Big shifts in the pensions landscape are underway following the Pension Schemes Act – and one possible outcome is the emergence of “megafunds” which could deliver stronger outcomes for savers and a boost to the broader UK economy.

New research from Standard Life, in partnership with WPI Economics, published in the wake of the Pension Schemes Act, shows that the potential emergence of 10-15 “megafunds” by 2035 could boost retirement savings pots by up to 20% while unlocking up to £115 billion in GDP and supporting 330,000 jobs across the UK from infrastructure investment alone.

“From scale to impact: A blueprint for the future DC pensions market” focuses on one of the Act’s major initiatives: a move to fewer, but much larger defined contribution (DC) pension schemes with a greater focus on long-term value.

Greater scale, suggests the research, would enable schemes to invest more effectively across a wider range of assets, particularly private markets which could potentially offer greater growth than current investment policies.

According to the research, this could mean that:

• By 2035, the DC pensions market is expected to reach up to £1.8 trillion in assets and between £40 billion and £200 billion of that could be invested in UK private markets – significantly more than today.
• As a result, pension pots could increase in value by between 4% and 20% at retirement
• This would mean that the average early-career saver could have up to £49,000 more in their pension pot
• While a typical mid-career saver could see up to £17,000 additional savings

Andy Briggs, Group CEO, Standard Life plc, said: “The UK pensions system is at a critical juncture. While auto enrolment has transformed participation, too many people remain at risk of falling short in retirement.

“The next phase must focus on how reforms are implemented in practice, ensuring that pension savings are translated into better outcomes through greater scale and a stronger emphasis on long-term value.

“Getting this right is essential to improving financial security in retirement while also ensuring pensions can support long-term investment in the UK economy.”

So how much retirement income does YOUR current workplace pension provide you… and will it be enough?

Using the RetireEasy LifePlan you can see at a glance just how secure your retirement finances will be based on the current level of contributions from yourself and your employer… along with their projected value at retirement together with the future value of any other investments and assets you have.

If you see that it going to produce a shortfall in terms of the standard of living you are hoping to achieve, perhaps now is the time to see whether you can increase YOUR contributions… and if your employer is prepared to match that.