In December 2025, investment manager Aberdeen took over responsibility for the SGPS using an FAA. This was the first time an asset manager had used the arrangement in this way.

Pensions Minister Torsten Bell said the transaction complied with current laws but used the FAA framework in a way that was not anticipated when the rules were introduced in 2012.

As a result, the Department for Work and Pensions (DWP) will consult on whether FAA regulations need to be strengthened. The review will look at whether extra safeguards are needed when defined benefit (DB) pension schemes are run commercially for profit.

Bell said the government supports innovation that could improve outcomes for pension scheme members, but regulation must keep pace with new business models and the risks they may create, PensionsAge reports.

He pointed to the Pension Schemes Act 2026, which created a regulatory framework for DB superfunds and includes protections designed to align the interests of commercial operators with those of scheme members. The government will consider whether similar protections should apply when FAAs are used in comparable ways.

Responding to the announcement, Lane Clark & Peacock (LCP) partner Steve Hodder welcomed the review. Hodder, who advised Stagecoach on the transaction, said appropriate safeguards are important and supported the DWP’s plans to strengthen the FAA framework.

He added that innovation, competition and greater choice can benefit pension scheme members and welcomed the government’s support for new approaches in the DB pensions market.