Scott Foster
Head fo Digital &
Governance Solutions
CACEIS UK
The UK pensions sector is undergoing a significant transformation, driven by a combination of regulatory ambition and economic growth agenda. With the government's recent "Workplace Pensions: A Roadmap" setting out a comprehensive reform agenda, and new legislation making its way through Parliament, pension professionals face both unprecedented challenges and opportunities. Here we seek to understand the key developments set to reshape the UK pensions landscape, from scheme consolidation and investment reform to the emergence of new pension models that promise to deliver better outcomes for members while supporting broader economic growth.
Continued Consolidation: Building Scale for Better Outcomes
The government's analysis (Pensions Investment Review: Final Report from May 2025) of the UK's pensions market reveals a stark picture of fragmentation, with 5,000 DB schemes holding around £1.4 trillion in assets and hundreds of DC schemes with fewer than 100 members.
This sub-scale operation has tangible consequences for savers, including costly governance requirements and limited economies of scale in asset diversification, which are putting pressure on the value for money proposition of smaller schemes.
The government's solution, articulated in the Pension Schemes Bill, is clear: create "a smaller number of bigger, better governed, better value pension providers". The evidence from both the UK and internationally from markets such as Australia supports this direction. In the DC trust market, consolidation into Master Trusts has already driven significant acceleration in assets under management, permitting higher efficiency through scale. The push for consolidation also presents an opportunity to address the long-standing difficulty in comparing pension fund performance – a challenge in a market where thousands of funds operate with different objectives and approaches to benchmarking ...
Read the full article on The Pensions Management Institute (PMI) website (page 42)
