Trustees of defined contribution (DC) pension schemes need to keep their arrangements under review and consider consolidating into larger schemes if they are not delivering value, the Pensions Regulator (TPR) has said.
Its latest data shows that consolidation is continuing at pace, with the number of DC schemes declining by 15% year on year to 790. This was largely driven by schemes with fewer than 5,000 members, TPR said. The figures exclude “micro” DC schemes with fewer than 12 members.
Assets under management in DC, meanwhile, have increased by 22% to £249bn, and total memberships are up by 7% on 2025 to nearly 31 million. Master trusts account for 92% of memberships and 83% of assets, according to TPR.
Consolidation needs to continue, TPR said, in order to continue to raise standards and improve the value delivered to members.
Richard Knox, TPR’s executive director for strategy, policy and analysis, said: “People rightly expect to receive value from their hard-earned retirement savings. As we move towards a market of fewer, larger schemes, master trusts now dominate. We believe that larger schemes are better placed to deliver value for money, including stronger investment returns and better service.
“The current Pension Schemes Bill will speed up market dynamics. In the new pensions world, we urge pension trustees of smaller schemes, in particular, to review their scheme today. Those that cannot match the stronger performers should consolidate out of the market and transfer savers to a better value scheme.”
The data comes after the Department for Work and Pensions published its plans for the scale test for DC master trusts, setting out how it wants such schemes to reach £25bn in assets.
Speaking at the Association of Member Nominated Trustees’ Spring Conference this morning (17 March), Emma Douglas, chair of Pensions UK and wealth policy director at Aviva, said scaling up pension schemes “makes a lot of sense” as there are significant benefits from size and scale.
However, she also warned that the scale test as it stands could hamper innovation in the DC space.
“We do want fewer, larger schemes, as there are some scale benefits,” Douglas said, “but I also worry that it will reduce innovation in the market.
“It’s hard to see how some of the smaller, more innovative players are going to survive in this new world with this regulation. And it would be really hard to be a new entrant getting into this when you know you’ve got the challenge of getting these assets.”
