The £25bn question facing DC Master Trusts; 'to grow or to go' is dominating the pensions headlines. But for those operating at the coal face, size alone doesn’t tell the full story.
In this issue of my Common Cents newsletter, I explore why the “DC Megafund” narrative is oversimplified, the real implications of the 2026 VFM and decumulation deadlines, and how these pressures are reshaping DC hiring and in-house talent strategies.
The pensions press is currently obsessed with one number: £25 billion.
The narrative is simple: if you’re a DC Master Trust without £25bn in your main default by 2030, you're acquisition bait. As Rosalind Knowles (2026) of Linklaters notes, the Pension Schemes Bill is driving a "major consolidation" wave. However, viewing the entire DC market through a "bigger is better" lens is reductive. It ignores the nuances of legal structures and the hurdles faced by schemes that aren't chasing scale.
1. Who is actually caught by the scale trap?
The mandate for £25bn+ in assets by 2030 is aimed at Multi-Employer Master Trusts and GPPs.
- The Reality: The latest legal outlook confirms that single-employer trusts and specific industry-wide arrangements remain outside the scope of mandatory "Megafund" consolidations.
- The Strategic Shift: Lydia Fearn , Partner at LCP (2026), argues that "Scale, support and sustainability will define the next phase of the market." For exempt schemes, this means proving you can deliver "Megafund" outcomes (private market access, lower costs) without the massive AUM requirement.
2. VFM Framework
The new Value for Money (VFM) Framework introduces a four-point rating system: Dark Green, Light Green, Amber, and Red.
- The 2026 Requirement: As highlighted by XPS (2026), schemes must now report on forward-looking metrics, predicting net returns over a 10-year period.
- The Impact: Kate Smith , Head of Pensions at Aegon (2026), notes that 2026 is "one of the most transformative years... from how schemes measure value to how individuals engage." An "Amber" or "Red" rating is no longer a warning; it’s a regulatory trigger for forced wind-up.
3. The Decumulation Duty & CDC Innovation
DC is no longer just about "accumulation." The Pension Schemes Bill (2026) places a statutory duty on trustees to provide a Default Pension Benefit Solution (DPBS).
- Retirement-Only CDC: Calum Cooper Head of Pensions Policy Innovation at Hymans Robertson (2026), states that "the UK pensions landscape is poised for significant transformation.” For me, it seems to be moving away from just helping members build a pot and toward designing solutions that actually pay a stable income for life.Retirement Collective Defined Contribution pension schemes
My Take: A recruitment perspective
The market is bifurcating. On one side, you have the "Megafunds" focusing on scale. On the other, you have large, sophisticated In-House/Industry arrangements that are exempt from the scale trap, but face the pressure of the new VFM framework, and Decumulation standards.
DC talent, hiring changes:
- The 2026 Requirement: As highlighted by XPS (2026), schemes must now report on forward-looking metrics, predicting net returns over a 10-year period.
- Longevity risk: With the Own Risk Assessment (ORA) deadline and the rise of Retirement-only CDC, specialists in longevity pooling and VFM protection are currently pretty sought-after profiles.
- Consultancy to In-House: Large, exempt industry schemes are aggressively hiring from consultancies to scale their internal teams. These roles offer the chance to own a proposition from start to finish, away from the "sign-off" culture and slow pace of the larger providers.
I will soon be hiring an in-house DC proposition role. They will be are a strategist who can advise trustees on navigating these regulations while ensuring the investment proposition remains "commercial standard."
If you want to lead a high-calibre in-house proposition that is exempt from the "Master Trust scale race", but is leading on innovation and decumulation strategy, get in touch.
References,
- Cooper, C. (2026) Pension reflections of the year past and 2026 predictions. Actuarial Post.
- Fearn, L. (2026) Scale, support and sustainability to ‘define’ DC market in 2026. Professional Pensions.
- Knowles, R. (2026) ‘Bigger is better’ for DC master trusts in 2026. Linklaters.
- Smith, K. (2026) What to expect in the world of pensions in 2026. Aegon UK.
- XPS Group (2026) Quarterly Pensions Watch: A look ahead to 2026.
This article is taken from my monthly Common Cents newsletter, where I share recruitment-led insight on pensions policy, regulatory change, market structure and the talent shifts shaping the industry.
If you’re navigating DC consolidation, in-house capability building, or decumulation strategy, or considering your next move, I’m always happy to have a confidential conversation.
