On 14 November 2024, HM Treasury issued a consultation setting out proposals to legislate for a minimum size and maximum number of Defined Contribution (DC) pension scheme default funds.

Policy

The Government believes that the future of the workplace DC market lies in fewer, bigger, better run schemes, with the scale and capability to invest in a wide range of asset classes that can deliver better returns for savers long term and invest in the UK, which benefits savers and their communities. The Government sets out proposals to remove complexity and fragmentation from the market and ensure that the vehicles used for Automatic Enrolment are operating at a large scale. To help achieve this, the Government is seeking views on two proposals to introduce minimum size requirements for default arrangements as well as limits on the number of default arrangements. To support these measures, the Government also sets out proposals to enable contractual overrides for contract-based pension arrangements, subject to appropriate member protections. This would enable transfers without consent into either a trust-based or contract-based arrangement and would aid the shift to fewer, larger schemes. Also, the consultation explores what could be the ongoing roles of employers and those who advise them.

Next steps

The deadline for comments on the consultation is 16 January 2025.