To ask His Majesty's Government what assessment they have made of the extent to which investment strategy and asset allocation determine saver outcomes for pension schemes compared to the overall pension scheme scale.

The Impact Assessment published alongside the Pension Schemes Act 2026 sets out that increasing scale in defined contribution pension schemes is expected to improve outcomes for savers. It finds that larger schemes are better able to benefit from economies of scale, including lower costs, stronger governance, and improved access to a wider range of investment opportunities and asset classes.

Evidence shows that investment strategy and asset allocation can have a significant impact on return. For example, industry data (Corporate Advisor) indicates that annualised returns for younger savers can vary by over eight percentage points across the market, partly reflecting differences in asset allocation and investment strategies. This highlights the role that scale can play in enabling schemes to access a broader range of investments and adopt more diversified, investment approaches. Taken together, these factors are expected to improve net investment returns over the long term and deliver better value for money for members, although outcomes will depend on market conditions and investment decisions.

The reforms outlined in the Pension Schemes Act 2026 are therefore intended to support the development of fewer, larger, and better‑run schemes capable of delivering improved retirement outcomes for savers. The government has estimated that these reforms could increase retirement outcomes by up to around £29,000 for an average earner over their lifetime.

Impact Assessment (pdf, 5823.4KB)