Pension fee exemption would widen access to private markets
The Financial Conduct Authority (FCA) proposes exempting certain performance-linked fees from workplace pension charge caps, widening investment options while retaining saver protections. Responses are due January 14, 2027.
More choice with fee safeguards
The proposed exemption covers default funds in FCA-regulated workplace pensions.
Performance-linked fees are common in private equity, venture capital and private credit; excluding certain fees from the cap would broaden providers' investment options.
Providers would need to weigh returns, risks and costs, justifying higher charges through additional value for savers.
Safeguards would cover transparency, fair fee allocation between savers and scrutiny of private-asset valuations.
Providers and Independent Governance Committees would need information to assess value for money.
Therese Chambers, FCA executive director of enforcement and market integrity, said: “But greater flexibility is not a licence to charge more.”
Closing the pension regime gap
The Government exempted certain performance fees for trust-based schemes in 2023, with member protections.
The FCA says closer rules would support competition and choice and reduce complexity for providers operating across both markets.
Using the exemption would be optional and subject to savers' interests and relevant protections.
Consultation CP26/40 closes January 14, 2027; the FCA plans final rules in summer 2027 after reviewing feedback.
The work falls under its Pensions Regulatory Priorities and wider pensions reform.
Access is not an obligation
The proposal expands investment choice rather than requiring pension providers to use private markets.
The FCA links any higher charges to additional value for savers.
Fee transparency and valuation scrutiny form part of the proposed protections.