The defined contribution pensions (DC) market continues to radically reshape towards fewer, larger pension schemes according to new data from The Pensions Regulator (TPR).
The official statistical release, the 2024 DC landscape shows the number of DC schemes decreasing 15% in 2024 to 920 – under 1,000 for the first time.
The drop in the number of schemes is primarily driven by those with fewer than 5,000 memberships.
Driving consolidation in savers’ interests was at the heart of TPR’s three-year Corporate Plan released last year with a regulatory initiative launched to challenge small schemes on the value for money they offer savers.
TPR research shows smaller schemes are more likely to have poorer standards of governance – with a TPR survey of small schemes finding that just 17% were undertaking the required enhanced value for members assessment in 2023.
Nausicaa Delfas, Chief Executive of TPR, said: “Our DC landscape report is further evidence of the evolution towards a pensions market of fewer, larger pension schemes, which we believe are better placed to deliver for savers and drive growth in savers’ interests.
“Value for money should be the guiding principle that runs through the DC system and where schemes cannot compete with the very best, they should consolidate and exit the market.”
The report, published today, also explains the following:
- Members in DC schemes increased 6% from 28.8 million members in 2023 to 30.6 million members in 2024. Active members remained at 11.1 million in 2024, but deferred members increased by 10% from 17.7 million to 19.5 million.
- Master trusts continue to provide for most DC members, holding 28 million memberships (91% of DC and hybrid schemes) and £166 billion in assets (81% of all DC scheme assets).
- DC scheme assets grew 25%, from £164 billion in 2023 to £205 billion in 2024 leading to a stable growth of 17% in assets per member, from £6,000 in 2023 to £7,000 in 2024. This growth in scheme assets was driven by a combination of contributions and investment returns.
As a data-led regulator, TPR continuously improves its statistical publications, and this year reports on micro and hybrid scheme assets for the first time having only reported on assets for DC schemes with more than 12 members previously.
Notes for editors
- A micro has two to 11 members, a non-micro has 12 or more members.
- A hybrid scheme combines elements of both defined benefit and DC schemes meaning it incorporates features from both types of pension plan.
- All figures in our release refer to DC schemes with 12 or more members and exclude hybrid schemes unless explicitly stated otherwise.
The 2024 DC Landscape report also shows:
- the number of non-micro DC and hybrid schemes decreased by 15% over the last year, from 1,080 schemes in 2023 to 920 schemes in 2024, compared to an 11% decrease the previous year. There are now fewer than 1,000 non-micro DC schemes. The reduction in schemes is primarily made up of schemes with fewer than 5,000 memberships.
- since 2011, the number of non-micro schemes and hybrid schemes has declined by 75% (from 3,660 to 920). Since 2011 memberships in non-micro and hybrid schemes grew from 2.3 million in 2011 to 30.6 million in 2024.
- TPR has made a revision to overall assets in 2022 and 2023. This follows a correction to data submitted by one scheme. The overall asset figure has been revised upwards by 3% in 2022 and 4% in 2023.
- Previous DC landscape reports, available on the national archive, will not be directly comparable as data revisions have not been applied to historic reports. We always recommend using the timeseries data in the latest publication to make historic comparisons.
- TPR believes the shift towards fewer, larger pension schemes can be beneficial through increased efficiency and scale and improved outcomes for savers and the UK economy. To regulate for this changed market, TPR is adapting its approach to focus on prudential-style regulation, addressing risks at both the individual scheme level and the broader financial ecosystem.
- In 2023, TPR launched a regulatory initiative to check savers in DC schemes are benefiting from rules requiring trustees to assess whether they are delivering value. This has been helping drive schemes to consolidate, with around 17% of DC schemes TPR engaged with reporting that, having concluded their schemes do not offer good value, they had opted to wind up. Since the start of the initiative, TPR has issued more than £33,000 in penalties for breaches of the regulations. More penalties are expected through this ongoing initiative.
- A survey of DC schemes, carried out by TPR in 2022, found just 17% of schemes required to complete the new value for members assessment had done so, and that 64% were unaware of this statutory obligation.
The Pensions Regulator is the regulator of work-based pension schemes in the UK. Our statutory objectives are to:
- protect members’ benefits
- reduce the risk of calls on the Pension Protection Fund
- promote, and improve understanding of, the good administration of work-based pension schemes
- maximise employer compliance with automatic enrolment duties
- minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only)
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