Policy paper

Regulation Action Plan: Growth Goals

Published 10 July 2026

In March 2025, the government set out its vision for overhauling the regulatory landscape so that it not only protects consumers but also supports competition and encourages growth.

At the Regional Investment Summit in October, the Chancellor gave an update on delivery of the Regulation Action Plan, setting out the progress made and where the government would go further and faster. As part of this, the government announced that it would ensure key regulators had clear direction on how they can support its overriding mission to deliver economic growth. This commitment sat alongside the announcement that the existing Growth Duty would be strengthened.

Departments have since been developing outcome-focused Growth Goals, where no equivalent framework already exists, to provide regulators with a structured set of priorities that clarify how their actions should support economic growth. These goals are designed to be measurable, with specific key results to enable progress tracking, and accompanied by an impact narrative explaining how regulators’ actions are expected to drive economic growth.

This document sets out the Growth Goals which the Department for Work and Pensions (DWP) is issuing to The Pensions Regulator (TPR).

Introduction

The Pensions Regulator has an important role to play in supporting the Growth Mission through its regulation of the pensions industry. UK workplace pension funds are worth approximately £2 trillion (around two-thirds of UK GDP) and play an integral part in the economy as institutional investors. Effective pensions regulation therefore has huge potential to support economic growth. Firstly, through increasing the value of pensions to boost retirement incomes, and, secondly, through the use of pension funds to invest in and grow the UK economy.

To make this come to pass, TPR has transformed its market oversight and supervisory approach. It now has embedded supervisory teams matched up to segments of the market with different risk profiles. It engages on risks and opportunities both at an entity and system-wide level seeking open and transparent dialogue with schemes to help them enhance capability and capitalise on new opportunities which benefit savers, including with respect to productive finance. Whilst investment decisions are in the hands of schemes, through this approach we will be able to ensure a focus on high-quality investment governance and that schemes are acting in their members’ best interests. Alongside this, TPR is supporting structural reform of the marketplace to enable trustees to invest in a broader range of assets, creating transparency around performance and enabling scheme structures and governance arrangements that provide resilience and better value for savers.   

Impact

TPR’s impact on growth is indirect. There are many different factors that need to work together to deliver economic growth through several channels. It is therefore not possible to disentangle the precise contribution of specific drivers and robustly define a direct, causal relationship between workplace pensions regulatory actions and economic growth. Asset allocation decisions are made by trustees, with saver outcomes paramount.

TPR will oversee the delivery of the Pension Schemes Act 2026.  Underpinned by changes to strengthen trusteeship and governance,^{[footnote 1]} the Act is expected to have a direct positive impact on GDP and Real Household Disposable Income (RHDI). It aims to build a pensions market with fewer, larger, and better pension providers. It is expected to generate 10 to 20 defined contribution (DC) Megafunds over the next 5 to 10 years and to strengthen the opportunity for pension funds to invest in more productive assets, which often have a stronger UK bias.

Complemented by the Mansion House Accord (a voluntary agreement by major pension schemes to invest 10% in private assets by 2030 of which 5% will have a UK focus) and by a backstop reserve investment power, DWP expect that together these measures could generate a 0.1% GDP impact by 2030. 

The Pension Schemes Act is also expected to deliver gains to around 20 million pension savers, resulting in a higher pensioner RHDI. This is important given that 4-in-10 (43%) of working-age people (equivalent to 14.6 million) are estimated to be under saving for retirement^{[footnote 2]}. An average earner with a DC pension saving over their career could potentially see £29,000 more in their pension pot at retirement as a result of the measures in the Act.

In addition, the Act will help safely release some of the £160bn surplus funds (on a low dependency basis) trapped in defined benefit (DB) schemes to employers and members, boosting RHDI and supporting re-investment into businesses and the economy. The Act will also allow the Local Government Pension Scheme (LGPS), with assets over £400bn, to boost investment in local economies and deliver better returns for savers.

