Defined contribution (DC) pension charges have continued to fall as employers focus on retirement outcomes, according to research by Willis Towers Watson (WTW).
Its 20th annual WTW UK DC pensions and savings survey 2025, which gathered insights from 259 UK employers, also found there are fewer bespoke default funds offered and a growing focus on decumulation strategies.
Annual management DC investment charges have decreased from an average of 38 basis points in 2017 to 28 basis points in 2025. Nearly two-thirds of schemes have charges below 30 basis points.
While two-fifths (39%) of larger schemes are willing to consider increasing charges to access illiquid investments, only 12% smaller schemes would consider this. Meanwhile, off-the-shelf default funds have increased in prevalence from 47% of funds in 2017 to 79% DC funds in 2025.
The rise of collective defined contribution (CDC) schemes is being explored for accumulation and decumulation, as 15% with an own-trust DC scheme consider moving to CDC in the next two years.
Just under three-quarters (70%) of respondents are focusing on building engagement and improving retirement outcomes. Other top priorities include improving retirement outcomes (63%) and enhancing financial wellbeing support (62%).
Approximately one-third (29%) provide or facilitate guidance services as a cost-effective way to support workers approaching retirement, with 69% planning to introduce these in the next two years.
Helen Holman, head of DC consulting at WTW, said: “The question is whether we have now reached the stage where the focus on driving costs down has gone too far and whether there is room to increase value for money by accessing alternative investment strategies that can provide growth, diversification and value, despite higher costs.
“Guidance services stop short of full financial advice, but offer more cost-effective means to support workers, both as they approach retirement and to support general financial wellbeing. Increasingly, we see employers looking to provide, and pay for, access to additional guidance for their employees.”
