Pensions Minister, Torsten Bell, has emphasised the need for the pensions industry to focus on delivering value and consistent returns for savers, suggesting that there is "a pretty big consensus" on what is needed in the pensions space over the next ten years.

Speaking at the Trades Union Congress (TUC) Pensions Conference 2025, Bell stated: "I think there's actually now a pretty big consensus about what needs to happen.

"Bigger schemes, more investment in a wider range of productive assets, better protections for individuals, better governance for those schemes, and different ways of managing the decumulation phase of pensions.

"There's a lot of consensus and it's our job now to put it in place."

Bell also confirmed that initiatives to support this direction of travel are on the horizon, as the government is looking to push ahead with its small pots policy.

"Because remember - small pots, large charges - that is not good value for money for the saver - as well as being risk of being lost and confusing to deal with," he said.

"So the small pots solution - that's coming and that will reduce costs significantly, because the pensions industry is currently spending a lot of money administering these pots - that's bad news for everybody."

Bell also stressed the need to focus on "actual returns" more broadly, emphasising that whilst employers or pension providers may focus on low costs or management charges, "that is not what matters to savers".

"What matters to savers is the return," he said, acknowledging that "sometimes there will be some higher costs involved in delivering those higher returns".

"Investing in infrastructure is more expensive than just putting money in trackers for equities," he admitted, "but we need that to happen."

He continued: "We also need to recognise that there are some low performing schemes, so the value for money reforms coming into force over the next few years will force the industry to focus and to be transparent about the returns that savers receive and the worst performing schemes will need to consider their position.

"Because we can't have savers who the government has basically soft mandated into savings, not getting returns for what they are putting in.

"And remember in the move from DB to DC savings we have moved to a world where the individuals, the workers, bear all the investment risk."

"So it's our job to make sure they get the best possible returns and we can't have this level of variation over time."

But "significantly more problematic" than the shift in investment risk, according to Bell, has been the shift in longevity risk.

"Individuals in a defined contribution (DC) world are being asked to bear all of the uncertainty about when we pass away... and that is impossible to manage well at an individual level," he said.

"We need to do a better job of managing that risk as we go forward."

In particular, Bell suggested that collective defined contribution (CDC) could be one way to address this, arguing that "we should talk about CDC in the context of the decumulation phase not just the accumulation phase, because that's more relevant to the large numbers of people that have now built up large volumes of DC savings".

"We will be making sure we provide a regulatory basis for that and certainty in the months and years ahead," he stated.

More broadly, Bell acknowledged that whilst there has been big increases in savings rates, they are still too low for some groups, with particular discrepancies highlighted in relation to the self-employed, as well as ethnic minority groups.

"We need to wrestle with why that is happening," he said.

However, he also stressed the need to think about the adequacy question not just in aggregate.

"We need to think about different groups because, for lower earners, the state pension is doing much more of the work in terms of their replacement rate.

"But obviously when you come to actual income levels in retirement, you need to think in a different way and both of those things are important and we need to wrestle with both of them."

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