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EXCLUSIVE: Master trusts dominate large DC schemes as focus shifts to retirement outcomes – Howden

Master trusts made up 41% of large schemes, compared with 34% own-trust arrangements and 25% contract-based schemes. 

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Master trusts now account for 41% of large DC schemes, compared with less than 30% in 2022, according to research from Howden Employee Benefits. 

The analysis covered 147 large DC schemes with £200bn of assets and 3.9 million members. 

Master trusts made up 41% of large schemes, compared with 34% own-trust arrangements and 25% contract-based schemes. 

Large master trusts held 37% of DC assets, which is more than half of the total assets in bundled DC arrangements and almost two-thirds (63%) of members. 

They also had the lowest average default charges at 0.217%.

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Data also showed that large master trusts now serves more than 60% of members in bundled DC arrangements, with more than half the assets for that group. 

Just four providers were responsible for more than 70% of assets and 74% of members. 

Despite more schemes targeting drawdown at retirement, 87% of members accessing benefits still took cash withdrawals.

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Target drawdown is now the most common retirement objective among large schemes. 

Analysis of more than 33,000 members who started taking benefits in 2025 found around 87% took pension savings as cash through lump-sum withdrawals, including Uncrystallised Funds Pension Lump Sum payments, while 35% entered drawdown and 7% bought an annuity. 

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Digital access has continued to improve, with most large schemes now reporting online registration rates above 60%. 

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Expression-of-wish completion rates stayed below 40% for the majority of schemes.

Mark Futcher, head of DC and financial wellbeing at Howden, said: “The government’s consolidation agenda is clearly having an impact. 

“Master trusts are growing, schemes are getting bigger, and many of the benefits of scale are starting to come through.

“But bigger pension schemes were never supposed to be the end goal – better retirement outcomes were.”

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Futcher added: “Despite schemes increasingly designing for flexible retirement incomes, many members continue to favour cash withdrawals. 

“And while people are logging into their pensions, few are taking the expected actions to genuinely improve their outcomes.

“Consolidation has helped create bigger, more efficient schemes – but members don’t experience pensions through scheme structures of governance models.”

He said: “They experience them through the decisions they make. 

“If we want better retirement outcomes, we need to focus just as much on engagement, support, and innovation as we do on scale.”

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