DC consolidation slows , Cinderella sits by the fire.

The Corporate Adviser Intelligence on GPP and mastertrusts is back for 2023 and a very good read it makes. The headlines are in the infographic above and I intend to dig down behind several of these metrics in blogs to come.

But I’ll start with the news that the market for bulk transfers of assets from DC occupational pension schemes to master trusts is slowing.


I don’t know why deals are down year on year from 139 to 112 or why assets transferred are down from £8.3bn to £5.8bn but this is not the direction of travel we had expected to see.

Clearly there is sufficient dispersion in performance within master trusts to suggest that outside this golden circle of schemes , member outcome are likely even more varied.

The promised rush for the door is not happening, Cinderella is still awaiting her prince.

Ineffective VFM regulation?

It comes in a week when I heard anecdotally that compliance with the DWP and TPR’s plan to require sub £100m DC schemes to self-assess for VFM and fold if found wanting, is still  meeting with high non-compliance. I don’t know how high but in March TPR told the market

Under the regulatory initiative, TPR will be checking that trustees of DC schemes with assets under management of less than £100m are complying with new value for members (VFM) regulations that came into force in October 2021.

The move follows a survey of DC schemes carried out by TPR last year that found just 17% of schemes required to complete the new value for members assessment had done so, and that 64% were unaware of this statutory obligation.

Just how much resource TPR is able to throw at this is another open question. In my opinion the Value for Members self-assessment regime is not fit for purpose, it will get a makeover if the VFM framework becomes law but right now it isn’t driving volumes of consolidations – and it should be by now.

Under incentivized advisers?

Talking with advisers, I do not hear the enthusiasm for consolidation that I had expected. The general feeling is that fee revenues are barely covering costs and that this is driving a broker mentality where advisers are justifying fees based on savings to members in the AMC and to the employer from “de-risking” toxic obligations or running a pension trust.

This is born out by some lukewarm metrics from Corporate Adviser’s intelligence

This doesn’t look to advisers either an immediate or strategic opportunity, DC consulting, like some DC schemes, remains the Cinderella waiting to go to the ball.

This is not turning out to be the expected adviser and I suspect that’s because there is a very limited  budget for objective setting, provider selection, implementation and ongoing consultancy from employer procurement teams. I suspect that most consultancy is little more than broking right now.

Either deal flows increase, or revenues per deal increase or most DC consultants are going to continue to struggle to add value for members.



Meanwhile the ball remains potentially  attractive, if a carriage and slipper turns up; but there is not much prospect of that happening in the next 12 months. There remains an opportunity, just not for now – a very exciting one

Which means that there are still over 12oo DC occupational schemes operating in the UK, probably 11oo too many for the DWP and TPR’s liking.

Reluctant trustees?

Trustees are unlikely to vote for Christmas, whether they are being paid or not, trusteeship remains a highly sort after professional vocation for a large number of executives. Many of these have acted on behalf of members for years and have a duty of care which they are reluctant to give up, some regard the appointment as a lucrative part of a portfolio career and there are some who see it as a status symbol and an opportunity to be a served by a well-heeled service industry. Sadly – some of these schemes have virtually no governance to speak of and lack the capacity to engage with what the law is telling them to do.

It is clear that DWP has lost its patience with many of these trustees and is looking to use TPR powers to force scheme closure if they fail to comply or comply and fail the proposed VFM tests.

This may sound draconian, but there are members in these schemes whose retirements depend on these schemes providing performance, service and ultimately an efficient route to a retirement income.

A worrying trend

The slowdown in transfers is obviously worrying a Government who wants to see more scale and better purchasing of investments.

As noted in another blog today, consolidation – when it happens – is not leading to the desired result of more investment in productive capital. Instead the budgets for investment within master trusts are drying up as the squeeze is put on fees.

Faced with a slowing market and undesired outcomes where consolidation is occurred, it is beholden on those working on this problem, to look for new solutions and not just trying the old stick.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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