London, United Kingdom, May 5, 2026 - As the Pension Schemes Bill receives royal assent, the UK DC market faces a defining decision. More than 13 million deferred small pots are already costing the industry an estimated £225 million a year — and without a coordinated consolidation framework, that number will reach 17.5 million by 2030, at growing cost to providers and increased detriment to members.
Nick Meredith, Products Director at Equisoft explains: “A solution is required to the small pots problem that is scalable, secure, and deliverable within the government’s targeted timeframe. However, with policy and legislative detail still evolving, the industry is at a critical point: decisions taken now will shape the long-term structure, cost, and competitiveness of the market.”
This is the premise and solution behind the Solving the Small Pots Challenge white paper released by Equisoft, a leading global provider of digital solutions for insurance and wealth industries. There is a risk that solutions [WW1] adopted prematurely, or outside of an open and interoperable framework, could introduce unnecessary cost, create dependency on single providers, or require rework as the regulatory model becomes clear. Given the scale of the challenge, it is essential that any solution aligns with the direction of government policy, preserves competition, and remains adaptable as requirements evolve.
The paper sets out a practical and deliverable alternative: a standards-based, federated Small Pots Consolidation model that’s deliverable in an appropriate timeframe. Rather than relying on new centralised infrastructure or a proprietary service, this approach builds on established industry capabilities — including ISO 20022 messaging over SWIFT and the existing governance and legal frameworks already supporting electronic transfers.
By leveraging proven infrastructure and open standards, the federated model:
- Minimises build risk and accelerates time to market
- Maintains competition and avoids dependency on a single provider
- Aligns with the likely direction of government policy and regulatory oversight
- Delivers consolidation at a cost proportionate to the size of small pots
- Provides flexibility to evolve alongside future legislative and market developments
Meredith adds: “Crucially, this approach allows the industry to begin progressing towards consolidation in a way that is consistent with long-term objectives, avoiding the need for duplication or transition as the regulatory framework is finalised.
“The choice facing the industry is not whether to act, but how to act. A federated, open standards model provides a low-risk, cost-effective, and future-proof path to delivering better outcomes for both providers and members.”
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Media contact: Will White, Omnia Paratus, will.white@weareomniapartners.com
