DC default schemes outperforms growth targets in 2025 – Howden

In the ‘at retirement’ phase, the allocation stayed the same over 2025, with a 25% increase since 2021.

Alex Toney, head of DC default research at Howden, said: “The DC market celebrated a good year in 2025 – all members using these flagship default strategies, be they early in their careers or coming up to retirement, saw strong returns. 

“Most schemes passed our passive portfolio test, aided by North American equities delivering weaker returns.

“But the real test starts now. With less than five years until the Mansion House deadline, we expect to see a rapid shift in strategic positioning.”

Toney added: “Private market advocates promise enhanced returns, diversification, and access to long term growth themes, yet the evidence is clear; manager selection and skill drive the majority of outcomes.

“In fact, this is true outside of private markets too – the best performers need the right tech, the best people, and the ability to scale-up portfolios at speed. 

“2026 is the year for DC providers to invest in themselves to ensure they have the experience and governance structures needed to consistently make the right calls, in complex asset classes like private markets, impactful strategies like currency hedging, and tumultuous markets like the AI tech market.”

He said: “Ultimately, the race is on to deliver the best member outcomes as DC market competitiveness reaches new heights.”