Larger pension funds could boost retirement savings by up to 20% – Standard Life

Moving to fewer, larger pension funds with a value-focused approach could increase retirement savings by up to 20%, according to research from Standard Life.

Its research with WPI Economics found that moving to fewer, larger pension funds could also unlock £115bn in GDP, supporting 330,000 jobs through infrastructure investment.

By 2035, the market is expected to see 10-15 megafunds, enabling bigger allocations to private market assets. 

Pension pots could rise by between 4% and 20% at retirement, with an early-career saver seeing up to £49,000 more in their pension and a mid-career saver up to £17,000 extra. 

Allocations to private markets could rise from 2% to 4% today to 15-30% in future default funds. 

The report stated that the defined contribution (DC) pensions market could reach £1.8trn in assets by 2035, with up to £200bn invested in UK private markets. 

Eight principles were set out to guide the transition, including a clear and outcome-focused regulatory framework, equal protection for all members, a shift from cost to value, skilled trustees, and aligning pensions with wider economic strategy.

Joe Ahern, director of policy at WPI Economics, said: “Our analysis shows that greater scale and more diversified investment strategies, particularly increased exposure to private markets, can deliver higher returns for savers while supporting infrastructure, businesses and economic growth.