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.”
Torsten Bell, 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.
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.
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