Do bigger pension schemes really deliver better returns?

A common assumption in pensions policy is that larger schemes deliver better investment returns. This belief underpins recent proposals to encourage consolidation and create so‑called “megafunds,” on the basis that size alone will improve outcomes for members.

But what does the evidence actually show?

Independent research by the Pensions Policy Institute (PPI)—drawing on international experience from markets such as Australia and Canada—suggests the link between scheme size and performance is far weaker than often assumed. While scale can deliver operational efficiencies, the research finds no clear or consistent relationship between larger pension schemes and higher investment returns.

Investment outcomes are shaped by a wide range of factors beyond scale alone. Contribution levels, asset allocation, governance, regulatory design, and market conditions all play a significant role. Isolating size as a reliable driver of returns is therefore difficult and, in many cases, misleading.

This matters because consolidation is often justified on the promise of better performance for savers. If size does not reliably deliver higher returns, it raises an important question about where efforts should really be focused when designing pension defaults and long‑term investment strategies.

Download the full PPI report below to explore the evidence in more detail.

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