Policy paper

​Discussion paper on key elements of the Scale Policy

Published 13 July 2026

Applies to England, Scotland and Wales

About this discussion paper 

Who is this discussion paper aimed at? 

The Department for Work and Pensions (DWP) welcomes input from: pension scheme providers, pension scheme trustees, scheme managers, members of workplace pension schemes, employee representatives, trade unions, consumer groups, employers, pension industry professionals, members of the advisory community and any other interested stakeholders. 

Purpose of the discussion paper 

DWP is issuing this discussion paper to seek industry views on key elements of the Scale Policy as we develop the detailed design for regulations. In particular, we are interested in the operation of default arrangements and investment strategies in multi-employer defined contribution (DC) schemes and the connections between schemes that exist within a provider’s corporate group.  

The responses to this discussion paper and other stakeholder engagement will inform DWP’s development of the detailed regulations. We will consult on draft regulations in 2027, in line with the published workplace pensions reform roadmap.  

Scope 

This discussion paper applies to England, Wales, and Scotland. 

Duration 

The discussion paper will run for 8 weeks, starting on 13 July 2026, and ending at 23:59 on 7 September 2026. Please ensure your response reaches us by that date, as any replies received later may not be taken into account.

How to respond to this discussion paper

Please send your responses to:

Email: caxtonhouse.dwpscaleteam@dwp.gov.uk

Private Pensions and Arm’s Length Bodies Directorate,
Scale and Consolidation Policy Team
Department for Work and Pensions,
Caxton House,  Tothill Street,
London,
SW1H 9NA. 

Existing data or unpublished analysis may be submitted to: caxtonhouse.dwpscaleteam@dwp.gov.uk

Note: When responding, please indicate whether you are responding as an individual or representing the views of an organisation, whether you are content for your response to be quoted in a future response the government issues and whether you would prefer this to be anonymous. 

We are happy to keep responses confidential where requested, subject to the Freedom of Information principles below, recognising that some respondents may prefer their response to not be public.

Government response 

We will publish our response to this discussion paper on the GOV.UK website in line with normal government practice.

How we gather evidence 

Feedback on the discussion paper process 

We value your feedback on how well we seek evidence. If you have any comments on the process of this discussion paper (as opposed to comments about the issues which are the subject of the discussion paper), please address them to:

DWP Scale Discussion Paper Co-ordinator: caxtonhouse.legislation@dwp.gov.uk

Freedom of information 

The information you send us may need to be passed to colleagues within DWP, published in a summary of responses received and referred to in the published government response. 

All information contained in your response, including personal information, may be subject to publication or disclosure if requested under the Freedom of Information Act 2000. By providing personal information for the purposes of the public discussion paper exercise, it is understood that you consent to its disclosure and publication. If this is not the case, you should limit any personal information provided or remove it completely. If you want the information in your response to the discussion paper to be kept confidential, you should explain why as part of your response, although we cannot guarantee to do this. 

To find out more about the general principles of Freedom of Information and how it is applied within DWP, please contact the Central Freedom of Information team: freedom-of-information-request@dwp.gov.uk. 

The Central Freedom of Information team cannot advise on a specific discussion paper exercise, only on Freedom of Information issues. Read more information about Freedom of Information Act.

Ministerial Foreword

The pensions landscape is changing. In the last decade the focus was on getting more people saving for their retirement, but our task now is to move beyond building savings pots to a pension system that delivers a decent income in retirement.  

The Pension Schemes Act 2026 sets out a substantial package of reforms which are designed to underpin better outcomes for members. They will drive a future market of a smaller number of bigger, better schemes that offer value for money. 

Adding wind to the sails of the consolidation process already underway in the defined contribution landscape forms a core pillar of these reforms. The Pensions Investment Review set out the case for Scale and led to the provisions in the Act to drive Scale from 2030. Scale can bring better governance and investment strategies, along with lower costs for members. It will enable schemes to have the capacity and capability to be fit for the future.  

How Scale is delivered matters. It cannot be fragmented in multiple arrangements. It is in the interest of members that those running schemes have at least one large default arrangement, that provides the buying power and expertise needed to deliver the benefits of Scale.   

Industry rightly wants clarity on how Scale can be demonstrated and this discussion paper sets out the direction. Work is now underway to draft the detailed regulations for Scale, and this discussion paper seeks input on the key elements of how Scale will be assessed. I look forward to hearing your views. 

Thank you for taking the time to contribute.

Torsten Bell MP, Minister for Pensions

Introduction

The Pensions Schemes Act 2026 (the Act) sets out a substantial package of reforms to ensure that the market can deliver for members. Measures such as Scale, contractual override and the value for money framework will reshape the market to deliver the government’s vision of schemes at scale which offer good value to members.  

