Legislation from the Labour Government designed to overhaul private pensions in Britain moved a step closer to enactment on Thursday after clearing its third reading in the House of Lords.
The Pension Schemes Bill progressed despite ministers indicating they do not support all changes made during its passage through the upper chamber.
The Government faced multiple defeats during the reform process, with particular concern centred on provisions that critics warned could amount to "mandation by the back door".
As such, the draft legislation will now proceed to the House of Commons, where MPs must examine the series of amendments inserted by peers.
Labour's pension reforms are inching closer to becoming law
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The Bill seeks to enhance outcomes for members of defined contribution pension schemes through several mechanisms, including better access to information about retirement options and the amalgamation of scattered savings pots.
Reforms are intended to reduce unnecessary costs while enabling larger, more effectively governed schemes to deliver improved long-term returns.
However, one element has proved contentious: a reserve power within the legislation that would compel pension providers to direct investments towards productive assets intended to boost the UK economy.
This provision sparked concerns among peers that the guidance framework could effectively force investment decisions without explicit mandates.
Torsten Bell said the reforms in the Pension Schemes Bill will enable more trustees of pension schemes to share the surplus with employers | PALATEST DEVELOPMENTS
Rachel Reeves is attempting to bolster the UK economy | RACHEL REEVES / LINKEDIN Shadow work and pensions minister Baroness Stedman-Scott offered a critical assessment of the legislation, telling peers the Bill "contains a number of significant flaws and shortcomings".
She asserted that the House of Lords has "offered the Government a clear opportunity to make necessary and timely improvements".
Pension minister Baroness Sherlock defended the reforms, stating: "The Bill will make a real difference for people saving for their retirement."
She argued the measures would ensure savers' money works harder by enhancing how pension schemes function, cutting superfluous expenses, and allowing well-governed larger schemes to achieve stronger returns over time.
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| GETTYBaroness Sherlock added that the legislation would bring "clarity" to matters that have created uncertainty for pension savers, specifically addressing historic scheme alterations and provisions for those diagnosed with terminal illness.
The minister emphasised the Bill would establish a more straightforward system for people to navigate when planning for retirement.
Regarding the amendments opposed by the Government, she assured peers: "During the passage of the bill, the House has voted for amendments that the Government did not support, I can assure the House will reflect carefully on these as the bill moves to the (Commons)."
MPs will now scrutinise the changes made by the Lords.