Reductions are concentrated among schemes with fewer than 5,000 members, while the number of larger schemes remains stable
Upcoming Pension Schemes Bill requirements mean trustees must urgently assess whether continuing, consolidating or winding up is in members’ best interests
The DC pensions market is changing - and changing quickly. New figures from TPR’s DC landscape analysis show a further 15% drop in non-micro DC and hybrid schemes over the past year, matching the steep reduction seen in 2023-24. This represents the largest proportional decline to date, signalling a continued shift toward larger, better-governed schemes capable of delivering stronger returns and an improved experience for savers.
In a new blog published today, Kim Goodall-Brown, TPR’s Director of Defined Contribution and Master Trust Supervision, sets out why trustees of smaller DC schemes must now take a clear-eyed look at their future. She acknowledges that, for many, the decision to consolidate is not straightforward - but stresses that securing the best possible outcomes for members must be paramount.
Kim notes that the Pension Schemes Bill, expected to become legislation soon, will introduce new and significant legal duties for most schemes providing DC benefits. These include providing a default guided retirement solution, undertaking a new value for money assessment that requires comparison against other schemes or benchmarks, and facilitating small pot transfers for auto-enrolment members with deferred pots of £1,000 or less.
“Running a smaller scheme is becoming more complex, more demanding and more resource-intensive,” Kim writes. “Trustees need to consider now whether they can continue to meet these higher expectations - or whether members would be better served through consolidation into a larger scheme with stronger governance and scale.”
She highlights that for many small schemes, the cost and administrative burden of meeting the new requirements will increase significantly. At the same time, larger schemes are better positioned to invest in member communications, data quality, operational resilience and long-term investment strategies. Taken together, these factors mean trustees must urgently assess whether continuing alone remains the right choice.
Kim encourages trustees to consider both consolidation and wind-up options. Consolidation into a master trust may offer better long-term value when taking into account future compliance costs and the potential consequences of breaches. For some schemes, winding up may be more appropriate. TPR has published updated guidance to support both routes, including new materials for trustees considering a transfer to a master trust and refreshed wind-up guidance.
She stresses that these decisions take time -and trustees cannot wait until new duties take effect. For example, data collection for the value for money framework is expected to begin in 2027, meaning schemes must begin preparations well ahead of this.
Kim concludes that TPR will continue supporting trustees and providing clarity as secondary legislation develops.
Read the blog: DC scheme consolidation: why trustees must take action now
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