Proposed Growth Goals for TPR

Given the clear growth focus of the Pension Schemes Act, the Minister for Pensions has set the following four growth goals for TPR which are explicitly linked to Act measures:

1. Reform the workplace pensions sector to boost growth and support adequate income for pension savers in retirement
2. Unlock surplus/capital to benefit savers, employers and the economy
3. Support productive investment to help grow the economy and increase saver returns
4. Promote the responsible and safe use of AI technologies in pensions to improve saver outcomes

Each of these proposed goals is considered in more detail below. DWP and TPR will consider next steps on assessing progress made against the indicators and milestones provided for each goal, including the approach to measurement, data availability and lessons learned, so that this can be factored into 2027 to 2028 business planning and associated targets. Performance will be monitored against indicators – however, it is expected to be directional and longer term, and is to be noted that this will be influenced by TPR’s interventions it will also be impacted by a range of factors outside of TPR’s control.

Goal 1: Reform the workplace pensions sector to boost growth and support adequate income for pension savers in retirement

Outcome: The market consolidates into fewer, larger schemes, able to harness the full range of investment opportunities, offering better value for money pensions and good quality defaults. These changes support UK growth and deliver improved returns to pension savers, supporting them to benefit from a sustainable and sufficient income in retirement.

The Pension Schemes Act will close many sub-scale multi-employer schemes across DC and LGPS by setting a £25 billion minimum value of assets under management, creating almost 20 Megafunds. The Act also introduces a permanent regime for Superfunds, which consolidate DB pensions. Greater scale is expected to lead to greater economies of scale and efficiencies, as well as enabling greater expertise and diversification in investments, helping increase net returns^{[footnote 3]}. Larger schemes are more likely to invest in private market assets, such as UK infrastructure projects or private equity, which have a stronger home bias^{[footnote 4]}.

Scale is a necessary, but not the only, condition for growth. It is important to view these scale measures alongside our other reforms, in particular (for DC schemes) the Value for Money framework, the Mansion House Accord and the backstop ‘reserve’ power on asset allocation. Value for Money aims to facilitate investments into higher value asset classes, to encourage schemes to prioritise investments that offer better long-term value and to address poor value^{[footnote 5]}. Value for Money is also expected to drive consolidation as it will lead to poor-performing providers exiting the market. In addition, the Pension Schemes Act introduces a backstop reserve power to enforce the voluntary commitments to increase UK private market investment. Increasing DC allocations to UK private markets will increase the availability of capital available to businesses to make investments in the UK^{[footnote 6]}.

As well as supporting economic growth, consolidation will help ensure members have adequate retirement income. The combined impact of the measures detailed above is expected to result in an increase in the proportion of members in schemes with higher investment performance. Scale requirements in Master Trusts alone are estimated to deliver around £3,000 more in a DC pension pot at retirement for an average earner saving over a career^{[footnote 7]}. In addition, as a result of the Value for Money framework, we expect to see a decline in the range of performance between providers - meaning that more savers get better returns. The Value for Money measure on its own is estimated to potentially deliver around £16,000 more in a DC pension pot at retirement for an average earner saving over a career.

Other DC measures being brought forward through the Pension Schemes Act will also help people build a sustainable retirement income. Currently, many savers have multiple small pension pots, some of which are lost, and each of which is subject to administrative fees. Through the Act, small pots will be combined, meaning pension savings are less likely to be lost and less of their value will be eroded through fees. The Act also introduces a DC guided retirement duty which will require decumulation products to be provided that allow many members to keep their pension assets within the scheme for a longer period, enabling longer-term investment strategies that can lead to better returns^{[footnote 8]}.

All of these factors should result in improved income (RHDI) for pensioners. For an average earner with a DC pension saving over their career, this package of Act measures could deliver £29,000 more in retirement. (Please note that this goal also reads across to forthcoming recommendations from the Pension Commission around ensuring pension adequacy in retirement).

Progress towards this goal will be monitored through DC Scheme Returns, industry data gathering, investment performance surveys (such as The Corporate Adviser Pensions Average (CAPA)), and TPR scheme surveys. At the same time, TPR will continue its supervisory focus on investments and good member outcomes through the introduction of a common supervisory framework, to ensure that value for money is at the heart of the workplace pensions system.

