The Pensions Regulator (TPR) chief executive, Nausicaa Delfas, has said the UK workplace pensions market could look “very different” by 2036, with a smaller number of large pension megafunds, greater consolidation and more scheme-led retirement solutions becoming the norm.

Speaking at the Eversheds Sutherland UK Pensions Conference, Delfas said the pensions market was currently undergoing “the biggest changes in pensions since the introduction of auto-enrolment”.

Setting out her vision for the future of the UK pensions system, Delfas said she expected to see “more people on track to achieving a secure retirement”, more value for members and greater transparency through pensions dashboards and improved communications.

She highlighted that 43 per cent of working-age people are currently not on track for a secure retirement, despite increased participation in pension saving.

Delfas said defined contribution (DC) pensions would “sit at the heart of the 2036 system”, arguing that the sector would look “very different from the fragmented landscape of the early 2020s”.

With this in mind, she described how DC would overtake defined benefit (DB) “not just in terms of membership”, with trust-based DC assets approaching £1trn by 2036.

Delfas also pointed to ongoing consolidation in the DC market, citing the Treasury’s pensions investment review and its expectation that default funds will reach a minimum size of £25bn by 2030.

“By 2036, consolidation will be largely complete,” she stated.

“A defining feature of that consolidation will be the emergence of a small number of true UK pension megafunds.”

According to Delfas, some master trusts could manage assets “measured in the £100bn” and collectively hold the majority of DC savings.

“These megafunds will not simply be larger versions of today’s schemes,” she continued.

“They will operate as long-term institutional investors, with deep governance benches, in-house investment capability, strong administration and the scale to invest directly, negotiate effectively, and withstand market stress.”

She suggested the standards expected of these schemes would increasingly resemble those applied to “other systemically important financial institutions”, particularly in areas such as trusteeship, administration, operational resilience and risk management.

Meanwhile, Delfas claimed that scale would transform investment behaviour, arguing that by 2036 the debate over whether DC schemes could invest in less liquid assets would be “largely settled”.

“Our engagements with them now indicate that as schemes have gained scale, we may be moving from a world where allocations to private markets for some schemes exceed the commitments made in the Mansion House Accord,” she stated.

However, she stressed that trustees would need to demonstrate how scale and investment strategies were delivering improved outcomes for members.

On the DB side, Delfas said the sector would remain significant but increasingly operate as a system in “managed runoff”, focused on endgame planning and member security rather than ongoing accrual.

She also pointed to TPR’s latest Annual Funding Statement, which showed that 80 per cent of DB schemes were in surplus on a low-dependency basis.

“The challenge of 2036 will not be whether defined benefit survives in the private sector, but whether it concludes in a way that is orderly, efficient, and fair to members,” she added.

Delfas also predicted that collective defined contribution (CDC) schemes would become an established part of the pensions landscape alongside traditional DC provision, helping reshape thinking around risk-sharing and retirement income.

In addition, she argued that retirement itself would increasingly be viewed as a continuation of the savings journey, rather than a handoff point at retirement.

“Accumulation and decumulation will be treated as a single journey, with most members remaining within scheme-led retirement pathways that balance flexibility with greater predictability of income,” she added.

Technology and AI were also expected to play a larger role in the pensions system, Delfas noted, particularly in relation to pensions dashboards, member engagement and regulatory supervision.

However, she cautioned that trust would remain “the system’s most valuable asset”, warning that AI systems would require “strong oversight, transparency and accountability”.

Looking ahead, Delfas confirmed that TPR would publish its draft corporate strategy for consultation next week.

She revealed that the regulator’s focus would include pensions reform, the future of DB and DC, governance, trusteeship, administration and data quality.

“The direction of travel is fewer, larger, well-run schemes that deliver value and security, not just in the accumulation phase, but also in providing default pensions,” she concluded.

“We stand ready to work with you on this.”

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