As regulatory changes approach for defined contribution pensions, 2025 is set to be transformative. The Government's Pensions Investment Review is pivotal, fostering consolidation and investment in UK productive assets. The coming year will emphasize the shift from cost to value, encouraging a focus on member outcomes. Notably, the FCA's Advice Guidance Boundary Review will prioritize DC pensions. TPT’s experience in private markets positions it well to adapt to these changes, signaling a broader industry move toward diverse investment strategies aimed at providing better returns for pension savers.
2025 is set to be a very busy year for defined contribution pensions. Schemes will have to navigate a wave of consultations and reforms over the next 12 months that could transform the future of workplace pensions.
A more consolidated DC market with larger schemes and providers presents potential advantages and risks for UK pension savers and economic growth. While economies of scale can improve investment opportunities and enhance governance, concentration risk, reduced innovation, and systemic risks must also be carefully considered.
A greater focus on member outcomes rather than simply the level of charges is badly needed and could help unlock increased investment budgets and greater diversification.
Ultimately, this should lead to superior risk-adjusted returns and higher pensions for members.
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