The Department for Work and Pensions (DWP) has launched an eight-week discussion paper seeking industry views on how the government’s £25bn defined contribution (DC) scale requirements should operate from April 2030.

Under the Pension Schemes Act 2026, all authorised master trusts and group personal pension (GPP) schemes used by employers to meet their automatic enrolment (AE) duties will be required to hold at least £25bn in a single main scale default arrangement (MSDA).

Alternatively, schemes with at least £10bn could be approved as part of a transition pathway, provided they are on track to reach the £25bn threshold by 2035.

A scheme that is not approved as having an MSDA of at least £25bn, or £10bn under the transition pathway, will no longer be able to receive AE contributions in respect of either new or existing employers from 2030.

The discussion paper focuses on three elements that the government said would determine whether schemes meet the threshold: the MSDA, the common investment strategy (CIS) and the connections between schemes within a provider’s corporate group.

The government’s expectation is that the MSDA will sit at the centre of a scheme’s investments and receive members’ default AE contributions, unless there is a specific reason to use an alternative default arrangement.

Although the DWP acknowledged there could be legitimate reasons for providers to operate more than one default arrangement, it argued there was currently “too much fragmentation” within schemes.

The Pension Schemes Act gives the government powers to restrict the creation of new default arrangements, while the DWP also intends to review all existing non-scale default arrangements in 2029.

The DWP is seeking views on whether assets from other arrangements should be eligible for inclusion, including bespoke default arrangements and self-select options that use the same underlying building-block funds as the MSDA.

It has also proposed using assets under management as the consistent method for valuing assets within an MSDA, asking whether this would create any practical issues for schemes.

Assets within an MSDA will be required to operate under a CIS, which the government said was intended to ensure they were invested in a sufficiently common way to deliver scale benefits.

The DWP’s preferred approach would require assets for each member to be allocated in the same proportions to the same investments, with variations permitted only by age.

This would allow schemes to continue operating lifestyling and target-date fund strategies, but could restrict the use of other factors to differentiate investment approaches between members.

The department is therefore seeking evidence on whether an age-only approach would create challenges and whether additional forms of variation should be permitted.

The detailed definition of a connection will be set out in regulations, although the DWP indicated that it was considering using the “common control” test contained in the Occupational Pension Schemes (Master Trusts) Regulations 2018.

It is seeking information from providers on whether their schemes would meet this test, as well as any practical challenges involved in combining default arrangements and making investment decisions across connected schemes.

The government said scale could support greater investment expertise and diversification, improved governance and lower costs, while stressing that competition and innovation would need to be preserved through measures such as the new entrant pathway.

Pensions Minister, Torsten Bell, said: “How scale is delivered matters. It cannot be fragmented in multiple arrangements.

“It is in the interest of members that those running schemes have at least one large default arrangement that provides the buying power and expertise needed to deliver the benefits of scale.”

The discussion paper closes on 7 September 2026, with the DWP planning to hold further industry roundtables before consulting on draft regulations in the latter part of 2027.

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