The majority (87 per cent) of defined contribution (DC) pension savers are in schemes that invest in at least one productive asset class, research from The Pensions Regulator (TPR) has revealed.

According to TPR's data, 45 per cent of defined benefit (DB) schemes, 57 per cent of large DC schemes, and 72 per cent of DC master trusts hold some productive assets, such as infrastructure, private equity or renewables.

Commenting on the findings, TPR chief executive, Nausicaa Delfas, said: "We believe sound investment in diverse assets could improve outcomes for savers and generate growth for the UK economy. The two do not have to be in conflict.

"We want to help all schemes to be able to consider a full range of investment options, either through ensuring strong governance or by encouraging them to consolidate."

However, the survey showed that while many larger DC schemes hold productive assets, such as infrastructure, private equity or renewables, a "sizeable" proportion of small (57 per cent) and micro schemes (70 per cent) did not know if their scheme held assets in these classes.

TPR highlighted this lack of understanding as a potential indicator of poor governance standards.

The regulator also found that large-scale DB and DC schemes are more aware and engaged with their governance compared to smaller schemes, which it suggested could put them in a stronger position to make informed decisions around diversified investments, cyber security and environmental, social and governance (ESG).

Smaller schemes, meanwhile, were also found to be at risk of not performing as well against TPR’s expectations on investment governance and governance more broadly.

Given this, TPR emphasised that it is continuing to tackle poor governance in smaller schemes through a number of initiatives, including work to develop a Value for Money framework in partnership with Department for Work and Pensions and the Financial Conduct Authority.

It also reiterated its plans to look to introduce a more proactive supervisory approach to improve the quality of trusteeship, with a greater emphasis on providing value.

In addition to this, TPR noted that its work to look at how many schemes meet their legal duty to carry out a detailed Value for Members assessment has already seen nearly one in five (17 per cent) schemes engaged with concluding they do not offer value and winding up and fines issued for non-compliance.

---