The number of defined contribution (DC) pension schemes has fallen below 1,000 for the first time as consolidation continues to reshape the sector, according to the Pensions Regulator (TPR).
Its latest data publication revealed that there were 920 DC pension schemes with 12 members or more in 2024, down from 1,080 in 2023.
The regulator reported that most of this decline came from schemes with between 12 and 4,999 members, indicating that smaller pension funds are choosing to merge or transfer to larger schemes or master trusts.
TPR chief executive Nausicaa Delfas said: “Our DC landscape report is further evidence of the evolution towards a pensions market of fewer, larger pension schemes, which we believe are better placed to deliver for savers and drive growth in savers’ interests.
“Value for money should be the guiding principle that runs through the DC system and where schemes cannot compete with the very best, they should consolidate and exit the market.”
Since 2011, the number of DC schemes has fallen by 75%. At the same time, the number of schemes with more than 5,000 members grew from 80 to 120.
Total membership of DC schemes increased to 30.6 million, up by 6% year on year. This was mostly driven by a rise in deferred memberships, which increased from 17.7 million to 19.5 million.
This reflects other studies that have shed light on the number of people who have pension accounts with multiple providers.
A data project led by the Pensions Policy Institute and featuring Nest, Legal & General, Now Pensions, Smart Pension and The People’s Pension found that there were a significant number of individuals with pension pots with multiple providers. A report on the study stated that two in five master trust memberships could be eligible for consolidation.
Zoe Alexander, director of policy and advocacy at the Pensions and Lifetime Savings Association, said: “TPR’s data further demonstrates the pace at which the DC pension market is consolidating as a result of competitive forces, regulator guidance and incoming initiatives like the Value for Money framework.
“Viewed in the context of the government’s Pensions Review, this further raises the question of why a scale test would be in the best interests of savers when we are already seeing a move to fewer, larger DC schemes.”
Damon Hopkins, head of DC workplace savings at Broadstone, said: “TPR’s findings highlight a positive trend, with rising contributions, investment returns, and scheme memberships – especially encouraging given the cost-of-living challenges in 2024 which could have derailed pension contribution levels.”
Hopkins added that the rise in memberships meant that the industry’s focus “must remain firmly on ensuring members have the right support and decumulation options”.
He called for pension scheme trustees and employers to strengthen engagement and financial education efforts to “emphasise the value of early contributions and support members on their journey to retirement”.
“At the same time, schemes must refine their investment approaches, balancing sustainability, regulatory developments, and member outcomes while continuously evolving default strategies to secure better long-term results,” Hopkins said.
