The majority of financial advisers see scale as an increasingly important differentiator between workplace pension providers, but highlighted that providers need to demonstrate how scale translates into better retirement outcomes, according to People’s Pension.

Its research showed that advisers recognised the importance of scale as the defined contribution (DC) workplace pensions market consolidates, with 51 per cent saying it was a key differentiator between providers.

Just 8 per cent did not believe that scale was an increasingly important differentiator between workplace pension providers.

Furthermore, only 11 per cent of advisers believed smaller providers could continue to compete effectively with larger providers.

However, advisers were also considering other factors when assessing DC pension providers, with 25 per cent saying scale delivered important operational advantages but did not necessarily translate into better retirement outcomes.

Just 9 per cent of financial advisers believed greater provider scale directly improved member outcomes.

More than half (58 per cent) of advisers felt member outcomes and support mattered more than cost alone, compared to 12 per cent who disagreed.

People’s Pension said the findings suggested advisers increasingly expected providers to demonstrate how scale translates into tangible benefits for members.

"It's encouraging to see advisers recognising that scale is becoming increasingly important as schemes consolidate and employers look for providers with the governance, resilience and investment capability to deliver over the long term,” commented People’s Pension distribution director, Stuart Reid.

"What stands out from these findings is that whilst advisers clearly see the value of scale, they're not yet convinced that it automatically translates into better outcomes for members.

“That reinforces the importance of providers demonstrating the value scale can create in practice.

"Ultimately, scale should never be judged in isolation. Its real value lies in what it enables providers to deliver for employers and members, and that's where the market is increasingly focusing its attention."

---