The defined contribution (DC) pensions market continues to “radically reshape” towards fewer, larger pension schemes, according to data from The Pensions Regulator (TPR) in the UK.
TPR’s 2024 DC Landscape statistics show the number of DC pension funds decreased by 15% in 2024 to 920 – under 1,000 for the first time.
The regulator said the drop in the number of funds was primarily driven by those with fewer than 5,000 members.
It added that 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.
This is because the regulator has previously found that just 17% of smaller schemes were undertaking the required enhanced value for members assessments in 2023.
While the number of DC pension funds dropped in the last year, the number of members in DC funds 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.
Most members are part of master trusts holding 28 million memberships (91% of DC and hybrid schemes) and £166bn in assets (81% of all DC scheme assets).
The data also shows that DC scheme assets grew 25% from £164bn in 2023 to £205bn 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 was attributed to a combination of contributions and investment returns.
Nausicaa Delfas, chief executive officer 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.”
She added that value for money should be the guiding principle that runs through the DC system and where schemes cannot compete with the very best, she warned they should consolidate and exit the market.
Zoe Alexander, director of policy and advocacy at the Pensions and Lifetime Savings Association (PLSA), added that the date demonstrates the pace at which the DC pension market is consolidating as a result of competitive forces, regulator guidance and incoming initiatives like the Value for Money framework.
She said: “Viewed in the context of the government’s Pensions Review, this further raises the question of why a scale test would be in the best interests of savers when we are already seeing a move to fewer, larger DC schemes.”
Damon Hopkins, head of DC workplace savings at Broadstone, noted that in 2025 pension fund trustees and employers “must” build on the progress made over the past year “strengthening pension engagement and financial education to emphasise the value of early contributions and support members on their journey to retirement”.
He said: “At the same time, schemes must refine their investment approaches, balancing sustainability, regulatory developments, and member outcomes while continuously evolving default strategies to secure better long-term results.”
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