Pension Investment Review – Shaping the future of DC pensions

On 29 May 2025, the Government published its final report on the Pensions Investment Review, setting out the conclusions of its wide-ranging review and the proposals it intends to take forward to reshape the UK’s Defined Contribution (DC) landscape. 

It is positive to see the direction of travel set out in the report.  We believe these proposals have the potential to drive real improvements in value and outcomes for members. 

Key Proposals for DC Schemes 

The report introduces a number of significant initiatives for DC pensions, including: 

• A minimum size of £25 billion for multi-employer schemes to encourage consolidation and scale. 

• A contractual override to facilitate the bulk transfer of contract-based schemes, enabling underperforming legacy default funds to move to better performing arrangements. 

• Following on from the announcement of the voluntary Mansion House Accord (you can read our paper here), which looks to increase DC pension schemes investment in private markets and the UK, it was positive that the Government didn’t impose any mandatory asset allocation targets. However, it is concerning that the Government has not ruled out this possibility and intends to introduce a reserve power to allow it to do this in future. 

• An update on the new Value for Member Framework, designed to ensure schemes are delivering good outcomes, focusing on wider value and not cost alone. 

Helyne Slade, Director, Isio commented:  

“We welcome the proposals to move to a smaller number of DC “mega-funds” with a greater focus on value and permitting the bulk transfer of underperforming legacy default funds into them. Whilst bigger isn’t always better, on balance, having a smaller number of larger mega-funds is more likely to facilitate investment in a way that boosts member outcomes. However, whilst investment performance is a key growth engine for DC pots, we must not forget that the single biggest factor driving member outcomes is the amount paid in, which these proposals don’t look to address.” 

We expect further detail to be included in the upcoming Pension Schemes Bill, which is due to be published soon. As well as capturing the output of the Review, this will also introduce a requirement for DC schemes to have a default decumulation strategy and measures to consolidate small pots. 

Pensions AM: Pensions Bill Breakfast Briefing

Watch the recording of our Pension Schemes Bill breakfast briefing – giving the inside track on the next steps sponsors and trustees should consider to optimise their DB and DC schemes following the recent publication of the Bill. Watch here.