The Pensions Regulator (TPR) has blasted the unacceptable performance of small pension schemes in the UK and told them to improve or leave the market.
The criticism came as TPR released figures yesterday showing that only 1% of small schemes with 12 to 99 members meet all the governance standards expected of them.
This is in stark contrast to the 71% of total pension schemes that are meeting all the trusteeship and governance standards, an increase from 54% in 2018 and 32% the year before.
"These figures clearly show that people saving for their retirement are generally far better served by big schemes than small," TPR executive director, David Fairs, said.
"This long tail of smaller schemes which do not meet the standards we expect is simply unacceptable."
The research also found that just 20% of schemes take climate change into account when considering their investment approach, despite this being mandatory from October.
However, three-quarters of schemes reported that they have more than half of the cyber security controls expected by the TPR in place, which were published last year.
And two-thirds of trustees directly contacted by TPR went on to spend more time on governance, with the regulator insisting it is approaching more small schemes.
It said it is taking a more "directive style" of communication, clarifying priorities and providing simple steps for complying with the fundamentals of good governance.
The TPR research also found that 43% of small schemes have considered winding up.
"They recognise that savers will generally get better value in a larger, better-run scheme which can benefit from economies of scale," Fairs continued.
"All trustees - of pension schemes big and small - should be taking their role tremendously seriously and ensuring they are running their scheme properly so savers get a good retirement."
