Sackers comments on The DWP’s consultation and discussion paper on DC pension scale requirements

The DWP’s consultation and discussion paper on DC pension scale requirements closes on 7 September 2026. Commenting on the consultation, Michael Jones, partner, said:

“The government has been pursuing a policy of bigger, fewer and better pension schemes and the scale proposals are a fundamental component of this policy. While the scale measures will likely consolidate assets into bigger pools of capital, it is unlikely they will reduce fragmentation in the pension system, at least initially, because the scale tests are at umbrella fund-level. For schemes seeking approval via main scale default arrangements which combine master trusts and GPPs, there will still be underlying differences in regulatory regimes, pension arrangements, and governance structures, which puts greater onus on the contractual override and the VFM framework to achieve the policy aim of fewer pension schemes.

The scale tests are also focused on auto-enrolment DC defaults in accumulation only; this means DC assets in decumulation and CDC assets would not count towards a main scale default arrangement. To encourage innovation and support the nascent CDC market, we consider these assets should count towards the scale tests so long as they form part of a common investment strategy in the same scheme.

We would also urge the government to consider opening applications for the transition pathway now to facilitate orderly and efficient consolidation, ensure transparency, encourage innovation and avoid stifling competition. The new entrant pathway requires careful scrutiny too; if a scheme cannot have members on application, potential innovators are unlikely to enter the market now, which leads to a stagnant and uncertain market and conflicts with the policy aim of encouraging schemes with innovative product design.”

A copy of the consultation response will be available on Monday 7 September.