The Pensions Policy Institute (PPI) has expressed doubts about whether the pension administration sector could handle significant disruptions or emergency scheme transfers effectively. The institute points out that ongoing consolidation efforts, regulatory updates, and advancements in technology are placing heavier burdens on service providers.
While adopting automation and artificial intelligence (AI) may boost operational efficiency, simply introducing these tools does not ensure enhanced service quality or better results for members, the report emphasizes. Administrators face mounting pressures from factors including pension scheme consolidation, the rollout of pensions dashboards, adjustments to defined benefit (DB) arrangements, public sector pension reforms, and stricter regulatory requirements.
Pension Scheme Consolidation
Between 2024 and 2025, the number of occupational defined contribution (DC) and hybrid pension schemes with at least 12 members declined by 15%, while DC memberships within those arrangements increased by 7%. This shift suggests that while fewer schemes exist, the administrative workload has not decreased proportionally.
The study also notes the persistent challenges posed by deferred members, with occupational DC and hybrid schemes holding 21.3 million deferred memberships in 2025—compared to 11.4 million active memberships. These records demand ongoing maintenance and can generate substantial work during transfers, retirements, or benefit accesses.
Market Preparedness
The PPI has flagged concerns about the sector’s readiness for a large-scale failure among administration providers. The availability of alternative providers does not necessarily mean sufficient capacity exists to accommodate emergency transfers. A receiving administrator would need the necessary expertise, systems, and implementation resources to take on additional schemes while continuing to deliver services to existing clients.
Market-wide evidence of spare capacity, emergency transfer capabilities, and operational resilience remains limited, making it difficult to assess how effectively the sector could respond to a major disruption. However, these evidence gaps do not, in themselves, demonstrate insufficient capacity or poor performance.
Technology presents both opportunities and risks, the report states. Automation could reduce routine processing, allowing administrators to focus on complex cases and member communication. Yet, effective implementation depends on reliable data, documented benefit rules, and appropriate oversight.
The PPI argues that greater use of AI will change the skills required across the administration workforce rather than eliminate the need for specialist pensions expertise. Shantel Okello, the institute’s policy researcher and lead author, said: “Pensions administration is changing, but members still need their benefits paid accurately, and their questions answered when it matters.”
Okello stressed that the sector’s challenge is balancing investment in modernisation with maintaining essential services. “The pension administration market’s ability to withstand major disruption or absorb an emergency transfer remains uncertain, with consolidation, regulatory reform and technological change placing incr,” he argued.
