Four providers are responsible for over 70 per cent of assets and three quarters of members, with master trusts now accounting for 41 per cent of large DC schemes, according to research from Howden Employee Benefits.
The master trust share of the market has grown from a figure of less than 30 per cent in 2022.
The report, Howden’s annual Analysis of Large Defined Contribution Schemes report, shows that large master trusts are serving more than 60 per cent of members in bundled DC arrangements, holding over half the assets for that cohort.
Howden says the figures show how a small number of providers are shaping a large proportion of member experience.
The research also shows that despite a shift towards drawdown-focused retirement targets, 87 per cent of members accessing benefits still take cash withdrawals.
Howden scrutinised data from 147 large DC schemes representing £200bn of assets and 3.9 million members.
It says this surge in consolidation now sees large master trusts holding 37 per cent of DC assets across the schemes analysed. This represents over half of the total assets in bundled DC arrangements and almost two-thirds (63 per cent) of members. They also continue to offer the lowest average default charges of any major scheme structure, at 0.217 per cent – highlighting one of the key benefits scale is delivering for members.
As consolidation continues and master trusts grow in prominence, Howden argues the next challenge is ensuring this scale translates into better engagement and retirement outcomes for members.
Target drawdown is now the most common retirement objective among large schemes, but analysis of more than 33,000 members who started taking benefits in 2025 reveals a disconnect between scheme design and member behaviour. Around 87 per cent took pension savings as cash through lump-sum withdrawals, including Uncrystallised Funds Pension Lump Sum (UFPLS) payments, while just 35 per cent entered drawdown and 7 per cent purchased an annuity, with some members selecting multiple options.
The report also found that while digital access continues to improve, member engagement remains a challenge. Most large schemes now report online registration rates above 60 per cent, yet expression-of-wish completion rates remain below 40 per cent for the majority of schemes, suggesting that improved access does not automatically translate into meaningful engagement.
Mark Futcher, head of DC and financial wellbeing at Howden, says: “The government’s consolidation agenda is clearly having an impact. Master trusts are growing, schemes are getting bigger, and many of the benefits of scale are starting to come through.
“But bigger pension schemes were never supposed to be the end goal – better retirement outcomes were. Despite schemes increasingly designing for flexible retirement incomes, many members continue to favour cash withdrawals. And while people are logging into their pensions, few are taking the expected actions to genuinely improve their outcomes.
“Consolidation has helped create bigger, more efficient schemes – but members don’t experience pensions through scheme structures of governance models. They experience them through the decisions they make. If we want better retirement outcomes, we need to focus just as much on engagement, support, and innovation as we do on scale.”