Question to the Department for Work and Pensions:

To ask His Majesty's Government what assessment they have made of the relationship between pension scheme size and member investment outcomes in defined contribution workplace pension schemes.

Answered by Baroness Sherlock - Minister of State (Department for Work and Pensions)

Evidence suggests there are a range of benefits to schemes achieving a greater level of scale through greater assets under management. This includes better governance, economies of scale, increased diversification of assets and improved bargaining power.

A growing number of research papers and evidence suggest a greater number of benefits can arise at £25 billion to £50 billion (or greater) of assets under management, as set out in the Department for Work and Pensions’ November 2024 publication “Pension fund investment and the UK economy” paper. The report can be found here: Pension fund investment and the UK economy - GOV.UK. Increased net returns via lower charges for members and higher net investment returns through diversification, both evidenced as being more possible through scale, can be expected to drive improved member outcomes. This evidence is set out in the Pension Schemes Act Impact Assessment published in December 2025. The Impact Assessment can be found here: Impact Assessment.

Question to the Department for Work and Pensions:

To ask His Majesty's Government what assessment they have made of the extent to which investment strategy and asset allocation determine saver outcomes for pension schemes compared to the overall pension scheme scale.

Answered by Baroness Sherlock - Minister of State (Department for Work and Pensions)

The Impact Assessment published alongside the Pension Schemes Act 2026 sets out that increasing scale in defined contribution pension schemes is expected to improve outcomes for savers. It finds that larger schemes are better able to benefit from economies of scale, including lower costs, stronger governance, and improved access to a wider range of investment opportunities and asset classes.

Evidence shows that investment strategy and asset allocation can have a significant impact on return. For example, industry data (Corporate Advisor) indicates that annualised returns for younger savers can vary by over eight percentage points across the market, partly reflecting differences in asset allocation and investment strategies. This highlights the role that scale can play in enabling schemes to access a broader range of investments and adopt more diversified, investment approaches. Taken together, these factors are expected to improve net investment returns over the long term and deliver better value for money for members, although outcomes will depend on market conditions and investment decisions.

The reforms outlined in the Pension Schemes Act 2026 are therefore intended to support the development of fewer, larger, and better‑run schemes capable of delivering improved retirement outcomes for savers. The government has estimated that these reforms could increase retirement outcomes by up to around £29,000 for an average earner over their lifetime.

Question to the Department for Work and Pensions:

To ask His Majesty's Government what assessment they have made of the difference in saver outcomes between (1) pension schemes with assets under management below £25 billion, and (2) larger pension schemes.

Answered by Baroness Sherlock - Minister of State (Department for Work and Pensions)

Evidence suggests there are a range of benefits to schemes achieving a greater scale. This includes better governance, economies of scale, increased diversification of assets and improved bargaining power.

A growing number of research papers and evidence suggest a greater number of benefits can arise at £25 billion to £50 billion (or greater) of assets under management, as set out in the Department for Work and Pensions’ November 2024 publication “Pension fund investment and the UK economy” paper. The report can be found here: Pension fund investment and the UK economy - GOV.UK. Increased net returns via lower charges for members and higher net investment returns through diversification, both evidenced as being more possible through scale, can be expected to drive improved member outcomes. This evidence is set out in the Pension Schemes Act Impact Assessment published in December 2025. The Impact Assessment can be found here: Impact Assessment.

Question to the Department for Work and Pensions:

To ask His Majesty's Government what assessment they have made, if any, of the potential risks associated with an increasing concentration of workplace pension assets within a small number of master trusts.

Answered by Baroness Sherlock - Minister of State (Department for Work and Pensions)

As part of our assessment of the Pension Schemes Act 2026 reforms the Department published an Impact Assessment, in addition to its 2024 report on Pension fund investment and the UK economy. These show that schemes operating at scale are better placed to deliver lower costs, stronger governance and improved long‑term outcomes for savers, reflecting international evidence.

The Act also makes provision for new entrants to operate in this market.

The reforms do not compel schemes to consolidate if they fall below the scale thresholds. However, from 2030, multi-employer schemes that do not meet the prescribed thresholds will be prohibited from accepting future automatic enrolment contributions. This is designed to encourage a market-led transition with schemes responding in a planned orderly way, support by regulatory oversight.

Question to the Department for Work and Pensions:

To ask His Majesty's Government whether high-performance workplace pension schemes will be required to consolidate if they fall below proposed scale thresholds.

Answered by Baroness Sherlock - Minister of State (Department for Work and Pensions)

As part of our assessment of the Pension Schemes Act 2026 reforms the Department published an Impact Assessment, in addition to its 2024 report on Pension fund investment and the UK economy. These show that schemes operating at scale are better placed to deliver lower costs, stronger governance and improved long‑term outcomes for savers, reflecting international evidence.

The Act also makes provision for new entrants to operate in this market.

The reforms do not compel schemes to consolidate if they fall below the scale thresholds. However, from 2030, multi-employer schemes that do not meet the prescribed thresholds will be prohibited from accepting future automatic enrolment contributions. This is designed to encourage a market-led transition with schemes responding in a planned orderly way, support by regulatory oversight.

Question to the Department for Work and Pensions:

To ask His Majesty's Government what assessment they have made of the causes of variation in member outcomes between workplace pension schemes.

Answered by Baroness Sherlock - Minister of State (Department for Work and Pensions)

The main driver of outcomes for Defined Contribution (DC) savers is investment returns. The Pension Schemes Act Impact Assessment estimated investment returns could account for over two-thirds of DC pot value at retirement. Variation in outcomes can also reflect differences in contributions being made, costs and charges, and governance quality across schemes.

Investment returns vary across the market. Analysis of Corporate Adviser data from Q42025 shows annualised investment returns for younger savers 30 years from their retirement currently vary across the DC market by over eight percentage points per year (from 14.3% annual returns to 5.5%), primarily due to differences in asset allocation and investment strategy, as well as broader market and macroeconomic performance.

Found: Minister for Equalities) See entry under Department for Levelling Up, Housing and Communities Baroness Stedman-Scott

Found: Charities and non-publicorganisations Member, SANDS Baroness Stedman-Scott OBE DL, Parliamentary UnderSecretary

Found: Minister for Equalities) See entry under Department for Levelling Up, Housing and Communities Baroness Stedman-Scott

Found: Charities and non-public organisations Member, SANDS Baroness Stedman-Scott OBE

Found: Directorships and shareholdings Shareholding in Atom Bank (registered as Crossco) Baroness Stedman-Scott

Found: Baroness Stedman-Scott OBE DL, Government Whip 4.

Found: Charities and non-public organisations Patron, National Osteoporosis Society Baroness Stedman-Scott

Found: Charities and non-public organisations Patron, National Osteoporosis Society Baroness Stedman-Scott

Found: A copy of this letter goes to the Secretary of State, Baroness Stedman -Scott, Neil Couling and Jonathan

Found: Yours sincerely, BARONESS STEDMAN-SCOTT MINISTER FOR WORK AND PENSIONS (LORDS)