The Pensions Data Project analysed data from five major UK master trusts
For the first time, real data from five of the UK’s largest master trusts has been brought together to reveal how well the workplace pension system is working and where it still falls short.
Pension policy in the UK has become increasingly evidence-based, yet there's still no single national database tracking how people's total retirement savings evolve over time. The Pensions Commission flagged this gap as far back as its 2004 report, and two decades on, it remains a barrier to truly informed policy making.
That's why the Pensions Data Project marks such an important step forward. For the first time, anonymised data from five major UK master trusts; Legal & General, Nest, Now Pensions, People's Partnership and Smart Pension has been pulled together and analysed by PwC to provide answers to some fundamental questions:
- How many pension pots do people have?
- How much is their pension wealth and how does this change over time?
- What is the scale of the consolidation challenge?
Spanning four fiscal years (2019/2020 to 2022/2023), this project demonstrates the power of collaboration in addressing systemic pension challenges and improving retirement outcomes for savers. It's a glimpse of what could be achieved if the whole industry worked together.
AE has been a success, but gaps remain
Auto-enrolment (AE) has clearly boosted pension participation, but the numbers also reveal where gaps remain.
Across the five master trusts, total membership has grown from around 15 million in 2019/2020 to 21 million in 2022/2023 and the number of unique individuals growing from 12.5 million in 2019/2020 to 16.3 million in 2022/2023.
The data also shows that AE has successfully widened participation among younger members. However, the gender pension gap has not been resolved. Under half were women (47%), with men holding two-thirds (65%) of the total pot value.
Frequent job changes lead to multiple pension pots
The modern workforce often moves jobs regularly, and that has a direct impact on pensions, with many people now holding more than one pot.
On average members have 1.3 pension pots, up from 1.2 in 2019, with nearly 4 million individuals having more than one pot. Nonetheless, if the entirety of workplace pension saving was included, we would expect to find even more pots belonging to these same people.
This fragmentation adds both complexity for savers and inefficiencies for the system, making it harder for people to see the full picture of their retirement wealth. Tools like the Pensions Dashboards are therefore essential to give savers a full picture of all their pots in one place.
Small pots dominate, especially among some key groups
Although total assets tripled in four years, reaching £64bn in 2022/23, the data shows that most individual pots remain very small.
Some 10.8 million pots were found to be worth less than £1,000, while 14.6 million were less than £2,500, with the average pot value worth £3,109 in 2022/23, highlighting the need for need for a small pot consolidation solution.
Men, older members, and those in certain regions typically have higher balances, while women, younger savers, and lower-income areas lag behind.
The consolidation opportunity
Modelling of the proposed consolidation approach suggests that merging pots could lift average balances by more than 25%, reduce the number of very small pots, and strengthen member outcomes. Indeed, out of 20.6 million total pots in 2022/2023, around 11.8 million were deferred and therefore eligible for review.
Within the five trusts alone, up to 2 million pots, representing around £1.5bn in assets, could be consolidated. However, including even more schemes and improving data matching processes, this figure could substantially increase that figure.
The scenarios tested show how consolidation outcomes depend on pot values, contribution timing, and consolidator designation. This reinforces the need for accurate, consistent, and timely data across the industry.
Next steps
I am immensely proud that we have managed to deliver this project, which at times has been challenging but incredibly rewarding. The next phase of the project aims to establish a comprehensive, longitudinal dataset of UK retirement savings to continue to monitor and evaluate how pension policy is impacting savers.
Nicky Day is project lead at the Pensions Policy Institute
Additional providers are invited to contribute and strengthen evidence for future pensions policy by contacting Nicky Day at [email protected]
