Pension schemes will need to publish
clear data on their performance, costs and quality of service,
under proposals announced today by the Financial Conduct Authority (FCA), the Department
for Work and Pensions (DWP) and The Pensions Regulator (TPR). If
a pension offers poor value, firms and trustees must then fix it
by moving savers to better schemes or driving
improvements.
The proposals aim to make
it clearer how pensions perform, what they cost and the
quality of service. So that people can
get good value, and so that poor performing schemes are
pushed to improve.
Over 16 million workers have defined
contribution (DC) pensions. Value for money makes a real
difference for pension savers: over 5 years, a £10,000 pot could
grow to £10,400 in a poor scheme or £15,100 in a high-performing
one - 46% more.
The proposals focus on long term value
and build on feedback from last year's consultation, with new
measures showing what returns and risks savers can expect over
the next ten years. This latest
consultation is for decision makers across the DC market,
including trustees.
Value for money assessments will be
shown in a colour rating, with dark green for strong performance,
light green for good value, amber for improvement, and red for
poor value, making comparisons clear and
easy.
Sarah Pritchard, FCA Deputy Chief Executive,
said:
"Good value isn't just about low costs
- it's about strong performance, good service, and transparency.
We want to see a focus on value. By working with government and
The Pensions Regulator, we will help secure better returns for
pension savers."
Nausicaa Delfas, TPR Chief Executive,
said:
"Millions of people rely on pension
income to support them through later life. We have to make sure
they get value for their money. This framework will empower
decision -makers to either improve their scheme or consolidate
out of the market. We want to hear the views of trustees to make
sure we get this right and help transform pension saving for
millions.”
, Minister for Pensions,
said:
"It is simply too difficult for people
to know whether their pension savings are working for them.
That's not right when we're talking about something as important
as people's security in retirement.
"These proposals change that. Pension
schemes' performance will be public with a simple rating system.
In future, savers will know if they are getting a good return or
not.
"This is about being straight with
people and making sure people's savings work as hard as they did
to earn them."
The framework also sets out:
-
Stronger governance with clear
expectations for trustees and
providers.
-
Clear steps to take when schemes are
not giving members good value, including closing them to
new business and moving members to better-performing
schemes.
These joint proposals are open for
comment until 8 March 2026. Final rules will only be confirmed
once responses have been considered and are subject to the
Pension Schemes Bill receiving Royal
Assent.
Notes to
editors:
- Read the Consultation
Paper.
- TPR has a landing page
for trustees which provides an introduction to the
Consultation.
- See previous work from the FCA, DWP and TPR on Value for Money.
- The FCA regulates contract-based pensions, which involve a
contract between an individual and the pension
provider.
- TPR regulates trust-based pension schemes, which have a board
of trustees overseeing the scheme.
- The UK government's Pension Schemes Bill 2025 is currently
progressing through Parliament and includes the legislative
powers to mandate a Value for Money (VFM) framework for
trust-based schemes. FCA rules will introduce the framework for
contract - based schemes. Timing of the framework is therefore
subject to legislative agreement.
- The framework is one of a number of joint
initiatives to deliver better outcomes for pension savers
including Targeted Support and the Pensions
Dashboard.
- The Consultation Paper is aimed at pension
providers and aligns with the wider FCA objectives,
including the Consumer Duty and competition.
