As part of the Government’s review of the pensions system, which aims to boost investment in the British economy whilst optimising returns for savers, the Government has sought views from the industry on proposed reforms to deliver scale, accelerate consolidation and drive a focus on value over cost in the Defined Contribution (DC) workplace pensions market.
Summarising the ABI’s response to the consultation
“We support the Government’s drive for scale in pension provision and better saver outcomes. However, in-train policies such as the Value for Money framework and the consolidator model for small pension pots share many of the same aims as the proposed size threshold for Megafunds - and legislation to bring about transfers without individual consent is necessary to deliver them all.
“The pensions industry cannot safely implement all four market-shifting policies whilst also delivering pensions dashboards and a new support model for customers. The Government must prioritise. We believe the Value for Money framework and bulk transfers without individual consent will have the greatest impact to deliver scale and customer benefit, and we would like to see Government focus its efforts on delivering these first. Assuming the Government presses ahead with Megafunds, the consolidator model also needs to be re-appraised.
“It is also vital that Government begins the second phase of its Pension Review as soon as possible to stave off the looming pension savings crisis.”
“It is also vital that Government begins the second phase of its Pension Review as soon as possible to stave off the looming pension savings crisis.”
Notes to editors
There has been considerable consolidation in the UK pensions market within the last few years, which is leading to greater scale:
- The UK’s DC sector has already achieved a higher proportion of provider concentration than the often-compared Australian model, with 79% of assets held by just 7 multi-employer providers - compared to 8 big providers in Australia accounting for 62% of assets (Corporate Adviser Master Trusts and GPP report, 2024).
- There are now 33 authorised Master Trust schemes, down from 90 six years ago.