LONDON, July 28, 2025 – Many DC organisations remain unconvinced that members are on track for sufficient income in retirement and expect the timeframe to reverse this to take decades, according to new research by the Thinking Ahead Institute.
The Global DC Peer Study 2025, conducted by the Thinking Ahead Institute, brought together 20 leading defined contribution organisations from across APAC, the Americas, and EMEA. Collectively, the funds represent over $2.2 trillion in assets under management, with participants including both public pension funds and private retirement schemes.
Among these organisations, 60% of expert participants said retirement income was the biggest challenge facing DC pensions over the next decade.
These concerns are especially pronounced in regions where minimum contribution levels are low or where auto-enrolment is widely misunderstood as being ‘enough by default’. Several organisations noted a growing focus on retirement adequacy – not just coverage or participation – as the next frontier of government reform and public attention.
A majority of organisations now offer soft-default pathways into retirement, but member behaviour still lags behind: many retirees engage late and tactically rather than strategically.
Some organisations are trialling collective defined contribution (CDC) or hybrid options to combine flexibility with sustainable income, but these remain exceptions.
The study also found that alternative investments are now equal in average allocation to bonds, with both at 20% and equities making up the remaining 60%. This marks a quiet but significant shift in DC investment thinking, particularly in more mature markets like Australia. While private markets bring new governance and communication challenges, the move reflects a growing belief that long-term return potential must be maximised – especially given the longer-term limitations of bond-heavy defaults.
A strong theme across the peer group was concern that current lifecycle designs may be underdelivering, particularly by allocating too conservatively during the early stages of members’ investment journeys. Some peers are exploring time-dynamic risk budgets or even leveraged equities for younger cohorts, based on the logic that greater early risk could dramatically improve long-term outcomes. Others are reassessing the glidepath altogether, aiming to align more closely with members’ changing capacity to bear risk. The concept of DC as liability-driven investing – similar to DB schemes – was raised as a potentially helpful mindset shift for future design.
“In many parts of the world, DC is now the dominant pension system. Yet it is still quite young and hasn’t fully matured – meaning there are challenges like retirement income, uptake and the level of contributions.”
Tim Hodgson | co-founder of the Thinking Ahead Institute
Tim Hodgson, co-founder of the Thinking Ahead Institute said: “In many parts of the world, DC is now the dominant pension system. Yet it is still quite young and hasn’t fully matured – meaning there are challenges like retirement income, uptake and the level of contributions.
“As DC matures as a system, we are noticing an increasing global emphasis on decumulation and whole of life solutions. Some are further ahead than others on this journey. Most DC members have decades to ensure sufficient retirement provision. Yet there are only two core and fundamental ways to better address adequacy in retirement; firstly greater contributions and secondly, greater long-term investment returns.
“More is being done to boost investment returns. We’ve noticed a growing consensus that current DC lifecycle designs may be leaving money on the table, particularly by not taking enough investment risk early in the accumulation phase.
“Yet on the first and most fundamental factor of pension savings, more may need to be done. Maximising returns on investment is essential but it can only do so much. In many markets, a clear majority of pension savers still fundamentally need to save more for their retirement during accumulation. While educating members can help, it is governments that will influence whether DC contributions are really sufficient to power a decent retirement for all future DC pensioners.”
The Thinking Ahead Institute was established in January 2015 and is a global not-for-profit investment research and innovation member group made up of engaged institutional asset owners and service providers committed to changing and improving the investment industry for the benefit of the end saver. It has over 55 members around the world and is an outgrowth of WTW Investments’ Thinking Ahead Group, which was set up in 2002.
WTW’s Investments business is focused on creating financial value for end investors through its expertise in risk assessment, strategic asset allocation, fiduciary management and investment manager selection. It has over 900 colleagues worldwide, more than 1,000 investment clients globally, assets under advisory of over US$3.4 trillion and US$168 billion of assets under management.
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