Reflections and resolutions: What 2024 taught us in DC pensions and how to shape 2025
Jump to:
With 2024 fast fading in the rearview mirror, reflecting feels like an important part of making any new year's resolution. It’s been a year of breakthroughs and bold moves, tempered by some challenges along the way…
What worked? What didn’t? And how can schemes use these lessons to improve member outcomes, refine strategies, and seize new opportunities this coming year?
Here’s a look back at some of our key reflections on 2024 — and some resolutions to help you make 2025 a standout year.
What would your scheme’s reflections and resolutions for 2024/25 look like?
Taking the time to review the past year and set clear priorities for the next is essential for delivering great outcomes. Let us help you create a plan tailored to your scheme’s needs—get in touch with your usual LCP advisor to find out more!
Private markets finally took off
Private markets made significant strides last year. Infrastructure, private equity, and other illiquid assets are becoming more common in default strategies with the help of Long-Term Asset Funds (LTAFs). In 2024, HSBC launched the largest LTAF for a single trust scheme; managed by Fulcrum Asset Management and with support from LCP, it was incorporated into HSBC’s DC default. Key players such as Schroders and Aviva Investors launched several LTAFs since the structure was approved, with Legal & General Investment Management following suit in 2024.
This is a game-changer for diversification in DC, showcasing how DC schemes can evolve to meet the needs of modern savers.
After a year of strong equity performance (especially in the US), mixed bond market results despite interest-rate cuts, and Labour’s landslide victory in the UK, attention now shifts to 2025. Trump’s return to office may bring its fair share of market volatility if his last presidency is anything to go by. Pro-business policies like tax cuts and deregulation may support US equity growth, but his history of tariffs and trade conflict could spell trouble. A desire to reduce reliance on Trump-sensitive US public equities, underscores the ever-growing importance of diversification.
Useful links:
Sustainability took centre stage
2024 saw further evolution in the approach to ESG and stewardship. Gone are the days of vague commitments and greenwashed ‘ESG’ branding without substance. Today, members, regulators, and stakeholders expect tangible evidence of action. Schemes are under increasing pressure to demonstrate not just their commitments, but the real-world impact of their investments.
This year, we’ve worked alongside clients to drive meaningful change—whether through conversations with industry experts about net zero investing on our Investment Uncut podcast or exploring ways investor influence can contribute to addressing climate challenges. Engage with our climate policy asks; pushing for systemic change by holding policymakers and regulators to account (if you haven’t already, there’s still time to get involved).
For a deeper dive into our approach to stewardship and responsible investment (RI), including our own DEI statistics, RI within manager research and how we’re tackling issues like climate change with systemic stewardship, take a look at our 2024 stewardship report.
Useful links:
Regulatory overload
Numerous announcements in the Autumn Budget and Mansion House speech promised sweeping changes. Whilst the intent is noble and governance improvements are always welcome, the pace and sheer volume of increasing requirements risks distracting from the bigger picture: delivering outcomes for members.
The Value for Money (VFM) framework consultation aimed to establish a clearer and comparable review of value and hold schemes accountable. Whilst positive in theory, we’ve raised concerns about its practicality in terms of onerous data requirements and missing ESG elements.
The Government’s ‘pension megafunds’ proposal, focused on the Master Trust and provider market, wanting faster consolidation - was also met with industry resistance. Critics argued it risks overlooking the unique needs of schemes, prioritising scale over flexibility and outcomes.
No regulatory review would be complete without mentioning the proposed changes to inheritance tax rules to include pensions. The impact could be widespread for the industry and altering how members view their retirement savings. Watch our webinar with Sir Steve Webb to see how employers and trustees can respond in order to support members.
On a positive note, the first of the pensions dashboards are finally set to connect in 2025, offering a consolidated view of retirement savings and (hopefully) enhancing member engagement and understanding.
With so many changes on the horizon, we’re here to help schemes navigate the challenges while keeping the focus firmly on delivering real value for members.
Useful links:
- Webinar: Unravelling the Chancellor's Mansion House speech
- VFM framework needs to focus more on member outcomes
- ‘Mega funds’ aren’t in members’ best interests – Head of DC
- Inheritance tax rules on pensions threaten bureaucratic nightmare
- Webinar: Inheritance Tax rules - Impact on pensions and death benefits
Prioritise member outcomes
In 2025, it’s all about turning ambition into measurable results. As more members progress towards retirement with their DC pot, the focus must shift to providing flexible decumulation options.
Investigating all pre- and post- retirement possibilities, from hybrid drawdown models and ‘fix-and-flex’ solutions to newly emerging CDC (Collective Defined Contribution) schemes and tailored guidance, is essential to ensuring members transition with confidence.
Within default strategies, private market investments will continue to grow; it’s about making them accessible and exploring opportunities such as thematic investing (eg such as healthcare, biotech, and renewable energy). The challenge for 2025 is to manage opportunities whilst maintaining alignment with scheme objectives.
Supporting members' wider financial wellbeing is key to achieving positive outcomes. By helping them plan for the short, medium, and long term, we can enhance their engagement with pension savings. Whether through online tools, webinars, or face-to-face guidance, there are plenty of ways to provide this support - an important focus for 2025.Whether you’re tackling decumulation, investments or financial wellbeing in your quest for better member outcomes – LCP can provide industry insights and tangible action plans.
Useful links:
Step up on stewardship
The responsible investment landscape is shifting and 2025 is the year to stand strong. From biodiversity initiatives to net-zero targets, it is important to actively engage fund managers to ensure investments deliver sustainable positive outcomes, with a strong financial rationale to address any arising scepticism as anti-climate change rhetoric increases with Trump’s return to office.
The importance of effective stewardship is heightened by the President's continued undermining of responsible investment efforts, with moves to withdraw from the Net Zero Asset Managers initiative (NZAMI) and with other influential figures pressuring large US asset managers to do the same. These developments highlight the importance of holding policymakers and fund managers to account.
LCP will soon be launching our new stewardship service: LCP Influence. We’ve found current stewardship approaches can feel time consuming and ineffective so we’ve developed a new market-leading service to holistically manage stewardship – focusing on the largest asset managers with stronger asks to affect measured changes. This service can include reporting on best/worst industry practices, tracking and comparing manager voting, and measuring progress against specific goals. Reach out to your usual LCP contact to find out more!
Useful links:
Modernise member communications
Member engagement needs to go beyond long-winded pdfs with fine print. Investing in interactive dashboards, video content, and other accessible formats can ensure members feel informed and empowered. Some examples of this include customisable colour backgrounds for dyslexic members, easier read hyperbold text for those with ADHD and screen-reader-compatible content for visual impairments.
We recommend embracing multimedia formats like explainer videos, interactive dashboards and animations to keep information engaging. AI can further enhance this with personalised and gamified pension education, and tools that offer tailored savings or budgeting support.
Language and detail can be tailored to members using relatable colloquialism for Gen Z, more literal messaging for autistic members and step-by-step tech access guides for older members. Mix this with mobile friendly (social media-inspired) formats and clear, easy to navigate microsites, and video/voice formats, there should be something for all.
2025 offers a chance to embrace these innovations, improving member accessibility and engagement. Chat to our comms team about how you can plan your comms approach this year!
Useful links:
The next chapter for DC
If 2024 laid the groundwork, then 2025 is the year to build. The DC pensions industry is evolving rapidly; only by learning from the successes and challenges of the past year can schemes stay ahead of the curve to deliver for their members.
At LCP, we’re here to help you navigate these changes and chart a course for success. Whether you’re looking to explore new investment opportunities, refine your governance, or simply communicate better with members, our team is ready to support you.
