced important guardrails".

Yvonne Braun, director of long-term savings at the Association of British Insurers, noted that while her organisation "strongly supports the overall package", concerns remained about the reserve power's inclusion.

Julian Mund, chief executive of Pensions UK, hailed the legislation as a "victory for pension savers", praising the "drastically scaled back" ministerial powers over investment direction.

Patrick Heath-Lay, the chief executive of People's Partnership, described the Bill's passage as a "historic moment for the UK".

On X, Pensions Minister Torsten Bell said: "Very good news tonight. The Pension Schemes Bill has completed its journey through Parliament.

"Time to celebrate before the really important work begins - implementing the huge reforms it contains to deliver better pensions for savers."