The number of participants in defined contribution plans in the U.K. has outstripped those in defined benefit funds for the first time due to the success of automatic enrollment, said The Pensions Regulator.
In its annual DC report, TPR said defined contribution arrangements had 14.8 million participants as at the end of 2016 compared to 11.7 million in defined benefit plans.
Andrew Warwick-Thompson, executive director for regulatory policy, said “55% of all private-sector pension plan members and 85% of active members are participants in defined contribution plans,” according to a statement accompanying the report. “This transformation is the direct result of the success of automatic enrollment, which has seen more than 7 million workers join pensions for the first time.”
The regulator also expressed concerns over the fragmentation of defined contribution arrangements, and “the persistence of a tail of subscale arrangements.” It said the trend toward consolidation of defined contribution plans, which had been observed in previous years, has slowed.
Mr. Warwick-Thompson added: “We strongly believe that it is unacceptable to have two classes of DC pension saver — those that benefit from the premium of scale and good governance and administration, and those that do not.”
The regulator will launch details of a trustee initiative later this year, with a clear objective to raise standards of trusteeship and take regulatory action against those who fail to meet a required level of competence.