Looking Ahead to 2036: The Future of UK Workplace Pensions
A speech by Nausicaa Delfas at the Eversheds Sutherland UK Pensions Conference
Summary
- By 2036, we can expect the workplace pensions market to look very different: more people on track for a secure retirement, more value for members, well-structured default pensions, and greater transparency for members.
- Megafunds will operate as long-term institutional investors, with deep governance benches, inhouse investment capability, and the scale to invest directly, negotiate effectively, and withstand market stress.
- At The Pensions Regulator (TPR) we stand ready to work with you to implement the changes and evolve the market successfully.
Thank you for that introduction, Jeremy.
I’m delighted to be here and to give this keynote address.
I have been asked to think ahead a decade, to 2036. Thank you for the challenge.
Normally, thinking so far in the future is a recipe for poor predictions. A decade ago, how many of us would have predicted a world of widespread AI or the geopolitical and economic turmoil of recent years? On the flip side we were promised regular space flights and flying taxis. Instead, we’re still commuting by train and tube – just with better podcasts about technology…
But in pensions, I think we can be a little more confident about the future: the direction for workplace pensions is becoming clearer:
- the pensions market is already changing rapidly
- the Pension Schemes Act 2026 is bringing in a raft of reforms to ensure that people in the UK have greater value in their pensions, and default pensions at retirement, and
- the Pensions Commission is conducting its review on adequacy, fairness and sustainability of the pensions system
Looking forward is not only interesting – it is essential if we are to act now to shape a system that truly delivers for members.
With all this in mind, I want to start by setting out a plausible picture of the system we are building towards, and what this means for you.
What will the market look like in 2036?
By 2036, we can expect the workplace pensions market to look very different.
There should be more people on track to achieving a secure retirement – currently, we know that whilst many more people are saving, 43% of working-age people are still not on track to a secure retirement.
There should be more value for members delivered by their pension schemes, meaning more money in their pocket at retirement.
And well-structured default pensions, providing certainty and security.
Underpinning this, there would be greater transparency to members through dashboards and communications from schemes, and trust.
And to enable all this to happen, the system is currently going through the biggest changes in pensions since the introduction of auto-enrolment. The workplace pensions market will be much more consolidated – with fewer, larger well-run schemes, offering broader investment opportunities.
Defined benefit (DB) will remain significant, but increasingly it will be a system in managed runoff focused on endgame planning, security of benefits, and capital efficiency rather than ongoing accrual. Our Annual Funding Statement published today demonstrates the continued strong DB funding position with 80% in surplus on a low dependency basis.
While a small number of schemes may choose to remain open, others will be in superfunds and many will have been insured: 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.
Defined contribution (DC) will sit at the heart of the 2036 system. It will look very different from the fragmented landscape of the early 2020s. It will have overtaken defined benefit not just in terms of membership, but with approaching £1 trillion in DC trust assets as the dominant repository of long-term household wealth.
HMT’s pensions investment review last year set the standards for minimum size of DC scheme’s default funds to be £25bn by 2030. By 2036, consolidation will be largely complete. A defining feature of that consolidation will be the emergence of a small number of true UK pension megafunds.
Some master trusts will manage assets measured in the £100 billions, and will collectively hold the majority of the defined contribution savings.
These megafunds will not simply be larger versions of today’s schemes. 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.
With that scale will come heightened expectations in areas such as trusteeship, administration, operational resilience, and risk management. We will see implementation of the other Pensions Scheme Act 2026 measures including value for money, guided retirement, small pots as well as continued focus on transfers and scams.
The standards applied to these schemes will increasingly resemble those expected of other systemically important financial institutions. Getting the best outcomes for members will also mean trustees thinking more widely about how schemes might be designed and managed.
Scale will also transform investment behaviour. By 2036, the debate about whether DC can support long-term, less liquid investment will feel largely settled. These schemes will be investing in a more diverse range of assets. 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.
The more important question will be how trustees demonstrate that scale is being used responsibly, with a clear line of sight between investment strategy and improved member outcomes.
Collective provision will also be a settled part of the landscape.
Collective defined contribution (CDC) will not replace individual DC, but it will have earned a stable role alongside it.
Its significance will lie less in scale and more in influence – reshaping how we think about risk sharing, income smoothing, and trustees’ responsibilities in retirement, shaped by clear lessons from international experience – particularly on risk‑sharing, benefit adjustment and communication. Drawing on what has worked in countries such as the Netherlands, Denmark and Canada, the industry will help build models that are credible, sustainable and trusted by members over the long term.
Perhaps the most fundamental change will be how the system approaches retirement itself. The traditional handoff at the point of retirement will feel increasingly outdated. 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.
There may well be different defaults and glidepaths for different cohorts of savers.
Technology will underpin much of this change.
Pensions data will be embedded in people’s wider financial lives, helping members understand the consequences of their decisions in real time. Dashboards will enable members to check key metrics about their pensions.
But greater transparency will bring higher expectations around data security, resilience, and accountability – and trust will remain the system’s most valuable asset.
AI has already arrived and offers significant opportunities to improve regulatory effectiveness in the future – enabling better use of data to identify risks earlier, target interventions more precisely, and support faster, more informed decision‑making. Used well, it can strengthen supervision, improve outcomes for members, and increase efficiency across the system.
But those benefits come with clear challenges. AI systems must be governed carefully, with strong oversight, transparency and accountability. Data quality, bias, explainability and security are critical risks, particularly in a system built on trust. AI must support human judgement, not replace it, and its use must always be aligned with our statutory objectives and public expectations.
If we succeed, the workplace pensions system of 2036 will be larger, simpler, and more trusted, and focused on delivering security in later life.
TPR corporate strategy
In this changing landscape, we will be publishing our draft corporate strategy for consultation next week.
Our vision is of a system which gives people a sustainable income in retirement, provides security and value for all, and supports UK prosperity more widely.
Our focus will be on pensions reform, and the future of DC, DB and of course a keen focus on governance: trusteeship, administration and data, as these will form the bedrock of the future pensions system.
So what does this mean for you?
We are at a pivotal moment in pensions with the passage of the Pensions Act and the Pensions Commission’s work on adequacy. I have painted a picture of the future – one where people can look forward to a sustainable income at retirement, providing security and value for all.
It is time to look at how schemes are delivering for your members, now and in the future.
The pensions system we are shaping today will deliver outcomes for decades to come – and those outcomes increasingly depend on the strength of governance, and the effectiveness of administration and the quality of data. Bringing all this together is the skills of Trustees to focus on the right issues and ask the right questions.
Administrators’ role in delivering better data and cybersecurity, will be increasingly crucial. Alongside this, member experience and service levels will matter more than ever. As systems become more complex, these are no longer operational details; they are central to risk management, decision making, and trust.
But at the heart of strong governance and the effectiveness of administration is the role of trustees. The pensions system is changing for the better, but this brings additional complexity, responsibility and the continued need for good judgement. The skills and knowledge of trustees will need to be enhanced to keep pace with the new system and this will require changes to the current model.
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.
These changes are coming soon.
We all have a role to play in making these changes successful.
We stand ready to work with you on this. At The Pensions Regulator, we are responding by becoming more strategic and more outcomes‑focused. That means higher expectations for data quality, clearer accountability in governance, and administration that is resilient and capable of supporting long‑term decisions.
If we get this right, together we can build a pensions system that is more resilient, more innovative, and more trusted – delivering sustainable outcomes for members while maintaining public confidence.
That is the challenge ahead. And I look forward to discussing it with you in the panel.
Thank you.
