Improved investment models could increase retirement savings by up to £100,000 per person over 40 years.

This is according to research published by Invesco and People’s Pension titled Built to Grow: How Asset Ownership Can Improve Outcomes and Help the UK Economy. It estimates that stronger asset ownership models could increase annualised returns by 0.25 to 0.75 percentage points, rising to 1.25 percentage points in the most favourable scenario. This could boost retirement savings by 5 per cent to 35 per cent.

The research also suggests that widespread adoption of larger-scale investment models across the defined contribution market could direct £30bn to £90bn into UK private markets over time.

But the research argues that consolidation alone is insufficient, with schemes needing stronger governance, investment expertise and decision-making to turn scale into better outcomes.

It identifies around £25bn in assets as a starting point for schemes to benefit more meaningfully from scale and advocates a hybrid model in which schemes retain control of strategic investment decisions while partnering with specialist providers.

The report calls on policymakers to support the development of larger schemes capable of improving retirement outcomes and directing more long-term capital into the UK economy.

People’s Pension CIO Dan Mikulskis says: “The UK has an opportunity to develop a pensions system that works even harder for millions of savers and for the wider economy. This research shows that scale really does matter, but what matters even more is how that scale is used. Greater asset ownership has the potential to improve retirement outcomes while also supporting investment in Britain’s future.”

Invesco senior managing director, co-head of investments Tony Wong says: “A key insight from this research is that successful asset ownership does not follow a single model. Around the world, leading pension organisations have adopted different approaches shaped by their governance, regulatory and market environments. As schemes grow, scale creates greater strategic optionality, but it should not be viewed as a choice between insourcing and outsourcing. The most successful organisations often combine strong strategic oversight with specialist capabilities in different ways to support their long-term objectives.” 

Invesco head of UK DC distribution Mary Cahani says: “As the UK DC market consolidates into a smaller number of larger schemes, the focus should increasingly shift from achieving scale to maximising its benefits. For many schemes, long-term strategic partnerships can complement existing operating models, helping enhance asset ownership capabilities, access specialist expertise and strengthen decision-making. Our research suggests that this pragmatic approach could provide a valuable pathway for schemes seeking to realise the full benefits of scale without needing to insource every function”

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