UK regulators unveil new pension value transparency framework

The Financial Conduct Authority (FCA), the Department for Work and Pensions (DWP), and The Pensions Regulator (TPR) have announced new proposals requiring pension schemes to publish transparent data on their performance, costs, and service quality. If schemes offer poor value, firms and trustees must improve them or move savers to better options.

Shining a light on pension performance

The proposals mandate that pension schemes provide clear data on their performance, costs, and quality of service.

This initiative aims to ensure that over 16 million defined contribution (DC) pension savers receive good value, highlighting that a £10,000 pot could yield 46% more in a high-performing scheme over five years compared to a poor one.

The framework introduces a colour-coded rating system, from dark green for strong performance to red for poor value, making comparisons straightforward for decision-makers.

This builds on previous consultations, focusing on long-term value and expected returns and risks over the next decade.

Empowering trustees and ensuring accountability

The framework also outlines stronger governance expectations for trustees and providers, with clear steps for addressing schemes that fail to deliver good value.

This includes closing schemes to new business and transferring members to better-performing alternatives.

FCA Deputy Chief Executive Sarah Pritchard emphasized that good value encompasses strong performance, service, and transparency, not just low costs.

TPR Chief Executive Nausicaa Delfas highlighted the importance of the framework for millions relying on pension income, empowering decision-makers to improve schemes or consolidate out of the market.

The proposals are open for public comment until March 8, 2025.