What are the risks of using a £25 billion size threshold to assess value in pension schemes?

A central feature of current consolidation proposals is the introduction of a single asset-based threshold, with £25 billion often cited as a benchmark for schemes to be considered sufficiently “scaled.” The assumption is that reaching this level of assets is a reliable indicator of quality, value, and long‑term sustainability.

Independent analysis by the Pensions Policy Institute (PPI) finds no clear consensus on the level of assets required for schemes to benefit from scale. Stakeholders interviewed as part of the research questioned whether a single threshold can capture the diversity of pension schemes, operating models, and market contexts within the UK system.

Crucially, the evidence shows that size and value do not always move together. Some smaller schemes were found to provide access to a wide range of asset classes and investment opportunities, while some larger schemes did not. This calls into question whether an asset threshold alone is an effective proxy for value for members.

There were also concerns about unintended consequences. A rigid threshold could encourage schemes to consolidate for structural reasons rather than to address underlying issues around governance, investment design, or member outcomes.

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

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