The Pensions Regulator (TPR) has urged asset managers and the investment industry to play their part in the "pensions revolution" by bringing forward innovations and new investment products that deliver long-term value.

Speaking at the Investment Association Annual Conference, TPR CEO, Nausicaa Delfas, said that this is a "pivotal" time for the pensions industry, with a "rapid rate of change" towards fewer, larger pension schemes, delivering real value for money for savers.

"We are no longer living in a world of gold-plated final salaries, but we are living in a time of re-invention," she stated. "A time in which we can re-think the status quo and shape the future."

Indeed, TPR's previous analysis showed that the number of schemes in the defined contribution (DC) pension system fell by 15 per cent in 2023/24 as smaller schemes exited the market, whilst the volume of assets under management grow by 25 per cent.

However, Delfas argued that the challenge for the next decade is to make sure that these savings grow adequately, warning that "there is still a very real risk that millions of people who have DC pensions will not have enough to support themselves in later life".

Given this, she explained that a key priority for TPR will be ensuring that these larger schemes are protected, stressing the need for pension trusteeship to come into line with other professions and corporate governance standards.

To support this, she confirmed that TPR will be launching a new strategy to guide trustees as they navigate this new world of mega funds and superfunds.

"We want their decisions to be the product of informed decision-making based on good governance with a view to the best financial interests of members.," she stated.

She also stressed the role of investment in generating good member outcomes, pointing out that, as schemes are consolidated, and the pot of money held by each grows, so too does the advantage of scale.

"This opens the door to greater investment sophistication, and new strategies to deliver for the saver," she stated.

"Professional in-house teams can manage portfolios dynamically, ride out volatility, and, crucially for growth, access private markets and complex instruments.

"And, with bigger, better-run funds, comes an increased flow of investable capital."

Delfas also highlighted the importance of the forthcoming value for money (VFM) framework in delivering these returns, suggesting that "the VFM framework will provide useful guardrails and support as trustees decide how and where to invest".

But Delfas argued that innovations are needed to help scheme trustees diversify their investments to deliver better outcomes for savers, challenging investment managers to step up and play their part with new investment products and funds.

She stated: "We all have a chance to shape the changing landscape so that in 10, 20, 30 years' time – people who are working hard and saving today can have a comfortable retirement".

"Are you being supportive enough of long-term assets? The FCA has authorised Long-Term Asset Funds (LTAFs) to provide DC schemes with access to illiquid assets – could they be integrated into default strategies?

"Could you be designing multi-asset solutions that are optimized for decumulation? Many DC pots lie in default funds that simply aren't working hard enough – can you be more dynamic? More personalized in your approach?

"It is incumbent on all of us to ensure that pots grow, and people are protected in their older years."

---