TPR will track its performance against the following regulatory milestones for this goal:

1. Publish new guidance for consolidating small single employer trust DC schemes by March 2026.
2. Produce a market engagement report to help set out the profile of UK assets of interest to UK pension schemes by summer 2026.
3. Implement Value for Money framework to improve long-term value in the DC sector by 2028, to force poor performers from the market.
4. Regulate against the scale regulations to ensure Master Trusts have at least £10 billion in assets in default funds by 2030 and a credible path to have at least £25 billion in assets in default funds by 2035.
5. Oversee compliance with the guided retirement duty, which we expect to be implemented in 2028.
6. Implement multiple default consolidator (small pot) reforms by 2030.

TPR will track its progress using the system-level indicators set out below:

a. An increase in the number of large multi-employer DC schemes that are of the required scale (Megafunds)

b. A decline in the number of default accumulation arrangements across DC schemes

c. An increase in the proportion of DC assets invested in unlisted/private assets

d. An increase in investment in UK-based assets by DC schemes

e. A reduction in the number of small pots

f. All DC schemes offer (or partner to offer) decumulation products, including well-designed default pension plans

g. An increase in the proportion of members in schemes with higher investment performance

h. A decline in the range of investment performance seen between firms

i. A growth in the number of authorised DB superfunds

Goal 2: Unlock surplus/capital to benefit savers, employers and the economy

Outcome: Well-funded DB pension schemes and Master Trusts are able to unlock additional reserving surplus or capital to benefit savers, employers and the economy.

It is currently estimated around £160 billion of surplus funds are held in DB schemes, some of which could be safely released to employers and members. The Pension Schemes Act will allow DB scheme trustees to modify scheme rules to share surplus funds with sponsoring employers, supporting business investment. This measure will also mean trustees are better placed to negotiate additional benefits from surplus for members, supporting RHDI for pensioners.

Money held in pension funds could also be unlocked for investment through changes to Master Trust capital reserving requirements. Master Trusts are required to hold or ‘reserve’ sufficient capital to cover risks, provide member security and fund operations.  TPR have committed to reviewing the regulatory requirements around how much capital Master Trusts are required to reserve by the end of 2025 to 2026.  Reducing excessive reserving has the potential to free up millions of pounds of funds for investment^{[footnote 9]}. 

TPR will track its performance against the following regulatory milestones for this goal:

1. Publish updated guidance for Master Trusts on reserving requirements to reflect changes in the market since authorisation to reduce regulatory uncertainty and allow schemes to reduce the level of cash reserves where safe to do so by March 2026.
2. Consult on regulations and TPR guidance to help schemes consider surplus release.
3. New regulations come into force supported by published TPR guidance.

TPR will track its progress using the system-level indicators set out below:

a. An increase in the number of DB schemes safely releasing their DB surplus

b. An increase in the amount of DB surplus released to members and employers

Goal 3: Support productive investment to grow the economy and increase saver returns

Outcome: Pension funds are supported to invest in productive assets, particularly in the UK, to support economic growth and increase returns for pension savers.

The Act measures on scale/consolidation as well as, for DC, the Value for Money framework, the reserve power and the Mansion House Accord (all detailed above), should help increase the proportion of DC assets invested in private markets and an increase in investment in UK-based assets by DC schemes, from less than 4% of DC assets currently. Schemes will still need to meet their fiduciary obligations, and system change in productive investment will take time, as it also requires schemes to develop the internal capability, and government to partner with schemes by making suitable investment opportunities available.

Progress will be measured by annual regulator surveys and Value for Money returns.

TPR will track its performance against the following regulatory milestones for this goal:

1. Articulate the kinds of investments that would be attractive to UK pension funds to invest in by summer 2026.
2. Sector responses to TPR guidance on private market investment, which highlights opportunities and risks by investment type^{[footnote 10]}.
3. Develop a strategy and workplan to make sure all schemes have trustees capable of considering a diversified range of investments.

TPR will track its progress using the system-level indicators set out below:

a. An increase in the proportion of DC assets invested in in unlisted/private assets

b. An increase in investment in UK-based assets by DC schemes.

