The Pensions Regulator (TPR) has revealed 90% of people are saving into the largest master trusts, creating a “safe and stable” workplace pension market.
The watchdog's annual Defined Contribution (DC) Trust report - published today (6 February) - revealed £38.5bn has so far been saved into master trusts by more than 16 million people.
The report - which showed the number of DC schemes has fallen 12% since last year - showed the impact of the master trust authorisation regime, which led to greater consolidation of DC schemes, made pensions significantly "safer".
The regulator also detailed the decline in average savings per member each year since 2013 as a result of the significant increase in the number of people saving due to auto-enrolment (AE). The report revealed this trend seems to be stabilising.
Executive director of policy, analysis and advice David Fairs said: "Thanks to the success of AE, the vast majority of DC members are saving into larger, stable master trusts which, though the authorisation programme, have demonstrated to us that they meet the high governance standards."
The report also showed that the number of schemes which identified themselves as having 12 or more DC memberships has declined by 62% since the beginning of 2010.
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."
TPR's master trust authorisation regime concluded last year and drastically reduced the size of the market leaving 38 authorised master trusts, while 44 schemes exited the market.
Fairs added: "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."
Smart Pension director of policy Darren Philp said: "Mastertrust authorisation and the regulator's efforts to raise standards across all schemes is changing the shape of the market and driving consolidation... 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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