Investment Themes
The DC Future Book
Edition 10 – the DC Future Book 2024
Columbia Threadneedle Investments are delighted to present this milestone edition of the latest DC Future Book. Since its inaugural publication in 2015, we have proudly sponsored this important work and we are thrilled to continue our support through to this 10th anniversary edition.
Produced by the Pensions Policy Institute (PPI), the DC Future Book sets out the current DC landscape in the UK and provides projections for future trends and evidence-based research for policymakers and the broader industry.
The UK pensions landscape has seen momentous change over the last decade. Broadly driven by the rapid decline in DB schemes and acceleration of DC provision where employees bear the investment risk while employers benefit from more predictable costs. One of the most notable achievements has been the take up of auto enrolment, which has resulted in 14 million active members in DC schemes, compared to only 4.6 million a decade ago when the DC Future Book was first published (2015). However, further reforms are required to bring more people into pension saving.
This rise in DC schemes has also seen master trusts emerge as the dominant pension provider. As of 2023, there are currently 36 master trusts authorised to operate in the UK market, playing a crucial role in enabling auto-enrolment, particularly for smaller schemes. Yet, the true cost-effectiveness of master trusts is complex. Evaluation need not just be on administrative efficiency, but also on their investment returns and quality of services.
In Chapter 4, we explore the evolution of the DC pensions landscape in greater detail, including the impact of past and present policy changes and what the next 10 years could look like for DC savers.
Like many investors over the past 10 years, interest from DC schemes in alternative asset classes has grown significantly – drawn to seemingly higher and more diversified sources of returns. However, the perceived barriers and complexities, including higher costs, pose challenges for DC schemes investing in private markets or illiquid investments. Recent Mansion House Reforms aim to address these barriers by encouraging investment in productive assets, such as private equity and infrastructure, to bolster economic growth and sustainability.
This tenth year edition of the DC Future Book also outlines the benefits of the new Value for Money (VFM) Framework as well as the necessary bridging of a generational gap in understanding of technology. This is required to truly unlock all possible advancements for DC savers, such as the Pensions Dashboards Programme and the use of AI in delivering personalised investment advice and guidance to DC savers of all ages. Whilst the demand and importance of ESG integration in DC investment strategies schemes has increased over the years, the Future Book highlights ongoing challenges related to the reliability of data provision.
We strongly encourage policymakers and industry leaders to prioritise the accessibility of financial advice and guidance for DC savers. Together, we must strive to help current and future retirees look forward to a comfortable retirement by providing frameworks that deliver better outcomes and safeguard the financial future for thousands of workers.
It is through collaboration, innovation and thoughtful policy that we can continue to improve pension provision for all savers.
We hope you enjoy reading the 10th anniversary edition of The DC Future Book.
Previous reports
Useful links
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An actively managed buy and maintain credit strategy with a formal commitment to net zero.
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A recently co-authored Policy Exchange paper, Growing Pension Capital, sets out how.
Pensions Watch
What’s been happening and what’s on the horizon in the world of pensions and importantly, why does it all matter?
CT Net Zero Transition Low Duration Credit
A short-dated global credit strategy with a formal commitment to net zero by 2050.
Pensions Watch
What’s been happening and what’s on the horizon in the world of pensions and importantly, why does it all matter?
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