GPP defaults typically have higher exposure to equities than master trust GPPs, potentially driving higher returns.
This was one of the key findings in the Pension Policy Institute’s 11th edition of the DC Future Book, which provides an in-depth analysis of the DC pensions landscape.
The report found that prior to de-risking, master trust defaults hold on average a 70 per cent allocation to listed equities compared to 80 per cent in GPP defaults in the growth phase.
The report takes a wider look at the DC landscape and shows how master trusts are becoming a more significant force. Trust-based DC schemes now hold 88 per cent of active membership, a significant increase over the past year. In 2023/24 just 60 per cent of active members were in trust-based DC arrangements.
The PPI found that overall 11.3m employees had been automatically enrolled into a DC pension by June 2025, but 11.8m workers remain ineligible for the second year in a row. This is one of the issues that is likely to be considered by the new Pensions Commission.
The PPI also found that median DC pot sizes continued to rise steadily, standing at £15,000 in 2024. The total DC assets have quadrupled over the 10 years, and now stands at £1.2 trillion.
The PPI report also found found that 73 per cent members of master trusts were invested in their scheme’s main default strategy; this compares to just 64 per cent of GPP members. Participation among stakeholder and GPP members is notably lower the PPI said, at 20 per cent and 10 per cent respectively.
The report also looks at how member are accessing their pensions at retirement. The data showed that annuity sales have continued to grow, reaching almost 90,000 in 2024, the highest level for a decade.
However annual drawdown sales have also increased by almost 30 per cent, rising to 140,500 in 2024, continuing the post-pandemic growth.
The PPI found that almost half of customers accessing drawdown used investment pathways — which providers have been required to offer to non-advised drawdown customers since 2021. Of those using these pathways the most popular option – used by 40 per cent of members – was pathway 1: for those not planning to touch their money in five years. This was followed by option 4 (used by 28 per cent of pathway users) for those planning to withdraw all of their funds within the five year period.
The PPI also found that there was a “substantial increase” in the proportion of people taking independent advice for annuities, rising from 27 per cent to 36 per cent. In contrast, the use of independent advice in drawdown is decreasing, falling from 44 per cent to 40 per cent, while the proportion seeking no advice increased from 40 per cent to 47 per cent.