Scale can lead to economies and efficiencies, as well as enabling greater expertise and diversification in investments. The scale measures focus on the automatic enrolment (AE) market and those schemes which are operated to serve a wide range of employers and members. In addition to Scale, the Act also introduces measures to reduce fragmentation created by multiple default arrangements in these schemes so genuine scale is achieved and that the starting point is that all members can get better outcomes through scale efficiencies. 

As part of this future landscape, it will be important to retain competition and innovation in the market, and that is why we introduced the new entrant pathway as well as committing to carry out a review on the effect of consolidation on innovative product design.  

The scale threshold will be introduced in April 2030 and require all authorised Master Trusts and group personal pension schemes (GPPs) which are used for meeting AE obligations to have assets of at least £25 billion in a single main scale default arrangement (MSDA). Alternatively, a scheme with £10 billion may be approved to be on the transition pathway if they are on track to meet the £25 billion requirement by 2035. The scale requirements will apply to Master Trusts and GPPs^{[footnote 1]} that are used by employers to meet their AE duties. 

A scheme that is not approved as having a MSDA of £25 billion in assets from 2030 (or £10 billion if applying for the transition pathway) will no longer be able to be used to meet AE obligations by receiving AE contributions in respect of new or existing employers. 

The assets that make up a scheme’s MSDA are to be managed under a common investment strategy (CIS). 

In addition, schemes which are connected will be able to ‘share’ a MSDA where the assets held within it are managed under the same CIS. This is possible where the schemes are operated within a single corporate group. 

These 3 elements, the MSDA, CIS and ‘connections’, will determine how and whether schemes will meet the scale thresholds.

This discussion paper sets out the intent for how these key elements of Scale will be structured to realise the expected benefits for members. We have heard from a range of stakeholders that these 3 elements, the MSDA, CIS and connections are fundamental in understanding how the scale threshold can be met and so this discussion paper focusses on these. 

We committed during the passage of the Act to engage with industry as we develop the detailed regulations to deliver Scale. We are therefore keen to hear your views on how the approach taken aligns with delivering the benefits of Scale. We will engage further through roundtables and use the information gathered in developing the regulations.

Chapter 1 – Main scale default arrangement (MSDA)

1. The scale requirements will come into force from 2030. Schemes in scope will have to be approved as having an MSDA of at least £25 billion (or £10 billion if on the transition pathway) if they are to continue to receive AE contributions.

2. How assets are held within a scheme matters in delivering the key benefits of Scale - such as investment sophistication and lower costs for members. This is why we set out requirements for an MSDA in the Act, so that Scale is held at the arrangement level, as this is where strategic decisions on investments are made. 

3. An MSDA sits at the centre of a scheme’s investments, and our expectation is it is where the default contributions for AE will be invested. We know there can be good reasons for operating more than one default arrangement, but we also know there is too much fragmentation in schemes. Our expectation is that AE contributions will be invested in the MSDA unless there is a reason to use an alternate default arrangement.  That is why the Act gives the Government the power to restrict the creation of new default arrangements. We also intend to carry out a review of all existing non-scale default arrangements in 2029.  

4. The MSDA will contain the assets of the Master Trust or GPP that is approved for Scale. It can also be made up of the collective assets of connected Master Trusts and GPPs. It cannot be made up of a shared pool of assets from various unconnected schemes and will not include assets from stakeholder schemes or single employer trusts. The regulations will set out the parameters about the assets that can be included, excluded or adjusted in an MSDA. 

5. We have heard from stakeholders that there is interest in being able to include elements of other arrangements, such as assets from bespoke default arrangements in the scheme or self-select arrangements that use the same building block funds as an MSDA. 

6. To the extent that elements from other arrangements are shared with the MSDA, we are interested in hearing any reasons why and how a wider set of assets could support the delivery of Scale.

7. We are particularly interested in gathering your views on:  

Q1: Currently, how many default arrangements do you have in your scheme or schemes that are used for AE? Do they include assets from more than one scheme? If so, why? 

Q2: Will you be consolidating any of your default arrangements used for AE ahead of 2030? Are there any practical challenges to this? 

Q3: It will be important that all schemes value assets in their MSDA in a consistent way. Our intent is that this will be assets under management (AUM). Does this present any issues? Do you consider a different method would be preferable? And if so, why? 

Q4: As set out above, the intent is that the MSDA is made up of assets in an authorised Master Trust or GPP. In developing the detailed regulations, are there other assets that we should consider for inclusion in the MSDA? If so, why?

Chapter 2 – Common investment strategy (CIS) 

8. The Act sets out that the assets held within an MSDA must be managed under a CIS. The CIS will be key in determining how or whether a scheme will be able to meet the scale threshold. It will also be a key consideration for those who may want their connected schemes to share an MSDA. 

9. The purpose of the CIS is to ensure that the assets within an MSDA will be invested in a sufficiently ‘common’ way to drive the benefits of Scale. Our view is that this would be achieved through assets relating to each member of the scheme being allocated in the same proportion to the same investments. 

