On the go: The increase in defined contribution members slowed to 11 per cent in 2020 as a result of the pandemic, compared with 17 per cent in the previous year, according to data from the Pensions Regulator.
TPR’s report ‘DC trust scheme return data 2020–2021’, published on Tuesday, covers around 28,360 plans from the pension schemes register as at December 31 2020.
The data also showed that average assets per member have increased by 10 per cent over the past year. According to the regulator, this contrasts a previous trend of decline, which has been running since 2013. Overall, average assets per member have fallen by 75 per cent since the beginning of 2012.
In 2020, the average assets per member at retirement stood at £5,300. This is a 3 per cent decrease since the beginning of last year and a 73 per cent fall since the start of 2015, TPR stated.
Nathan Long, senior analyst at Hargreaves Lansdown, noted that ever since the launch of auto-enrolment accelerated the seismic shift into DC pensions, membership of trust-based DC schemes has soared while assets per member tumble.
He said: “This year the pandemic changed both. Auto-enrolment boosts membership of these schemes every year, and the 2020-21 tax year was no different, but the pandemic slowed the rate of new joiners — partly because people started new jobs less often, which means fewer being enrolled into schemes.
“Meanwhile, average assets per member rose significantly. This is partly because global stock markets have held up rather well, despite wobbles in the early part of 2020 and also because support from the government enabled contributions to continue flowing in.”
TPR’s data also showed that the total number of DC schemes continues to drop, down 10 per cent in a year and 66 per cent since the start of 2010.
Kate Smith, head of pensions at Aegon, noted that the regulator’s findings “clearly show that size matters”.
She said: “The rapid decline of smaller schemes continues with a 65 per cent fall in numbers, as trustees of these schemes continue to look to consolidate with larger schemes.”
The overall winners are DC master trusts, “which have seen exponential growth since 2010 from 270,000 members to more than 18.6m in 2021, and £52.8bn of assets, driven partly by consolidation but also from auto-enrolment”, Smith noted.
“This trend is set to continue once the full effect of the new good value assessment test, for occupational pension schemes with less than £100m, starts to kick in from later on this year,” she added.
