A quartet of pension providers holds more than 70% of assets and serves 74% of members across a study of the UK’s largest defined contribution (DC) schemes, according to Howden Employee Benefits.
The largest provider alone accounted for almost one-third of the assets covered, giving a small group significant influence over default design, retirement provision, investment choices and digital servicing.
Howden’s analysis of large DC schemes report examined 147 schemes with £200bn in assets and nearly four million members. Master trusts accounted for 41% of schemes, up from less than 30% in 2022. They also served 63% of members in bundled arrangements.
The data illustrates the concentrated nature of the DC sector, despite ongoing efforts from the government and the Pensions Regulator to further consolidate DC schemes. This week, the government confirmed its timetable for requiring auto-enrolment multi-employer schemes to achieve a minimum £25bn in size.
Investment design is broadening, although allocations remain relatively limited. Some 55% of schemes had exposure to private markets, but only one in five held more than 5% in those assets.
The report said provider-led, off-the-shelf propositions were often leading private market adoption, increasing the importance of trustees understanding whether their investment views aligned with their provider’s approach.
Mark Futcher, head of DC and financial wellbeing at Howden, said: “Bigger pension schemes were never supposed to be the end goal – better retirement outcomes were.
“Despite schemes increasingly designing for flexible retirement incomes, many members continue to favour cash withdrawals. And while people are logging into their pensions, few are taking the expected actions to genuinely improve their outcomes.”
Retirement behaviour diverges from design
Of the schemes that provided retirement target data, 93% aimed to deliver a variable income, with drawdown the most common objective.
However, 87% of the 33,328 members who began taking benefits in 2025 used cash withdrawals in some form. Some selected several options, with 35% entering drawdown and 7% purchasing an annuity.
“There is a real concern about members not understanding the tax implications, longevity or inflation risk from cashing out their benefits.”
Marie Blood, DC technical lead at Howden, said cash could be appropriate for members with other retirement income, but warned that it would not suit everyone.
“There is a real concern about members not understanding the tax implications, longevity or inflation risk from cashing out their benefits,” she said.
Most schemes reported online registration rates above 60%, but expression-of-wish completion remained below 40% for the majority. Blood added: “Access is not engagement and options are not outcomes.”
