The Pensions Regulator (TPR) is calling on defined contribution (DC) trustees to review the value their pension funds present to savers, as market shifts towards fewer, larger schemes.
TPR’s latest data shows that the number of DC schemes has decreased by 15% to 790 in 2025, a decrease of 15% on the 920 pension funds in 2024, primarily driven by those with fewer than 5,000 memberships exiting the market.
Between 2011 and 2025, the total number of pension funds decreased by 78% from 3,660 to 790.
Right now, master trusts account for the majority of DC members, holding 30.1 million memberships (92%) and £208bn in assets (83%).
The upcoming Pension Schemes Bill will only speed up the market dynamics as the scale test included in the Bill introduces a £25bn asset threshold by 2030 for DC multi-employer main scale default arrangements to improve value for money and boost investment in productive assets, with transition pathways for smaller schemes.
The transition pathway will require pension funds to have a credible plan to reach £25bn by 2035.
Richard Knox, TPR’s executive director, strategy, policy and analysis, said larger schemes are “better placed” to deliver value for money, including stronger investment returns and better service.
He urged pension trustees of smaller schemes to review their funds “today”.
“Those that cannot match the stronger performers should consolidate out of the market and transfer savers to a better value scheme,” he noted.
Shabna Islam, head of DC provider relations at Hymans Robertson, said that rising regulatory and governance pressures, including upcoming Value for Money (VfM) assessments, are prompting many to consolidate earlier, partly due to concerns about future provider capacity.
“Demographic shifts are also adding pressure. Growing numbers of deferred members are worsening small‑pot issues and increasing admin burden. Industry developments, such as dashboards and improved digital transfers, should help by making it easier for members to engage and combine savings,” she said.
“Average DC assets per member continue to rise, but pots still fall short of what’s needed for a moderate or comfortable retirement. Growing assets will, however, help master trusts reach scale more quickly and strengthen their position in a competitive market,” she added.
