This legislation is focused on large workplace pension default funds where individuals haven’t made an active investment choice. It is not designed to apply to personal pensions or adviser-managed portfolios like those we manage for our clients, where investment decisions are tailored to your individual circumstances.
What has happened?
The Pension Schemes Act 2026 has now become law. It introduces a range of changes across the pensions landscape, including consolidation of schemes, value-for-money rules, and changes to how retirement options are presented.
However, the part that has attracted the most attention is the Government’s new “reserve power” — often referred to as “mandation”.
What is “mandation” in simple terms?
Mandation is a potential future power that could allow the Government to require certain pension schemes to invest a small portion of their funds into specific types of assets.
In practice, this is aimed at encouraging investment into areas like infrastructure, private markets and UK growth assets.
Importantly, this is a reserve power, not something being actively applied today.
Who does this apply to?
The key point is that this is aimed at:
- Large workplace pension schemes
- Default investment funds within those schemes
These are the funds many employees are automatically placed into when they are enrolled into a pension and do not make an active investment decision.
Who does this NOT apply to?
This is not aimed at:
- Personal pensions
- SIPPs
- Adviser-managed portfolios
For clients of Clarity Wealth Limited, pensions are typically structured as personal arrangements with investments chosen based on your specific goals and circumstances. These are not default workplace funds.
What powers have actually been granted?
The Government has not been given unlimited control.
Instead, it has been given a limited backstop power with safeguards:
- It can only apply to certain qualifying schemes (expected to be large workplace schemes)
- It is limited to a maximum of 10% of relevant default fund assets
- Within that, only up to 5% can be directed specifically to UK assets
- It cannot be used before 2028
- It is intended to be used only if the market does not move in this direction naturally
In simple terms:
The Government could, in future, require a small portion of large workplace default pension funds to be invested in certain areas — but only within strict limits.
Why was this controversial?
There was significant debate because pension trustees have a legal duty to act in the best interests of their members.
Critics argued that allowing Government influence over investment decisions could undermine that principle.
The final version of the Act reflects a compromise, with tighter restrictions and safeguards added to the original proposal.
What else does the Act include?
Beyond mandation, the Act also aims to:
- Reduce the number of small, forgotten pension pots
- Encourage consolidation into larger schemes
- Improve value-for-money assessments
- Provide better support for retirement income decisions
- Make changes to defined benefit scheme surplus rules
What does this mean for you?
For most clients, there is no immediate action required.
More importantly, for clients of Clarity Wealth Limited:
- Your pension remains under your control
- Your investments are tailored to your individual plan
- Our investment approach remains unchanged
We will continue to focus on:
- Evidence-based investing
- Global diversification
- Tax-efficient planning
- Long-term financial outcomes
Our view
This is an important piece of legislation, but it should not be misunderstood.
The changes are targeted at large workplace pension default funds, not individual, adviser-managed portfolios.
For our clients, this does not change how your pension is invested or how your financial plan is managed.
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