Michael Johnson, a research fellow at the Centre for Policy Studies, has proposed phasing out contract-based workplace default schemes entirely, making them ineligible for auto-enrolment contributions from 2030.
In a guest paper published by the Social Market Foundation, Johnson noted that consolidation under the Pension Schemes Bill 2025 could leave as few as ten dominant “megatrust” providers by the mid-2030s. He also argued that with funds of this scale the current regulatory regime will “no longer be fit for purpose.”
Johnson called for The Pensions Regulator to become the single regulator of all workplace DC pensions. He also proposed phasing out contract-based workplace default schemes entirely, making them ineligible for auto-enrolment contributions from 2030.
He also called for major reform of pensions regulation, namely that ‘megatrust’ providers to be regulated as giants, and that trustees to be required to meet higher standards.
Theo Bertram, director at the Social Market Foundation, says: “Savers do not care whether their pension is ‘contract’ or ‘trust’ based — they care about security, value and retirement income.
“Meanwhile, workplace pension megafunds are about to become some of the most powerful financial institutions in Britain, and Michael makes a clear case that if we end up with a small set of pension giants, then they must be regulated as giants.”
Johnson also proposed a single national accreditation framework for trustees, with clear conduct standards and defined technical competencies.
Regarding proposed Value for Money table, in the paper Johnson advocated for a league table of VfM assessments that should only be made public once both the purpose, and the downside risks, are understood. He also suggested that the VfM process should be broadened to include all workplace DC schemes including hybrids.
Regarding VfM, Johson also argued that Local Government Pension Schemes should be subject to the same assessments.