June 2025
The Pension Schemes Bill 2025 represents the most comprehensive development for pension scheme members since auto-enrolment and will redefine what constitutes acceptable pension administration.
By emphasising ‘value creation’ for members, it positions digital transformation as a pathway to delivering genuine value for the entire sector.
Modernising pension administration platforms is a strategic imperative, as the Bill necessitates that schemes address systemic issues including operational efficiencies, evidence-based decision-making, member engagement, performance measurement and reporting.
These improvements are only achievable when a sophisticated digital infrastructure is adopted.
In this article, we consider:
- Why The Bill Demands Digital Transformation to Deliver Value for Members
- How It Will Create Meaningful Member Value Propositions
- The Critical Role of Pensions Administration Software Solutions
- What The Value for Money (VFM) Framework Means for Administration
- How The Bill Drives Technological Innovation
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1. Why the Bill Demands Digital Transformation to Deliver Value for Members
Addressing Systemic Inefficiencies
Many pension providers may be relying on administration platforms developed for a less automated era. The landscape now requires digitised capabilities that some schemes struggle to provide — bulk data transfers and cleansing, comprehensive analytics, automated processes, 24/7 self-service member experiences, online identification and verification, advanced cyber-security controls, and real-time Pensions Dashboard integration.
In mandating that schemes deliver value for money and by setting transparency and data reporting standards, systemic inefficiencies will become more apparent. If schemes are to meet the new regulatory requirements and future-proof their operations and service delivery, digital transformation and modernisation programmes will be unavoidable.
Delivering Better Outcomes for Members
The Value for Money (VFM) framework focuses on delivering better outcomes for members through investment performance, cost efficiency, and service quality. Action plans must “reasonably be expected to result in the generality of those members receiving improved long-term value for money” [Section 14(7)].
Performance success will be measured by the quality of outcomes rather than simply meeting minimum operational benchmarks. It requires continuous monitoring to maintain standards or identify areas for improvement, and digitisation will be essential to evaluate performance and flag issues that may significantly impact members.
2. How It Will Create Meaningful Member Value Propositions
A Member Value Proposition articulates an organisation’s promised value to its current and new members. It’s a member-centric approach that helps drive acquisition, retention, engagement, loyalty, and growth.
A clearly defined proposition spans the entire membership lifecycle and has satisfaction and feedback at its core. The VFM framework sees a fundamental shift towards member satisfaction surveys and data reporting, with a requirement to publish “prescribed categories of information (‘metric data’) for the purpose of enabling VFM assessments to be made” [Section 10(2)(c)].
If schemes are to meet the VFM assessment standards, they must develop an authentic proposition, ensure consistent communication and service delivery across all channels, and create feedback loops to continually improve.
Administration and customer relationship platforms will play a crucial role in delivering personalised experiences and gathering member satisfaction responses, after which the detailed metric data will be automatically available for assessment.
Transparency = Competitive Pressure = Member-Centricity
The Government’s Pensions Investment Review Final Report states that funds must “make publicly available a range of data and metrics of scheme quality, including investment performance, showing the consistency of returns, over time” [Section 2.4], meaning they will be directly comparable on standardised metrics.
Rather than a race to the bottom on costs, this transparency will put pressure on schemes to demonstrate superior value for members at all levels and, notably, will “support the cultural shift needed in the DC pensions market.” [Section 2.4]
Such transparency and comparative data will create a ‘perform or perish’ environment by making poor performers visible to employers, advisers and members. The public Value for Money ratings will reward schemes that demonstrate superior member outcomes, and regulatory pressure will require “underperforming funds to improve, wind up or consolidate into better performing ones.” [Section 1.23]
Analysis and assessment of a scheme’s performance can only be measured through comprehensive digital administration and oversight tools, which will incentivise schemes to invest in long-overdue modernisation.
3. The Critical Role of Pensions Administration Software Solutions
Modern pensions administration software is the operational cornerstone from which schemes will deliver enhanced member value by utilising a wide range of integrated capabilities that older systems are unable to provide.
The new performance standards will also create functionality gaps that manual processes can’t bridge, and with potential penalties reaching £100,000 for compliance failures, investment in technology becomes necessary to mitigate risk.
Small Pot Consolidation for Value-led Outcomes
Consolidation requires significant infrastructure to run automated member identification systems, extensive data cleansing, and high-volume transfers. Modern solutions and APIs will be needed to quickly identify stranded assets and efficiently consolidate pots to ensure the best outcomes for members’ savings.
Again, pension providers will need a sophisticated suite of tools for automation and validation, with robust data handling and security controls. Legacy systems may struggle to manage the scale of the tasks, and manual processing will be impractical.
Pension providers must therefore adopt solutions capable of:
- Dynamic performance monitoring
- Tracking the scheme’s performance against benchmarks and identifying issues that may negatively impact member outcomes.
- Comprehensive cost analysis
- Analysing all activities to ensure transparency, accurate cash-flow forecasting, and to identify cost improvements.
- Member satisfaction measurement
- Distributing satisfaction surveys, evaluating responses, and correlating satisfaction scores against performance indicators.
