The survey gathered responses from organisations responsible for around £98 billion of defined contribution (DC) pension assets and more than 1.2 million DC savers. Its findings come as policymakers increasingly focus on improving retirement outcomes through initiatives such as the Pensions Commission review and the new “Value for Money” framework for DC pensions. Key findings include:
Just over half (51%) are considering changing their DC structure, most commonly because they expect another structure to deliver better member outcomes (39%).
Almost three-quarters (73%) do not know the expected outcome for a typical lifetime member of their DC plan.
Nearly two-thirds (63%) rank ensuring their plan delivers good value for money among their top three priorities.
The most common approach is to align the pension plan with competitors (53%), ahead of enabling employees to retire at a reasonable age (23%).
Nearly two-fifths (38%) estimate that fewer than a quarter of members have actively changed their contribution rate.
Just 14% measure returns against tailored objectives for their DC members, while 56% monitor returns of the component funds versus benchmarks.
Steven Leigh, Associate Partner, Aon, said: “This year’s survey results reveal a DC pensions landscape in which organisations are trying to balance the ‘value equation’ of adequacy, engagement, governance, cost and retirement outcomes, while dealing with unprecedented regulatory change in UK workplace pensions and during continued financial pressure for individuals.
“Value in a DC pension cannot be judged by cost or competitive positioning alone. It must ultimately be assessed by the outcomes it helps members achieve. However, our study highlights a clear adequacy blind spot. Many organisations are investing in engagement, financial wellbeing and stronger governance but don’t yet know what their pension is likely to deliver for employees.”
Steven Leigh continued: “The challenge for employers and trustees is often how to prioritise and what to delegate when managing a workplace pension plan, as well as considering the context of wider employee financial wellbeing. Doing this right, matters not just for individuals, but for the ongoing success of organisations as they attempt to manage employment costs, succession planning and employee engagement over the longer term.
Strategy and Design: competitive positioning is overtaking outcomes
The survey results reveal the most common approach to pension provision is to align the benefits with competitors (53%). This is significantly ahead of designing a plan to provide sufficient funds for employees to retire at a reasonable age (23%) - despite the finding that almost two-thirds (63%) of respondents place ensuring good value for money in their top three priorities.
The survey results also point to continuing consolidation. The number of schemes currently using an Own Trust structure has fallen from over 50% in 2017 to 24% in 2026, with numbers expected to fall by half again in the next five years. Overall, 51% of respondents are considering changing their DC structure because they expect another structure to deliver better member outcomes (39%).
Steven Leigh said: “Prioritising competitive positioning over retirement outcomes creates a risk that the pension strategy becomes detached from the result it’s designed to deliver. Benchmarking has a role, but it’s not a substitute for a clear view of whether employees are building sufficient savings to retire at a reasonable age.
“It’s no surprise, however, to see continued moves into larger multi-employer pension schemes, such as master trusts, to allow outsourcing of governance and investment. This year we also saw Collective DC, otherwise known as CDC or Collective pensions, starting to be considered as a potential future structure. This is a new option in the UK and aims to deliver more stable, better value pension outcomes for savers.”
Contributions and Adequacy: the central blind spot
Median company pension contribution rates have remained broadly stable, with the median default company rate continuing to sit at around 6% of pay, but with a wide range between the least and most generous rates. However, the survey reveals that 73% of respondents do not know the expected retirement outcome for a typical lifetime member. Among those that do have an outcome target, 22% reference the Retirement Living Standards, while only 4% use a replacement salary ratio.
Steven Leigh said:
“Employers and trustees need first to understand the retirement outcomes their current design is likely to deliver, identify where different groups may be falling behind, and then consider how defaults, matching and engagement can work together to improve long-term member outcomes.”
Investment: missed opportunity on default performance
Although investment returns are a major driver of retirement outcomes, only 14% of respondents said that they monitor default fund returns against tailored objectives for members. By comparison, 56% monitor component funds against benchmarks and 28% monitor aggregate returns experienced by default members, while 22% did not know how default performance is monitored.
A further 44% did not know whether their DC plan invests in illiquid assets. The remaining 56% were broadly split equally between those already invested in illiquids, those planning to do so and those where illiquid assets are not under consideration.
Kath Patel, Associate Partner, Aon, said: "Most DC savers do not make active decisions - their default investments are doing most of the heavy lifting. This means the choice of a well-designed default option will make a significant difference to member outcomes.
“Alongside contributions, investment returns are one of the most important drivers of retirement outcomes. But our survey found that relatively few organisations – less than a third - are assessing the returns of their default investment strategy in aggregate.
“It is crucial that employers and trustees consider investments more holistically and test two things together – whether savings rates and the default investment returns combined are delivering what members need for a decent income in retirement."
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