Goal 4: Artificial Intelligence Growth Goal

In the coming years, we are likely to see extraordinary strides forward in technology, particularly artificial intelligence (AI). In workplace pensions, a number of use cases for AI are emerging which could signal improvements in administration and member engagement in particular. However, whilst adoption of AI in the pensions industry is growing, it remains generally low: the Society of Pension Professionals’ 2025 survey of members found 87% of respondents’ firms use AI, yet 77% use it in only 1-5% of their services^{[footnote 11]}. Adoption is hampered by a lack of understanding and concerns around the technology.

AI technologies continue to advance rapidly, raising governance, operational, and resilience challenges. The evolving fraud threat with AI indicates that it is currently used to boost the scale and efficiency of telecom enabled fraud, but instances of AI enabled advanced impersonation fraud remain rare. AI also offers new capabilities to combat fraud by identifying and detecting unusual patterns and fraudulent websites.

As a result, our focus as a regulator is on providing the pensions industry with the tools to explore and implement AI in a safe, controlled way. We have already established an AI Advisory Council with external experts to oversee the ethical use of AI technologies. And we will promote the responsible and safe use of AI technologies in pensions to improve saver outcomes. We will achieve this by focusing on good scheme governance and administration, putting the data building blocks in place, supporting and fostering responsible innovation, and harnessing AI to become a more effective and efficient regulator. This includes a concerted focus on data as part of its supervisory efforts to make sure that it is considered a strategic asset.

TPR will track its performance against the following regulatory milestones for this goal:

1. Publish guidance in 2026 on the responsible adoption of AI for pension schemes
2. AI Advisory Council/Data and Digital Industry Working Group: Meeting 4 times in the year and publishing summaries of discussions
3. AI Accelerator Programme, which has a significant focus on building TPR’s AI capability to enhance our regulatory delivery:

a. 80% of TPR staff utilising AI productivity tools such as Copilot as part of their workflow

b. at least 70% of priority AI use cases progressed to live use or operational pilot

1. Trust-based pension schemes: Trustees and governance, building a stronger future – GOV.UK ↩

2. Analysis of Future Pension Incomes 2025 – GOV.UK ↩

3. Many respondents to the Department for Business and Trade’s (DBT’s) Invest 2035 consultation strongly supported consolidation as a means to achieve scale, efficiency and better member outcomes. British Private Equity and Venture Capital Association (BVCA): Supported consolidation, noting both large and small funds are vital for growth; highlighted risks of LGPS pooling reducing regional investment, but backed proposals for local strategies. Railpen: Advocated for incentivising sponsors to provide risk capital and merge LGPS for scale. UK Finance: Supported reforms to incentivise LGPS and DC funds to invest in UK assets; believed consolidation for scale is a key action. Association of Real Estate Funds (AREF): Advocated for incentives for smaller DC schemes to merge for scale. ↩

4. See: Pension fund investment and the UK economy – GOV.UK ↩

5. Responses to DBT’s ‘Invest 2035: the UK’s modern industrial strategy’ consultation strongly supported the use of Value for Money (VfM) as a key metric: UK Finance advocated measuring consumer value by net returns rather than fees, while BVCA and Fidelity emphasised moving beyond cost to focus on outcomes. ↩

6. Several respondents to DBT’s Invest 2035 consultation expressed support for productive investment in UK assets. ShareAction: Supported aligning pension investment with UK growth and net zero goals. ↩

7. See: Pensions Investment Review: Final Report – GOV.UK ↩

8. In response to DBT’s ‘Invest 2035: the UK’s modern industrial strategy’ consultation, Fidelity International supported stronger regulatory powers to ensure smooth transitions and guided options for savers. ↩

9. Responses to DBT’s Invest 2035 consultation showed strong support for unlocking pension capital. IP Group plc: Advocated unlocking pension capital for UK growth companies. UK BioIndustry Association (BIA): Urged directing unlocked pension funds to life sciences and innovation sectors. ↩

10. Private markets investment – The Pensions Regulator (TPR) ↩

11. See: The Society of Pension Professionals (SPP) response to the Treasury Select Committee Call for Evidence on the use of AI in banking, pensions and other financial services ↩