Louise Wheeler, head of UK DC solutions, Aon Investments
Why scale matters in the race for better retirement outcomes
The UK defined contribution pensions market is evolving quickly as assets grow, schemes consolidate and regulators sharpen their focus on Value for Money.
With Pensions UK’s Retirement Living Standards rising and reports suggesting only one in eight people are on track for a basic retirement lifestyle, the size of a pension scheme alone will not solve the retirement challenge for many individuals.
Indeed, assets alone are a blunt measure of scale. True scale incorporates the right philosophy, people and processes, especially as schemes invest in more complex assets. What matters is how broader expertise
is used to support employers to deliver better outcomes and better care for their members.
Our experience shows two growing priorities for employers: how to achieve strong default investment performance to improve retirement savings for their employees; and how to better engage their employees through effective communication strategies.
Scale can support employers to meet both priorities, offering the following benefits:
- Opportunities for enhanced investment performance
Better-performing default strategies can significantly improve retirement outcomes, potentially doubling benefits through higher annual returns. Scale can also help reduce costs, which compounds benefits for members.
But consistent performance over time is essential to secure positive member outcomes.
We are proud that Aon’s 10-year default strategy performance to 31 December 2025 delivered a total return of 232 per cent before fees, outperforming the Corporate Adviser median by 93 per cent, for a member 30 years
from retirement.
To deliver consistently strong returns over many years, schemes must put member outcomes at the heart of their investments.
Our defaults target clear retirement goals: keeping pace with inflation and replacing a meaningful share of income. We measure success against those goals. We back this with a robust investment process and proactive
governance, where asset allocation, fund selection, risk management and timely decision-making combine to grow members’ savings. This is where scale matters: the right people and expertise.
Additionally, specialist global expertise can open access to a wider range of assets, including
private markets (such as real estate, infrastructure and private equity). And, while private markets in default strategies can enhance returns and diversification, implementation matters and we see a wide variety of approaches across the market.
The range of performance in private markets funds is huge; the gap between the top and bottom quartile private equity managers can be as large as 12-15 per cent compared with just 1.5 per cent in public equities. Aon has been investing in private markets for a long time, with $130bn in private markets under advice. We use our research depth and market position to access best-in-class specialists and negotiate attractive fees, ultimately supporting opportunities for better member returns.
2. Exceptional member and client care
Scale also offers the potential for centralised, professional governance and experienced professionals can help to reduce employers’ administrative and governance burden. This supports consistent oversight, regulatory compliance and faster responses to legislative change, allowing employers to focus on their core business.
That said, for many employers it’s not about handing over the reins. It’s about choosing a partner with shared values and a focus on exceptional client care. We support employers to retain and build their brand, and maximise value for employees, while they benefit from our investment expertise and service model.
3. Tailored member engagement and personalised communication
Scale can also provide access to advanced technology and sophisticated communications expertise to deliver timely, relevant and targeted communication strategies to better engage employees. These strategies can include tailored education, guidance and digital tools crafted for different member needs, from information to independent advice. This can boost engagement and can help members make informed, arguably better, retirement decisions.
In a DC market where everyone talks about value, we believe the schemes that stand out deliver three things brilliantly: outcome-focused, consistently performing investments, exceptional client care and personalised
member engagement. Those that get this right will lead the market.
For more information, visit aon.com/betterbydefault To contact Louise, email talktous@aon.com