Smaller DC schemes must take a “clear-eyed” look at the their future and seriously consider the best path to consolidation, according to Kim Goodall‑Brown, director of DC and master trust at The Pensions Regulator.
Goodall‑Brown admitted that for many schemes the decision to consolidate is not straightforward, but stressed that securing the best possible outcomes for members must be paramount.
Legislation within the upcoming Pension Schemes Bill includes providing a default guided retirement solution, undertaking a new value for money assessment that requires comparison against other schemes or benchmarks, and facilitating small pot transfers for auto‑enrolment members with deferred pots of £1,000 or less.
The UK’s DC landscape saw further concentration in 2025, falling 15 per cent, to 790 non-micro DC and hybrid schemes.
“Running a smaller scheme is becoming more complex, more demanding and more resource‑intensive,” says Goodall-Brown.
“Trustees need to consider now whether they can continue to meet these higher expectations, or whether members would be better served through consolidation into a larger scheme with stronger governance and scale.”
Goodall-Brown also highlighted that for many small schemes, the cost and administrative burden of meeting the new requirements will increase significantly. At the same time, larger schemes are better positioned to invest in member communications, data quality, operational resilience and long-term investment strategies.
