The amount transferred into DC schemes increased by 134 per cent last year, from £3.7 billion to £8.6 billion, according to figures from The Pensions Regulator (TPR).
DC trust scheme data from TPR shows the total number of micro and non-micro schemes, excluding hybrid schemes, decreased by 2 per cent, while the total number of non-micro schemes, including hybrid schemes, has decreased by 12 per cent and 63 per cent, respectively since 2021.
There are 36 authorised master trusts, which account for 20.7 million DC memberships, including hybrid schemes, and over £78.8 billion in assets, excluding hybrid schemes.
Aggregate asset values are now £113.5 billion, up £26 billion or 30 per cent from last year and 413 per cent since the beginning of 2012. Currently, the average asset per membership is £5,212. In 2012, the membership fee was £17,206.
Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey says: “Bigger is better when it comes to DC pensions, with the number of small schemes continuing to decline in favour of the burgeoning master trust market and the introduction of auto-enrolment swelling the numbers of members.
“Asset levels are also on the rise – growing a massive 413 per cent since January 2012. However, this isn’t corresponding to higher levels of pension assets per member – average levels have collapsed 70 per cent to just over £5,212 since 2012.
“So not everything is booming in the DC market – average pension pots still need a boost. There might be many more people saving into a pension but overall, they are saving less – the vast majority of people won’t be saving more than the current auto-enrolment minimum of 8 per cent. While many of these members will still be young and have many years to build up a good level of pension, they need to be doing all they can to bolster the amount they contribute above these minimums if they are to build a firm foundation for their retirement.
“Making small changes such as increasing your contribution every time you get a pay-rise can really make a difference over time. Another key thing is that your employer may contribute more if you do, so it’s worth seeing if that is an option as that can really boost your retirement pot.”
Aegon head of pensions Kate Smith says: “The latest scheme return data clearly shows the rapidly changing pension landscape. Single employer trust-based scheme consolidation is continuing at a fast pace, with the number of schemes with 12 or more members (non-macro schemes) declining by 12 per cent in the last year.
“Master trusts have been the clear winners in the consolidation battle, now with over 20.7m members, up from only 270,000 members in 2012, and with over £78.8bn in assets. This trend is set to continue, probably at a faster pace as single employer trust-based schemes, with assets under £100m, now have to test whether their scheme provides value for money for their members.
“Scheme memberships continue to grow, but the side-effect of auto-enrolment and the fluid job market is that deferred memberships have increased by 15 per cent while active membership has decreased by 1 per cent in the last year. The growing number of small frozen pension pots is an issue the pension industry is grappling with, and one that the Government, along with the industry, is trying to address.
“Although scheme assets continue to grow year on year as memberships grow, this has been accompanied by a decline in member’s average pension assets. Back in 2012, before auto-enrolment kicked off, the average assets per member was £17,206. Now it’s only £5,212, although there has been a steady improvement since 2017 when auto-enrolment contributions started to increase. This clearly shows that many employees and their employers are paying contributions at the current 8 per cent minimum contribution levels. There’s obviously more work to be done to encourage people to save more for later life.”