Lewis Daley, workplace investment lead, Royal London
In DC pensions, scale is no longer a strategic ambition – it’s becoming the price of admission. The
proposed Pension Schemes Bill’s £25 billion default requirement by 2030 is a signal of intent: the market is moving to fewer, larger and better-governed arrangements.
While these reforms make scale the objective, the true goal is better outcomes for members. What matters most isn’t scale itself – it’s what scale makes possible.
From fragmentation to opportunity
The UK’s DC market has long been fragmented. Hundreds of defaults exist alongside each other, many of them too small to build real capability or keep pace with industry innovation.
For smaller defaults, the result is often higher cost pressures, greater operational complexity and less investment reach. And because most members don’t engage with their pension investments, those limits show up in member experience and results – through narrower investment opportunities, slower innovation and less consistent oversight.
The reforms proposed in the Pension Schemes Bill aim to address those challenges by consolidating defaults into arrangements better equipped to deliver stronger value for members.
What meaningful scale unlocks for members
- Access to broader investment opportunities
Scale helps remove some of the commercial and operational barriers that can limit access to high-quality investment opportunities. That can broaden the investable universe, including access to private markets such as
infrastructure, property and private equity. Over time, it gives larger defaults a wider toolkit and more levers to pull, so they can keep improving the journey and deliver better outcomes for members.
2. Deeper expertise and governance
Scale makes it easier to fund and support specialist teams and rigorous oversight, supporting stronger risk management and better-timed decisions. It gives reassurance that member outcomes are being actively looked after, not passively maintained.
3. Resilience through change
Pension saving is a multi-decade journey, and a lot can change over that time: economic
conditions, markets, regulatory expectations, and how (and when) people retire. To continue to deliver good outcomes, defaults must be able to adapt and evolve.
Larger schemes are better placed to implement change without disrupting employers or members, and are more likely to be able to absorb the financial cost of doing so. That can include updating asset allocation as markets evolve, refining derisking as member demographics or behaviours shift, and adjusting target retirement strategies – all within the default itself, rather than through a full redesign.
4. Better outcomes by default, not decision
Perhaps most importantly, scale enables defaults to work effectively on behalf of members. This is especially important when making changes on behalf of a largely disengaged population. Well-designed, larger
defaults can be upgraded progressively, carrying members through the journey rather than asking them to opt in, choose or act. The result is a smoother member experience and better outcomes over time.
Distraction for some, focus for others
For defaults that aren’t yet at scale, the next phase of reform can force a change in priorities. Time and budget can be pulled into consolidation planning, governance changes and transition delivery. The cost isn’t only
financial – it’s opportunity cost.
By contrast, defaults already operating at scale start from a position of strength. The reforms largely reinforce existing capabilities rather than creating new ones.
That distinction matters, because time spent dealing with consolidation pressure, regulatory remediation or provider transition is time not spent focusing on what really matters: member outcomes.
Making scale count for members
The proposed Pension Schemes Bill 2030 reforms raise the baseline for scale, but it’s only the starting point. The real question is what scale is used to enable: broader diversification, stronger governance and a default that can keep adapting as markets, regulation and member needs evolve.
For advisers and employers, that shifts the question from “who has scale?” to “who’s using it well?”. If scale becomes a minimum standard, differentiation comes from execution and stewardship: the ability to implement change without disruption, to run governance that’s genuinely resourced and challenging, and to use investment access to improve member value – not simply to reduce headline cost.
Learn more about how Royal London uses scale to unlock opportunities for members: adviser.royallondon.com/
investment-2026
