The government’s final report on the Pensions Investment Review outlines a bold vision: a market of fewer, bigger, better-run defined contribution schemes capable of investing in productive UK assets and delivering stronger outcomes for savers.
It is a vision that, conceptually, many in the industry support. But our recent research suggests that, across the industry, confidence in delivery remains cautious.
In March 2025, Altus Consulting conducted an anonymous survey of 56 senior industry stakeholders — trustees, IGCs, providers, consultants and advisers — on their views of the government’s proposals. What we found was that while there is no resistance to reform, there is a significant gap between the outcomes the industry would prioritise and those that it believes current policy will deliver.
Confidence lags behind ambition
Nine suggested outcomes were tested, from improving long-term net returns to increasing UK-based investment. Protecting and delivering value for members emerged as the most important goal — by some distance. In fact, for every outcome tested, the importance scores were higher than the confidence scores.
There is a significant gap between the outcomes the industry would prioritise and those that it believes current policy will deliver
This matters. It reveals a gap — not just in policy, but in trust. Industry professionals recognise the potential benefits of scale, but are unconvinced that mandating a £25bn AUM threshold by 2030, limiting default arrangements and enabling bulk transfers without consent will reliably translate into improved saver outcomes. Size may be a tool, but it is not the end goal.
Consolidation should follow value, not define it
Our respondents acknowledged the logic behind pushing the market toward fewer, larger schemes. But there was clear concern that scale, pursued too bluntly, could crowd out innovation, erode diversity of proposition and create a homogenised market of mega-schemes incentivised to track each other’s investment behaviour.
As one master trust trustee noted: “Many of the proposals will simply drive short-termism and herding, not support innovation or fiduciary value.”
While the government’s intention is for scale to unlock consolidation, the commercial reality is more complex
Others warned of the risk that small but well-performing schemes – offering ESG-aligned or tailored solutions, for example – could be forced out not because of poor value, but because they fail to meet an arbitrary asset threshold.
Commercial friction could stall progress
This tension is likely to intensify as the industry adapts to the new framework. While the government’s intention is for scale to unlock consolidation, the commercial reality is more complex. As schemes grow larger and their annual inflows increase, the operational and administrative burden of onboarding smaller books becomes harder to justify.
Without targeted incentives or support structures, there is a real risk that the largest players will deprioritise absorbing sub-scale schemes — undermining the very consolidation the policy seeks to encourage.
Member trust is not a renewable resource
A stark warning comes from the views of the participants in our survey with an international perspective. In Australia, consolidation delivered scale, but at the cost of innovation and personalisation. In the Netherlands, megafunds now carry high levels of governance costs. And in New Zealand, competition and mobility — not consolidation — have been the real drivers of better outcomes.
The new world – Regulating for growth not risk
Each model has its trade-offs. But what unites the best-performing systems is not uniformity — it is clarity of purpose.
As a former Australian super fund executive said, “Consolidation must serve ‘the light on the hill’: better outcomes for members. Lose sight of that and the system risks becoming a warehouse with no windows.”
What next?
In its final report, the government commits to publishing a roadmap and launching a second phase of the review focused on adequacy. That is welcome. But adequacy and value should be pursued in tandem. Requiring schemes to demonstrate investment capabilities that match their size is a good start, but it should not be reduced to private markets tick-boxing or default UK exposure.
If the system is to deliver for members, it must remain open to performance-led differentiation. That means supporting innovation at any scale, sharpening the Value-for-money (VfM) framework’s teeth and equipping the Financial Conduct Authority and The Pensions Regulator with the tools and the mandate to ensure consolidation remains a means to an end, not the end itself.
Requiring schemes to demonstrate investment capabilities that match their size is a good start
As one trustee told us in the survey, “Looking beyond the pain of getting there, a more consolidated market could offer better options — but only if it stays focused on value, not just cost or scale.”
Altus Consulting will be publishing the full results of the survey and discussing the broader findings from our upcoming white paper at our event, “Pensions Transformation: Bigger, Stronger, Better?”, taking place on 2 July.
We look forward to continuing the debate with those committed to ensuring this market transformation delivers not just scale, but better outcomes for every saver.
Robert Holford is insights director at Altus Consulting
