UK DC pension schemes down 40% in a decade

pensionThe UK’s occupational defined contribution (DC) pension market has consolidated by nearly 40% in a decade, data has shown.

The Pensions Regulator’s (TPR) 12th annual DC trust report revealed that there were 27,700 DC schemes in December 2021 down from 45,150 in 2011.

It also showed a 2% drop in the number of schemes in the last year.

The report discovered that the number of master trusts in the market dropped from 38 to 36 since the last report. However, membership of these has increased by about 10% in that time to 20.7 million. Assets in master trusts, excluding hybrid schemes, rose by almost 50% to £78.8 billion.

In addition, the total amount transferred into DC schemes augmented by 134% last year from £3.7 billion to £8.6 billion, with this including transfers from defined benefit schemes as well as from other DC occupational and personal schemes.

Meanwhile, average assets per member increased by 20% over the past year compared with a 10% increase the previous year. However, looking longer-term, average assets per member fell by 70% since the start of 2012.

This year, the average assets per member at retirement was £5,100, a 3% fall since the beginning of last year and a 73% decrease since the beginning of 2015.

David Fairs, executive director of policy, analysis and advice at TPR, commented that the continuing trend of consolidation in the DC market is good news for savers, as the vast majority of DC members continue to be saving into larger, more stable master trusts.

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“However, every saver deserves to be in a well-run scheme which offers good value for money,” he said. “We know many small DC schemes are poorly run and we are determined to continue to work with industry to drive up standards of governance and trusteeship.

“We expect this trend of DC consolidation to continue as small schemes are now required to demonstrate that they provide value for members. Where they don’t, we expect them to either wind up or take immediate action to make improvements,” he said.