Over 16 million people have saved £38.5bn into master trusts, an increase from 13.4 million in 2018, new data from The Pensions Regulator (TPR) has revealed.

In its annual report, DC Trust, TPR revealed that master trust membership had increased from 270,000 at the beginning of 2012, with nine out of ten people saving into the largest master trusts.

The regulator stated that the rise of master trust membership showed “the impact of master trust authorisation” and had “created a safe and stable market for workplace pensions”.

However, TPR also revealed that average assets per member fell for the seventh consecutive year.

Although this could be due to more low earners having pensions due to auto-enrolment, average DC assets per membership at retirement had fallen by 43 per cent in 2019, to just £5,500.

Furthermore, this is a 72 per cent decrease since the beginning of 2015.

As master trusts have grown, the DC market has also been subject to "further concentration", with the number of schemes which identity as DC falling by 12 per cent over the last year, and 42 per cent since 2010.

TPR executive director of policy, analysis and advice, David Fairs said: “Thanks to the success of automatic enrolment, the vast majority of DC members are saving into large, stable master trusts which, through the authorisation programme, have demonstrated to us that they meet the high governance standards”.

The majority (95 per cent) of remaining DC schemes identify as micro schemes, with 91 per cent of these identifying as a 'Relevant Small Scheme'.

Fairs added: “The drop in the number of DC schemes shows many are consolidating.
Consolidation is good news for savers - we only want to see well governed schemes that meet our expectations in the market place so that all savers have the best opportunity to save for a retirement they want.

“We know many small schemes are poorly run and we are working with the industry to drive up standards of governance and trusteeship. For trustees who cannot or will not fulfil their responsibilities properly, we encourage them to consider consolidation.”

Reported DC asset values now total £71.3bn, an increase of £10bn (16 per cent) since last year and 222 per cent since the beginning of 2012.

The report also revealed a 55 per cent increase in member contributions throughout 2019, compared to an increase of just 25 per cent in 2018.

Despite the rise in contributions, the report showed that average assets per member have continued to decline every year since 2013.

This rate appears to be “stabilising” though, as 2019 saw a decrease of just 2 per cent, compared to 6 per cent in 2018.

The report noted that that this trend was likely due to the influx of savers introduced by automatic enrolment, while the rise in contributions may be due to the increase in minimum auto-enrolment contributions implemented in April 2019.

The impact of an ageing population was also seen, with the number of memberships that retired increasing by 46 per cent compared to 2018, rising from 51,000 to 95,000.

Commenting on the report, Smart Pension director of policy, Darren Philp, said: "Master trust authorisation and the regulator’s efforts to raise standards across all schemes is changing the shape of the market and driving consolidation.

"This will only be of benefit pension savers. If we are auto enrolling people into a pension it's only right that we make sure that schemes have scale and good governance, provide value for money and the security to ensure scheme members' savings are protected.

"Further consolidation is inevitable as the regulator continues to raise standards and expects the whole occupational sector to up its game."

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