Structural Shifts: Scaling, Innovation and Fit for the Future

This divergence reflects the reality that consolidation is unfolding differently across segments. For defined benefit (DB) schemes, improved funding positions and improved buyout affordability have accelerated risk transfer activity. Transaction volumes have increased significantly in recent years, reshaping the market. For defined contribution (DC) schemes, policy initiatives, governance burdens and scale requirements are pushing smaller schemes to reassess their long-term viability. For Local Government Pension Schemes (LGPS), pooling structures continue to evolve under regulatory direction, aiming to deliver scale while maintaining local accountability.

Despite these differences, a common theme emerged: consolidation is not a single pathway. It encompasses pooling, buy-in and buy-out activity, transfers to master trusts, superfund solutions and emerging structures such as the collective defined contribution (CDC) schemes.  Each model offers different trade-offs across governance, cost, flexibility and member outcomes.

Scale is valued, but not in isolation

The panel was clear that scale can deliver benefits, but only when it is applied effectively. Larger structures may support stronger governance, access to specialist capabilities and more resilient operating models, as well as  investment in infrastructure, technology and servicing capabilities that smaller schemes may find difficult to sustain.

The role of scale, however, differs by scheme type. For DB schemes and the LGPS, it is often linked to governance, cost efficiency, investment strategy, risk management and endgame planning, with member outcomes typically affected indirectly because benefits are promised or guaranteed. For DC schemes, the link is more direct: if used well, scale can create efficiencies and broaden investment opportunities in ways that may improve member outcomes.

Scale alone is not sufficient. The discussion repeatedly returned to fiduciary duty and member outcomes as the primary benchmark. While 78% of attendees agreed that consolidation leads to better member outcomes, panellists emphasised that this is not automatic.

Scale must be accompanied by robust governance, clear accountability and effective implementation. There is also recognition that excessive scale can introduce its own challenges, including reduced flexibility and potential constraints in accessing certain investment opportunities.

This nuance is reflected in the drivers of consolidation identified by attendees. Cost and efficiency pressures ranked highest (38%), followed by funding strength and regulatory direction (both 23%). These responses point to a combination of financial, operational and policy forces shaping the trend, rather than a single dominant factor.

The real challenge is choosing the right model

If consolidation is inevitable, the critical question becomes how to approach it. Polling showed that 69% of respondents see “choosing the wrong model” as the biggest concern, far outweighing fears of acting too early or too late. 

This reflects a growing complexity in the decision-making landscape. With multiple end-state options, asset owners must evaluate not just whether to consolidate, but how. Each pathway involves different implications for governance, cost, member experience and long-term strategy.

Preparation emerged as a decisive factor. Panellists highlighted that schemes which have invested in data quality, governance frameworks and clear decision processes are better positioned to act effectively. Well-prepared schemes are more likely to achieve favourable outcomes, move efficiently through transactions and retain control over their strategic direction. By contrast, a lack of preparation can lead to delays, increased costs and suboptimal decision-making.

Tokenisation is moving toward practical application

The second half of the event focused on tokenisation, shifting the discussion away from crypto assets and toward institutional use cases. The discussion emphasised that tokenisation should not be viewed as a departure from established investment processes, but as an opportunity to deliver familiar investment structures with improved efficiency, enhanced collateral mobility and more streamlined operational workflows. The focus was on achieving better outcomes through modernised infrastructure rather than creating entirely new investment products.

Examples highlighted included tokenised funds, digital gilts, improved settlement mechanisms and enhanced collateral mobility. Rather than replacing existing systems outright, the emphasis was on making them “the same, but better”: maintaining familiar investment structures, governance and investor protections while reducing operational friction and improving how assets are issued, held and transferred.

What has changed in recent years is the level of regulatory engagement and market participation. Regulatory clarity is improving, and initiatives such as the UK digital gilt pilot signal increasing institutional support. This is helping shift tokenisation from a conceptual discussion toward practical implementation.

Adoption remains cautious

Despite this progress, institutional adoption is still at an early stage. Event polling showed that 44% of organisations are aware of the trend but not yet taking action and 36% say tokenisation is not yet on their radar, with only a small minority actively involved. 

In the room, the barriers appeared to be evolving. Regulatory uncertainty, remained relevant, but attendees pointed more strongly to unclear value-add and governance or cultural challenges as the main barriers to adoption. 

These responses suggest that the key hurdle is not access to the technology, but conviction. Asset owners are asking what tokenisation improves in practice, and whether those improvements justify the effort and change required to adopt it.

This caution should be viewed alongside broader asset owner survey findings, which indicate that digital asset exposure is becoming more established among institutional investors, even if tokenisation-specific activity remains at an earlier stage. The survey suggests that the market is not starting from zero: asset owners are increasingly familiar with digital asset themes, but are still assessing where tokenisation delivers a sufficiently clear benefit for long-term portfolios and operating models.

Demonstrating value will be critical

Panellists focused on practical use cases to address that question. Potential benefits include improved collateral mobility, reduced operational costs, faster settlement and greater transparency in ownership records. For asset owners, the practical relevance may be less about accessing a new asset class and more about whether tokenisation can improve existing market processes, including collateral management, transfer agency, fund administration and the movement of assets across market participants.

However, achieving these benefits will depend on integration with existing market infrastructure. Trusted service providers, familiar governance frameworks, robust custody arrangements, fund administration capabilities, reporting and regulatory oversight will be essential if tokenised markets are to scale successfully. Tokenisation is unlikely to gain traction as a standalone innovation; it will need to fit within the established ecosystem and demonstrate clear incremental value.

For most asset owners, the near-term priority is not wholesale adoption, but informed engagement. That means building internal understanding, asking managers and providers how tokenisation could benefit existing investment and operating models, monitoring regulatory developments and identifying where future use cases may support governance, efficiency or member outcomes.