10. The CIS will allow for variance by age, to accommodate both lifestyling and target date fund strategies. So, it will be possible for member’s contributions to be invested in different proportions with regard to age. 

11. Our intention is that the regulations, will require all assets in a CIS to be invested in a sufficiently similar way to drive the benefits of Scale for members.  We think this is best achieved by only allowing investment in different proportions with regard to age. However, we welcome views on the opportunities, limitations and possible challenges for us to consider in defining the CIS.  

12. We would also like further detail about the make-up of your current default arrangements. In particular, we are interested in gathering your views on:

Q5: In your AE default arrangement(s) – as well as allowing for variance by age – do you include other factors? If so, how have these varying factors been incorporated into your investment strategy? And how do you seek to mitigate the loss of scale benefits? 

Q6: If the only permitted variation for the CIS is by age (to accommodate lifestyling and target date funds), would this present any challenges? If so, please explain. 

Q7: If you consider that there should be additional variances in the CIS, which factors do you think should be considered and why?

Chapter 3 – Connections

13. The Act allows connected schemes to share an MSDA if they use a CIS and meet the standard of ‘connection’ that will be set out in regulations. The intent is that schemes will only be connected where they sit in the same corporate group. 

14. Where a single provider has more than one multi-employer DC workplace scheme that will be subject to the scale requirements, they will be able to combine the assets in their Master Trusts and GPPs into an MSDA. This is subject to all assets in the shared MSDA being managed under a single CIS and meeting the requirements to be connected. 

15. Unconnected schemes (and by this we typically mean schemes that are operated by different providers that are not in the same corporate group) will not be permitted to contribute to or benefit from the same MSDA. 

16. The regulations will set out the nature of an acceptable connection, and we are keen to hear from the industry to ensure that these regulations are appropriately formulated and work as intended. 

17. If you anticipate meeting the scale requirements by combining assets held in more than one scheme into a ‘shared’ MSDA, please could you tell us where this connection is established in your corporate structure and clearly set this out in a diagram. 

18. It would also be useful to understand the relationship between the funder or strategist of any Master Trust and the entity that acts as the provider of any GPP(s). 

19. In particular, we are interested in gathering your views on:

Q8: For providers who offer multiple schemes, to what extent would your schemes be captured by applying the test for ‘common control’ found in Regulation 29(5) of the Occupational Pension Schemes (Master Trusts) Regulations 2018? If they do not satisfy this test, please explain why. 

Q9: Do you think there are any particular challenges for connected schemes in combining their default arrangements into an MSDA? And if so, what are they? And what possible solutions do you think there are? 

Q10: Are there any practical challenges to connected schemes (Master Trusts and GPPs) in making investment decisions and managing the aggregated assets under the same CIS?

Next steps

20. We will be holding roundtables with industry stakeholders to further discuss the key elements of the Scale Policy included in this discussion paper, as well as other matters we need to consider for the Scale Policy. We will continue to engage with industry as we develop the draft regulations, which we plan to consult on in the latter part of 2027.

Annex A – list of questions

Q1: Currently, how many default arrangements do you have in your scheme or schemes that are used for AE? Do they include assets from more than one scheme? If so, why? 

Q2: Will you be consolidating any of your default arrangements used for AE ahead of 2030? Are there any practical challenges to this? 

Q3: It will be important that all schemes value assets in their MSDA in a consistent way. Our intent is that this will be assets under management (AUM). Does this present any issues? Do you consider a different method would be preferable? And if so, why? 

Q4: The intent is that the MSDA is made up of assets in an authorised Master Trust or GPP. In developing the detailed regulations, are there other assets that we should consider for inclusion in the MSDA? If so, why? 

Q5: In your AE default arrangement(s) – as well as allowing for variance by age – do you include other factors? If so, how have these varying factors been incorporated into your investment strategy? And how do you seek to mitigate the loss of scale benefits? 

Q6: If the only permitted variation for the CIS is by age (to accommodate lifestyling and target date funds), would this present any challenges? If so, please explain. 

Q7: If you consider that there should be additional flexibility in the CIS, which factors do you think should be considered and why? 

Q8: For providers who offer multiple schemes, to what extent would your schemes be captured by applying the test for ‘common control’ found in Regulation 29(5) of the Occupational Pension Schemes (Master Trusts) Regulations 2018? If they do not satisfy this test, please explain why. 

Q9: Do you think there are any particular challenges for connected schemes in combining their default arrangements into an MSDA? And if so, what are they? And what possible solutions do you think there are? 

Q10: Are there any practical challenges to connected schemes (Master Trusts and GPPs) in making investment decisions and managing the aggregated assets under the same CIS?

1. The Pension Schemes Act 2026 inserts additional quality requirements into s20 and s26 of the Pensions Act 2008. These relate to Master Trusts and group personal pensions. This will include Self-Invested Personal Pensions (SIPPs) if they are used for AE but will not include stakeholder schemes or any scheme that requires all of its members to make a choice as to how their contributions are invested. ↩