By the numbers: TPR’s DC landscape data

TPR’s latest data report into the state of the DC market has revealed an 11% decline in the number of DC and hybrid schemes over the course of 2023.

Compared to 2022 figures, there was also an increase in overall DC memberships of 9%.

TPR said the reduction in the number of schemes was completely down to a reduction in those with fewer than 5,000 members.

The data also showed the continuing dominance of master trusts, which account for 84% of DC or hybrid memberships.

However, the average pot size declined year-on-year to £5,846 per member. This is still higher than the £3,938 per member recorded in 2020, but significantly lower than the £16,963 average size 10 years ago – reflecting the proliferation of small pension pots due to auto-enrolment.

TPR also noted that the average level of assets per member only grew by 1% during the year, compared to 10%-20% growth over the past three years. This reflected not only investment volatility, but also the fact that there were a variety of different reporting dates used by schemes going back to as early as December 2022.

Here are some of the key figures from TPR’s report. Figures exclude schemes with fewer than 12 members.

Number of schemes

• 1,080: total number of DC schemes, down from 3,080 in 2014.

• 790: number of schemes with fewer than 1,000 members, as of 1 January 2024. This compares to 2,700 such schemes a decade earlier.

• 130: number of DC schemes with more than 5,000 members. This is up from 80 a decade ago, but down from the 150 schemes recorded in 2020.

• 35: number of authorised master trusts, excluding hybrids.

Number of members

• 2.3 million: DC memberships recorded in 2012, the year auto-enrolment was first introduced.

• 28.8 million: DC memberships as of 1 January 2024, a 12-fold increase.

• 28.3 million: number of DC memberships within schemes with 5,000 or more members.

• 69%: decline in the number of memberships covered by schemes with fewer than 1,000 members over the past 10 years.

Assets

• £5,846: average pot size per DC member.

• £122.9bn: estimated assets held within authorised master trusts, 77% of total DC assets.

• £158.3bn: total DC assets as of 1 January 2024, an increase of almost 500% since 2014 and more than 600% since 2012, before auto-enrolment.

• 96%: proportion of total assets managed by schemes with 5,000 members or more.

The data illustrates that the industry is gradually heading towards the “fewer, larger schemes” envisaged by TPR.

Richard Birkin, head of DC pensions at Isio, said the dominance of master trusts was only going to increase over time as the consolidation trend continues.

However, Birkin added, the growing average pot size was the “more significant trend”.

“As more people who rely more heavily on DC savings approach retirement, providing the right support and decumulation solutions will be one of the biggest challenges for the pensions and investments industries to overcome,” he said.

“To date, focus has been on the growth phase of pension saving, and the quality and choice of offerings for people transitioning to decumulation hasn’t been good enough. Innovation that delivers better products, strategies and member support is desperately needed.

“For DC schemes more broadly, one of the biggest challenges going forwards will be getting the investment mix right by focusing on member outcomes, sustainability and the integration of various initiatives and reforms, with the evolution of the default strategy a continuous priority.”

Further reading

DC consolidation: A complex picture (23 April 2024)

TPR boss outlines consolidation drive (13 March 2024)