What the Pension Schemes Bill 2024 Means for Asset Managers

By Senior Consultant, James Ward

Changes coming to the UK pension assets landscape 

In November 2024, the UK government unveiled pension reforms to consolidate the country’s fragmented pension market and unlock capital for higher-returning investments – like private equity and infrastructure.  

Smaller defined contribution (DC) schemes and Local Government Pension Schemes (LGPS) now face regulatory pressure to merge, creating opportunity and disruption for asset managers.

This article breaks down the key reforms and what they mean for your strategy, operating model, and next move. 

The Government’s Consolidation Strategy 

With nearly 3,000 DC schemes in the UK, the government aims to reduce this number drastically, targeting fewer, larger schemes each managing between £25bn and £50bn, down from 920 in 2024 to 50 to 100. It also plans to consolidate the LGPS from 86 funds into 8-15 megafunds by 2030. Consolidation on that scale will touch almost all industry players. 

The aim is scale: enabling access to private markets and infrastructure, reducing costs, and raising governance standards.  

The government hopes its changes will unlock: 

• Economies of scale, freeing up capital, talent, and operational capacity. 

• Access to higher-return investments through scale and professionalisation. 

• Improved for member outcomes, including higher growth and lower fees. 

Navigating the Change 

The stage is set for larger firms to acquire smaller players, and for smaller firms to seek merger partners. To get ready: 

• Larger players should: 

• Assess their capacity to absorb smaller schemes and integrate operations efficiently.

• Consider whether/when to initiate conversations and how to structure integration programmes that minimise disruption and preserve value. 

• Smaller firms should: 

• Prepare governance, data, and delivery models to be attractive merger targets, OR to merge with others and operate at greater scale. 

• Consider their ideal outcome: grow, buy or get bought – and position themselves accordingly. 

Innovation and AUM Growth 

With the government’s support for bolder investment strategies, asset managers with a track record in private equity or infrastructure are well-placed to benefit. Those who can design investing and operational solutions with government and member priorities may see attract significant inflows of member funds as the consolidations roll. Remember: even if the reforms somehow unlocked no new funds, they structurally allow pensions to invest in new asset classes. 

Rising to this moment requires more than just ambition: 

• Data strategy and operating model alignment are critical to supporting diligence, risk and performance across new asset classes. 

• Build scalable operating models fit for complex portfolios. 

• The government’s true goal – to unlock greater investment in the UK – will only materialise if those assets offer credible, risk-adjusted return. Asset managers – particularly those broadening their investment horizons – must maintain discipline, engage early with opportunities, support pipeline development, and adapt for complex, long-term assets. 

Programme Directors should consider external uncertainty into scoping and roadmaps with proper contingency planning. Governance frameworks need to clearly separate fiduciary accountability – pensions ultimately serve their members – from politically motivated investment pressure. 

Balancing Opportunity with Caution 

It’s important in times of change to be alive to the risks it creates: 

• Fiduciary duties may clash with political pressure to invest domestically. 

• Without strong governance, investment mandates may drift. 

• Uncertainty during implementation could delay flows. 

• Delivery leaders need optionality, flexible resource models, and readiness to adapt as regulation evolves. 

What’s Next? 

Whether you are positioning to be acquired, planning to acquire, or preparing to compete in a larger, more complex environment, UK pensions are entering a new phase and the window to act is open. The operating model you put in place today will define your role in tomorrow’s pension market. 

For market participants who think nimbly and prepare themselves well, the changes present ample opportunities to generate business and provide better returns, to widespread benefit. 

This is a big moment for the UK pensions and asset managers. For stakeholders responsible for mobilising resources within the industry, immediate questions are: 

• How do we respond to the regulatory pressure to scale? 

• How do we ensure our operating model can absorb new assets, asset classes, and expectations from the government and investors? 

• Do we have the governance, data and delivery capabilities to compete at larger scale? 

These aren’t easy shifts, but they’re not unfamiliar, either. Liqueo has helped clients navigate comparable transformations across the pensions and asset management space, with experience covering TOM redesigns, data strategy, integration delivery and creating flexible operating models that scale while adapting to regulatory change. 

Whether you’re absorbing schemes, entering new markets, or helping others transition, we can help you design and deliver the right response. Let’s start a conversation about how we can support your next steps. 

Change is coming. Be ready to harness it.