DC pension charges fall as employers focus on retirement outcomes – WTW

Defined contribution (DC) pension charges continued to fall as employers focused on improving retirement outcomes, according to WTW’s 20th annual DC Pensions and Savings Survey. 

The research found average annual management charges dropped from 0.38% in 2017 to 0.28% in 2025, with nearly two-thirds (around 66%) of schemes charging less than 0.30%.

Four in 10 (39%) larger schemes said they would consider higher charges to get access to illiquid investments like private equity or infrastructure, while only one in 10 (12%) smaller schemes would do the same. 

Companies moved towards off-the-shelf default funds, which increased from 47% in 2017 to 79% in 2025.

Helen Holman, head of DC consulting at WTW, said: “The question is whether we have now reached the stage where the focus on driving costs down has gone too far and whether there is room to increase value-for-money by accessing alternative investment strategies that can provide growth, diversification and value, despite higher costs.

“Whether illiquid assets, such as private equity or infrastructure, hold the potential to enhance risk-adjusted returns is a key debate in the pension industry, with the UK government seeking to encourage greater investment in illiquid assets via the Mansion House Compact.”

The research found employers were focusing on providing better support and guidance for staff, rather than changing contribution rates or cutting costs. 

70% of employers focused on engagement and retirement outcomes, while 62% wanted to improve financial wellbeing support.

Holman added: “Guidance services stop short of full financial advice, but offer more cost-effective means to support workers, both as they approach retirement and to support general financial wellbeing. 

“Increasingly we see companies looking to provide, and pay for, access to additional guidance for their employees.”