- System integration
- Real-time synchronisation to ensure all users and stakeholders have access to current data and information.
- Automated processes
- Custom-designed workflows to handle routine transactions, reporting and communications, to improve accuracy and minimise manual intervention.
- Advanced analytics
- Tools that provide continuous, real-time insights into scheme performance, member behaviour, and operational conditions.
- Personalisation at scale
- Tailored member experiences at an omni-channel level and personalised communications designed to serve individual members’ needs.
- Self-service for members
- Personalised member portals with 24/7 access to account information and autonomous services.
Regulatory Technology (RegTech)
As defined by the Financial Conduct Authority, “RegTech applies to new technologies developed to help overcome regulatory challenges in financial services.”
To ensure best practice in compliance and data security, some funds may adopt a more defined RegTech approach alongside a modern pension administration solution.
4. What the Value for Money Framework Means for Administration
Strategic Investment Beyond Compliance
While regulatory adherence will drive an immediate demand for schemes and funds to invest in new technologies, forward-thinking organisations will recognise longer-term value creation opportunities. If schemes view the legislation as a blueprint for over-performance rather than merely a compliance burden, they will be future-proofing themselves against further regulatory developments, changing markets, and evolving member expectations.
Schemes must acknowledge the scale of change needed and then commit appropriate resources to develop a sustainable digital transformation programme. Cloud-based software solutions that can continuously scale, upgrade and evolve will become essential.
Identifying Capability Gaps
Schemes need administration systems with extensive automation and analytics capabilities that can benchmark performance against defined metrics, identify underperforming funds, and generate predictive insights on future trends.
Many will find their platforms lacking these fundamental capabilities. But before making any procurement decisions about a new platform, schemes should evaluate their existing capabilities against the mandates and identify the gaps, such as data cleansing, identification and validation, automated workflow processing, or real-time API connectivity.
For example:
- Technical Evaluation
- Identify if the current systems can handle increased data transfers and investment analysis.
- Resourcing Review
- Evaluate the administration team’s capabilities to undertake continuous performance monitoring and comprehensive metric data reporting.
- Capability Mapping
- Create a detailed matrix comparing current system capabilities against each requirement, including levels of performance under operational stress.
Increasing the Value of Administration
Technological advancement is holistic. In an era where professionals question whether AI will make their jobs redundant, we whole-heartedly believe digital transformation will make administrators even more valuable.
Schemes are more likely to maintain experienced staff, build on in-house skills, and enhance job roles rather than outsource administrative functions.
Enhanced administrator roles might involve:
- Member experience
- Developing personalised digital communication strategies, creating member journeys, and measuring satisfaction.
- Data analytics and reporting
- Interpreting complex data, generating insights, and presenting findings to trustees and regulators.
- Strategic decision-making
- Analysing performance, recommending actions, and making evidence-based decisions.
- Quality assurance
- Managing exceptions, validating outputs, and ensuring accuracy and compliance.
5. How the Bill Drives Technological Innovation
The legislation creates an environment where investment in technology directly translates into value creation. Cloud-based platforms, advanced analytics, and AI will provide competitive advantages for forward-thinking schemes and third-party administrators, leading to even better member experiences and outcomes.
The Role of AI and Predictive Modelling
AI will accelerate operational excellence and enable schemes to anticipate member needs and provide proactive support, for example:
- Behavioural pattern analysis
- Machine learning tools that evaluate engagement levels and account activity to identify vulnerable members and those who may benefit from additional guidance and intervention.
- Machine learning member support
- Natural Language Processing that create highly personalised communications that explain pension concepts relevant to individual members, and adapt to improve performance and engagement.
- Predictive modelling for better investment outcomes
- Models that forecast more accurate retirement outcomes based on contribution patterns, market conditions and trends.
- Intelligent document processing
- Automated tools that process regulatory documents and member information, extract relevant details, cross reference, and update databases with greater speed and more accuracy.
- Validation, verification and fraud detection
- Machine learning algorithms that identify unusual transaction patterns and potentially fraudulent activity, and automatically adapt to sophisticated cyber threats.
- Automated customer service
- AI-powered chatbots and agents that handle routine member queries, providing instant responses while directing complex issues to the administration team.
Conclusion: Providing the Value that Members Deserve and Expect
The Pension Schemes Bill 2025 sets the foundation for a digitally transformed industry that will finally echo the value-led service delivery which has existed in the financial sector for years.
The Bill addresses systemic issues within the pension sector by aligning schemes and funds with members’ interests. Transparency, VFM, and consolidation will improve retirement outcomes for millions of savers, and the technology that powers this value creation will itself inherently improve.
The transition period will, of course, present challenges. The simultaneous introduction of multiple requirements within tight timeframes creates operational and financial pressures, particularly for smaller schemes.
Ultimately, the sector knows it must adopt a digital-first approach and invest in technology to deliver the exceptional value that members deserve and expect, and The Pension Schemes Bill is a positive catalyst for that change.
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Disclaimer: AI was used in the analysis of the Bill and the extraction of key points, facts and sections contained therein.