Master trusts now account for 41 per cent of large defined contribution (DC) schemes, up from less than 30 per cent in 2022, research from Howden Employee Benefits has found.

Howden’s latest annual Analysis of Large Defined Contribution Schemes report examined 147 large DC schemes, representing £200bn of assets and 3.9 million members.

The research found that master trusts now account for the greatest share of the large DC scheme market, at 41 per cent, compared with 25 per cent using contract-based schemes and 34 per cent using own-trust arrangements.

Howden said the findings showed that the UK DC market is entering a "new phase", with master trusts firmly established as the dominant structure in the large-scheme market.

However, it said attention is increasingly turning to whether greater scale is translating into better outcomes for members.

Indeed, large master trusts now hold 37 per cent of DC assets across the schemes analysed, representing more than half of the total assets in bundled DC arrangements and 63 per cent of members.

The report also found that a small number of providers are shaping a large proportion of member experience, with four providers responsible for more than 70 per cent of assets and 74 per cent of members.

Howden noted that large master trusts continue to offer the lowest average default charges of any major scheme structure, at 0.217 per cent, highlighting one of the key benefits that scale delivers for members.

However, the report suggested that consolidation alone may not be enough to improve retirement outcomes.

Target drawdown is now the most common retirement objective among large schemes, but Howden’s analysis of more than 33,000 members who started taking benefits in 2025 found a disconnect between scheme design and member behaviour.

Around 87 per cent of these members took pension savings as cash through lump-sum withdrawals, including uncrystallised funds pension lump sum payments.

By comparison, 35 per cent entered drawdown and 7 per cent purchased an annuity, although Howden noted that some members select multiple options.

Meanwhile, the report also revealed that while digital access continues to improve, member engagement remains a challenge.

Most large schemes now report online registration rates above 60 per cent, but expression-of-wish completion rates remain below 40 per cent for the majority of schemes.

Howden suggested that improved access does not automatically translate into meaningful engagement.

Howden head of DC and financial wellbeing, Mark Futcher, said: “The government’s consolidation agenda is clearly having an impact.

“Master trusts are growing, schemes are getting bigger, and many of the benefits of scale are starting to come through.

“But bigger pension schemes were never supposed to be the end goal - better retirement outcomes were.

“Despite schemes increasingly designing for flexible retirement incomes, many members continue to favour cash withdrawals.

“And while people are logging into their pensions, few are taking the expected actions to genuinely improve their outcomes.”

Futcher added that consolidation had helped create bigger and more efficient schemes, but warned that members do not experience pensions through scheme structures or governance models.

“They experience them through the decisions they make,” he continued.

“If we want better retirement outcomes, we need to focus just as much on engagement, support, and innovation as we do on scale.”

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