Charges for DC investments have continued to fall, from 38 basis points in 2017 to 28 in 2025, with nearly two-thirds of schemes now below 30, according to WTW.
This drop comes even as the industry shifts focus from cost to value, raising questions about whether investment performance has been overlooked.
According to WTW’s 20th annual DC Pensions and Savings Survey 2025, larger schemes are more willing to pay higher charges for access to illiquid assets, with 39 per cent open to the idea. In contrast, only 12 per cent of smaller schemes would consider the same.
At the same time, the survey shows that off-the-shelf default funds have become more common, rising from 47 per cent of funds in 2017 to 79 per cent in 2025, yet providers’ approaches to ESG and private markets vary widely, which highlights the need for employers to review their arrangements.
The survey also indicates that as DC pensions mature, decumulation is moving up the agenda. By 2027, master trusts will be required to offer suitable retirement income products, which is driving interest in “flex then fix” strategies.
In addition, Collective Defined Contribution (CDC) schemes are gaining traction, with 15 per cent of employers considering a move within the next two years.
Furthermore, the survey finds that employers are increasingly prioritising engagement and retirement outcomes, while many are also enhancing financial wellbeing support to help members prepare for retirement.
WTW head of DC Consulting Helen Holman says: “The question is whether we have now reached the stage where the focus on driving costs down has gone too far and whether there is room to increase value-for-money by accessing alternative investment strategies that can provide growth, diversification and value, despite higher costs.
“Whether illiquid assets, such as private equity or infrastructure, hold the potential to enhance risk-adjusted returns is a key debate in the pension industry, with the UK government seeking to encourage greater investment in illiquid assets via the Mansion House Compact.
“Guidance services stop short of full financial advice, but offer more cost-effective means to support workers, both as they approach retirement and to support general financial wellbeing. Increasingly we see companies looking to provide, and pay for, access to additional guidance for their employees.”
