{"id":361845,"date":"2026-01-10T00:40:09","date_gmt":"2026-01-10T00:40:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/361845\/"},"modified":"2026-01-10T00:40:09","modified_gmt":"2026-01-10T00:40:09","slug":"pensions-watchdog-backs-new-value-for-money-framework","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/361845\/","title":{"rendered":"Pensions watchdog backs new value for money framework"},"content":{"rendered":"

The Government and Pensions Regulator have backed revised proposals designed to assess value for money across defined contribution pension schemes.<\/p>\n

The updated framework, published yesterday, introduces forward-looking measures alongside a more detailed ratings system for evaluating pension arrangements.<\/p>\n

The proposals follow industry feedback on an assessment framework first set out by the Financial Conduct Authority (FCA) in August 2024.<\/p>\n

The Department for Work and Pensions (DWP) and The Pensions Regulator worked jointly with the FCA to develop the revised approach.<\/p>\n

The document also acts as a formal discussion paper for trust-based pension schemes.<\/p>\n

It seeks views to inform regulations under the Pension Schemes Bill, which is currently progressing through Parliament.<\/p>\n

Industry stakeholders have until March 8 to respond to the consultation.<\/p>\n

Under the revised framework, pension schemes would be assessed using projections of expected investment returns and risk over a 10-year period.<\/p>\n

These forward-looking metrics would sit alongside updated backward-looking measures of historical performance.<\/p>\n

Regulators said this combination is intended to provide a more rounded picture of how schemes are likely to perform for savers over time.<\/p>\n

The proposals also include changes to the ratings system used to categorise schemes.<\/p>\n

The existing three-tier structure of red, amber and green ratings would be expanded to four categories.<\/p>\n

\"Pensioner\"\/<\/p>\n

Four-tier ratings proposed for defined contribution schemes to ensure value for money <\/p>\n

| <\/p>\n

GETTY<\/p>\n

Under the new model, the green rating would be split into light green and dark green classifications.<\/p>\n

Regulators said this would allow clearer distinctions between schemes that meet minimum value standards and those that perform particularly strongly.<\/p>\n

The revised framework also simplifies the data required to assess costs and historic investment performance.<\/p>\n

Pension schemes would be compared against a wider group of commercial comparators than under earlier proposals.<\/p>\n

This change is intended to reflect the diversity of the defined contribution market and improve consistency across different types of schemes.<\/p>\n

Proposals to update service quality metrics are also included.<\/p>\n

However, regulators said further work with the industry is needed to develop meaningful measures of member engagement.<\/p>\n

\"Pensioner\"\/<\/p>\n

Pension schemes would be compared against a wider group of commercial comparators<\/p>\n

| GETTY<\/p>\n

As currently designed, service quality scores would be able to maintain or lower a scheme\u2019s overall rating, but not improve it.<\/p>\n

Nausicaa Delfas, chief executive at The Pensions Regulator, said the framework is intended to drive better outcomes for savers.<\/p>\n

“This framework will empower decision-makers to either improve their scheme or consolidate out of the market.”<\/p>\n

She said the regulator wants to ensure trustees\u2019 views are reflected before final rules are introduced.<\/p>\n

“We want to hear the views of trustees to make sure we get this right and help transform pension saving for millions.”<\/p>\n

Pensions minister Torsten Bell said the proposals are designed to improve transparency for savers.<\/p>\n

Mr Bell said the framework is “about being straight with people and making sure people’s savings work as hard as they did to earn them”.<\/p>\n

Industry figures have welcomed the collaborative approach taken by regulators and the Government.<\/p>\n

Gail Izat, workplace managing director at Standard Life, part of Phoenix Group, said there had been close cooperation between regulators.<\/p>\n

She said there had “clearly been a lot of interaction between FCA, TPR and DWP in developing the system”, and that ongoing coordination would be important during implementation.<\/p>\n

Ms Izat said this would help ensure consistency between contract-based and trust-based pension schemes.<\/p>\n

The framework also introduces enhanced governance expectations for trustees and pension providers.<\/p>\n

Schemes identified as delivering poor value for money would be required to notify regulators.<\/p>\n

They could also face restrictions on accepting new members.<\/p>\n

\"StateAre you affected by state pension age changes? | GETTY<\/p>\n

Regulators said this is intended to encourage improvement or consolidation where schemes fall short of required standards.<\/p>\n

Helen Forrest Hall, chief strategy officer at the Pensions Management Institute, said the framework represents progress but warned of practical challenges.<\/p>\n

“Schemes face heavy pressures, and added burdens must stay proportionate.”<\/p>\n

She said clear communication would be essential to avoid confusion among pension scheme members.<\/p>\n

Ms Forrest Hall added that she would work with the Government and regulators to help ensure the final rules are workable and consistent.<\/p>\n

A group of defined contribution master trust providers has already taken part in a pilot exercise.<\/p>\n

The trial tested the proposed value metrics ahead of wider rollout.<\/p>\n

Feedback from that pilot is expected to inform further refinements before the framework is finalised.<\/p>\n","protected":false},"excerpt":{"rendered":"The Government and Pensions Regulator have backed revised proposals designed to assess value for money across defined contribution…\n","protected":false},"author":2,"featured_media":361846,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,2222,50,4178,4174,4175,2331,56,54,55],"class_list":{"0":"post-361845","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-money","11":"tag-news","12":"tag-pensions","13":"tag-personal-finance","14":"tag-personalfinance","15":"tag-sgg","16":"tag-uk","17":"tag-united-kingdom","18":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/361845","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=361845"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/361845\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/361846"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=361845"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=361845"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=361845"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}