The average defined contribution pension pot in the UK has reached £15,000—the highest level since automatic enrollment began—according to new research from the Pensions Policy Institute. The median pot size rose from £12,700 in 2023 to £15,000 this year, reflecting both the growth of the sector and strong investment returns, particularly in listed equities.
The MSCI World index climbed roughly 87% over the five years ending March 2025, helping to push total assets to £1.2 trillion in 2024, up from £324 billion in 2015. Automatic enrollment has brought 11.3 million people into pension saving as of June 2025, with 2.6 million employers now participating. Just over one million individuals have been re-enrolled after previously opting out.
Gaps in coverage remain
Despite the progress, 11.8 million people still fall outside the system, ineligible for automatic enrollment. The relaunched Pensions Commission will explore how to broaden inclusion in pension saving to help low earners and those with multiple jobs save for retirement.
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Investment strategies within schemes vary depending on the phase of retirement saving. During the growth phase, schemes heavily favor listed equities before shifting toward government and corporate bonds as members near retirement. Master trusts tend to be more diversified, allocating 13% to alternative assets, while contract-based schemes dedicate just 1% each to private equity, infrastructure, and private debt, with another 5% in real estate.
That balance may be shifting. Recent figures show £1.6 billion has flowed into private equity, aligning with the 2023 Mansion House Compact. Exposure in default funds has risen to 0.6%. Seventeen pension providers signed the Mansion House Accord earlier this year, committing to allocate 10% of default portfolios to private markets—half of which would target UK investments, subject to an appropriate supply of investible assets.
The government’s latest initiative, Sterling 20, involves 20 organizations collaborating on domestic and regional investment programs.
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Withdrawals and retirement options grow
Annuity sales have climbed steadily, with 90,000 sold in 2024—up from 54,000 in 2022. More than 140,000 drawdown arrangements were opened last year, totaling £11.6 billion. At the same time, withdrawals have increased. In the 2023-24 financial year, there were 296,000 full withdrawals, compared to 273,000 the previous year. Partial withdrawals rose to 302,000 from 285,000.
Nearly 150,000 pots were fully withdrawn in the first half of the 2024-25 financial year, meaning this year could reach 300,000 pots fully withdrawn. The Pension Schemes Bill contains provisions for “guided retirement,” which would require all DC schemes to provide at least one default option for members at retirement.
Savers need clarity.
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