UK pension schemes may soon face increased scrutiny as regulatory bodies aim to enhance value and service quality for savers. Under proposals from the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR), schemes will be required to publish clear data on their performance, costs, and service quality.
Should a pension scheme be deemed of poor value, firms and trustees must take corrective action. This could involve transferring savers to better-performing schemes or implementing internal improvements. The proposals also set clear expectations for trustees and providers on their conduct.
The initiatives are designed to provide savers with greater clarity regarding pension scheme performance, costs, and service quality, thus enabling more informed decision-making. Additionally, they aim to motivate underperforming schemes to enhance their offerings to attract customers.
Nausicaa Delfas, TPR chief executive, emphasised the importance of ensuring value for savers’ money, stating: “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.”
Financial advisers have raised concerns about pension saving in the UK, citing the cost of living crisis and increasing life expectancy as factors necessitating greater retirement savings.
Generating the best value for money is crucial, especially as over 16 million UK workers are enrolled in defined contribution (DC) pension schemes, where both employers and employees contribute. In poorly performing schemes, a £10,000 investment may yield only £10,400, while high-performing schemes could increase it to £15,100, according to the FCA.
The proposals also focus on long-term value, incorporating feedback from the 2025 consultation. New measures aim to clarify the expected returns and risks for savers over the next decade.
Sarah Pritchard, FCA deputy chief executive, highlighted the importance of value, stating: “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… we will help secure better returns for pension savers.”
Pensions minister Torsten Bell remarked on the current standards, noting they make it “simply too difficult” for individuals to ascertain whether their pension savings are adequate for retirement. Bell stated: “That’s not right when we’re talking about something as important as people’s security in retirement. These proposals change that. This is about being straight with people and making sure people’s savings work as hard as they did to earn them.”
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