This 2023 research uses data from six leading defined contribution (DC) pension scheme providers covering 65 large schemes with combined assets of just over £80bn. The analysis provides observations on the characteristics of schemes with assets under management in excess of £500m to give indications of what may be expected of those schemes as well as wider market insights.
To create this report we have collected an array of data covering the scheme structure, membership characteristics, default investment characteristics including management style and ESG integration, Total Expense Ratio for the default and facilitation of at retirement options for members.
Overview of analysis of large DC pension schemes
Since our research and publication in 2022 we have continued to see that value for members is still a main focus from the governing bodies in the pensions industry with joint consultation between The Pensions Regulator, the Financial Conduct Authority and the Department for Work and Pensions on a new framework throughout Q1 2023.
In addition, despite the highly volatile investment markets in 2022 the pace has not slowed on the expectations within pension arrangements to consider environmental, social and governance and stewardship matters.
- Unbundled own-trusts make up the largest of the large schemes, but master trusts are not just being used to consolidate the sub £100m schemes.
- Member charges have reduced within default investment strategies.
- There is a general correlation between average member fund size and default pricing, with larger average fund sizes being able to afford to have bespoke strategies for the same price as off-the-shelf solutions where average fund sizes are smaller.
- Increasing use of passive investments with a quasi-active or short-term tactical overlay in the default strategy.
- Significant increase in the support being provided by own-trust schemes in supporting members at retirement.
The authors would like to thank Marie Blood, Senior DC Consultant at Barnett Waddingham, who is a key contributor to this research.
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