Navigating the future of DC governance – Insights from Governance Matters
I was delighted to present the final session at Vidett’s Governance Matters conference, hosted in partnership with Sackers, where we explored the evolving landscape of Defined Contribution (DC) pensions and what these changes mean for employers.
The discussion focused on the Pensions Bill, governance standards, and consolidation and why it is so important, with so much change on the horizon, for employers to stay actively involved.
Too often, when employers have outsourced to a Master Trust or Group Personal Pension Plan (GPP), pensions are treated as a “set and forget” benefit. Yet as pensions are usually the single biggest reward spend for employers, not engaging with them risks leaving employees with poorer outcomes, and organisations exposed to governance challenges. There is a great deal for those running pension schemes to do, but by staying close to their providers and trustees, employers can be part of the solution and work collaboratively to drive better outcomes for their employees.
Pension dashboards and data standards
The introduction of pensions dashboards is transforming how members interact with their savings. Soon, people will be able to see all their pensions in one place, increasing engagement and making data quality more important than ever. For schemes, maintaining up-to-date, accurate data isn’t just a technical requirement, it underpins good governance, effective communication, and tailored retirement strategies.
Value for Money Assessments
Detailed Value for Money (VfM) assessments are already in play for DC schemes with under £100m which has driven consolidation. However, coming down the track is a similar requirement for large schemes, including master trusts, who will soon need to assess their performance across key areas including investment returns, charges, and service quality. The standardisation of metrics will mean that VfM assessments will provide a clear comparison across schemes, incentivising improvements and better outcomes for members. Those who are underperforming may find themselves forced to merge with better-performing schemes in order to deliver improved outcomes for members.
Consolidation and scale requirements
The Pensions Bill takes this further. By 2030, all master trusts and GPPs used for auto-enrolment must reach at least £25 billion of assets in their default funds (with some transitional pathways to get there). The government’s goal is to achieve scale, reduce member costs, and unlock greater investment opportunities, particularly in UK productive finance and private markets.
While many providers already meet this threshold or have plans to get there, some well-known names may need to merge or exit. Consolidation brings efficiencies but also risks, as employer influence may be diluted, choices can shrink, and innovation may slow. It’s important for employers to be aware of this and to start thinking about whether your current arrangement is on track to meet the scale requirements, or what your options might be if things change within your provider.
Investment strategy and government powers
The Bill also gives the government a reserve power to mandate that a proportion of DC assets be invested in private markets. If implemented, it could mean changes to default funds, higher charges, and more work for employers to communicate these shifts to members.
Staying on the front foot
With so much impending change, even when using a Master Trust or GPP, employers cannot simply set and forget. Active oversight is essential. Employers should monitor risks, ensure the scheme continues to align with organisational objectives, and engage regularly with trustees and providers. Many now establish governance committees, meeting with master trust trustees to share ideas and stay on the front foot. This proactive approach is key in an environment of regulatory change, consolidation, and evolving expectations.
Final thoughts...
I ended the session with a final message that ultimately good governance leads to better outcomes for members. Employers and trustees must remain engaged, adaptable, and proactive. Pensions are too important to be left on autopilot, and those who take the time to monitor, align, and engage will deliver the best outcomes for their employees.
