New Value for Money framework will for the first time require pension schemes to measure and publish how they perform against the best in the market
\n Transparency will help tackle a performance gap that is currently leaving an average member \u00a35,000 worse off over 5 years.\u00a0
\n A\u00a0timetable\u00a0to deliver the landmark Pensions Act\u00a0gives\u00a0industry certainty\u00a0for next stage of reforms.\u00a0
\n Default pensions will help millions convert their savings into a decent retirement income.<\/p>\n
Developed with the Pensions Regulator (TPR), the Financial Conduct Authority (FCA), HMT and\u00a0key\u00a0industry\u00a0partners,\u00a0the plan will boost the retirement pots of pension savers and give industry clarity over the delivery timetable for these landmark\u00a0reforms.\u00a0\u00a0<\/p>\n
The centrepiece is a\u00a0new Value for Money framework\u00a0designed to\u00a0drive up standards and ensure\u00a0savers\u00a0get\u00a0the best\u00a0possible\u00a0returns.\u00a0Savers will be able to see how the returns their pension scheme delivers compares to others, while the poorest performing schemes\u00a0will have to\u00a0improve or\u00a0close.\u00a0Schemes will\u00a0be assessed on their investment\u00a0performance, costs and charges,\u00a0and quality of service, and rated from red (for poor value) through to green (outperforming on\u00a0value).\u00a0<\/p>\n
Where they\u00a0fail to\u00a0act,\u00a0regulators can\u00a0issue\u00a0compliance notices,\u00a0levy\u00a0fines,\u00a0or in serious cases\u00a0take steps to\u00a0wind up\u00a0the\u00a0scheme.\u00a0<\/p>\n
From 2028, larger schemes,\u00a0including\u00a0Master Trusts, large single employer schemes,\u00a0and multi-employer contract-based schemes\u00a0which are open to\u00a0new\u00a0employers, will complete and publish these Value for Money assessments.\u00a0The changes will\u00a0be rolled out to all\u00a0workplace pension schemes from 2029.\u00a0<\/p>\n
Torsten Bell, Minister for Pensions, said:\u00a0<\/p>\n
Our task is to level up the quality of the pensions private sector workers receive, towards those in the public sector. For the first time, we\u2019re making sure savers can see whether they are getting a good deal from the pension\u00a0they\u2019re saving into.\u00a0<\/p>\n
We can\u2019t have people working hard to earn the money they save towards retirement, only to have those funds sitting in schemes that aren\u2019t working just as hard on their behalf.<\/p>\n
The stakes are high, when the gap between the best and worst performers could cost a saver with a \u00a310,000 pot over \u00a35,000 across just five years.<\/p>\n
This is part of the biggest pension reforms for a generation, which are now entering the delivery phase that we are publishing the timeline for today. They represent a wide consensus across the pensions industry, who have helped shape plans that also tackle the proliferation of small pension pots, drive the move to bigger and better pensions schemes, and simply the process for savers of turning their hard earned savings into a decent retirement income.<\/p>\n
The Government has also published a discussion paper\u00a0on its\u00a0flagship scale policy\u00a0\u2013\u00a0which will build a market of fewer, larger and better pensions schemes\u00a0and is inviting industry views\u00a0on\u00a0how\u00a0scale will be assessed. From April 2030,\u00a0automatic-enrolment\u00a0schemes in scope\u00a0must\u00a0reach\u00a0at\u00a0least \u00a325 billion\u00a0of assets under management, or have at least \u00a310bn\u00a0with a credible growth plan to reach \u00a325bn by 2035.\u00a0\u00a0These\u00a0megafunds\u00a0will drive up returns for savers via lower fees, higher\u00a0returns\u00a0and\u00a0more diversified\u00a0investments.\u00a0\u00a0<\/p>\n
Sarah Pritchard,\u00a0the FCA\u2019s\u00a0deputy chief executive, said:\u00a0<\/p>\n
This framework puts savers first. For the first time, it creates a consistent way to compare value across workplace pensions, bringing transparency to the outcomes that really matter.\u00a0\u00a0<\/p>\n
Together with the Department\u00a0for\u00a0Work and\u00a0Pensions\u00a0and The Pensions Regulator, we\u2019re building a pensions market that is more transparent, more accountable, and works better for everyone.<\/p>\n
Default pensions will also be introduced so that savers\u00a0reaching retirement\u00a0will be able to convert their\u00a0savings into a reliable retirement income. This means that, whilst\u00a0individuals\u00a0will always be free to choose a different option if they prefer, the system will no longer rely on savers having to\u00a0navigate\u00a0complex\u00a0financial\u00a0decisions alone\u00a0in order\u00a0to\u00a0get a decent retirement income.\u00a0<\/p>\n
Richard Knox, TPR\u2019s Executive Director, Strategy, Policy and Analysis, said:<\/p>\n
Better value and good outcomes at retirement, built on a system with real transparency, are at the heart of pensions reform.<\/p>\n
The value for money framework, developed in close collaboration between government, regulators and the industry, is a major milestone. Under it, schemes will for the first time be able\u00a0to reliably compare their performance against the best in the market.<\/p>\n
The timeline published today provides further clarity as the pensions industry prepares for these vital reforms.<\/p>\n
\u00a0This delivery plan follows the Pension Schemes Act, which will deliver better outcomes for savers,\u00a0benefitting\u00a0millions with an average saver seeing their pension pot boosted by \u00a329,000 by retirement.\u00a0<\/p>\n
The Lady Mayor of the City of London, Dame Susan Langley, said:<\/p>\n
The ambition for our pensions sector is clear: bigger pools of capital, greater diversification, and a laser focus on delivering better returns for savers.<\/p>\n
The Mansion House Compact and the Mansion House Accord – co-signed by Conservative and Labour Chancellors – represent a significant structural shift in how our pension funds are invested. That cross-party consensus speaks to the urgency of this agenda.<\/p>\n
But ambition needs architecture. We now need the strategy and vehicles in place to turn these commitments into results for the millions of savers whose financial futures depend on getting this right. I welcome the Minister\u2019s commitment and look forward to the progress ahead.<\/p>\n
Dr Yvonne Braun, Director of Long-Term Savings Policy at the ABI, said:\u00a0<\/p>\n
Pensions need a long-term plan.\u00a0The Pension Schemes Act sets a clear direction of travel, but a roadmap is essential to lay clearer milestones for the next phase of pension reform.\u00a0Delivering lasting\u00a0change\u00a0will require close partnership between government, industry and regulators acting in the interests of pension savers. The implementation programme must be clear and coordinated, with regulatory alignment at its heart, to help ensure reforms achieve their objectives and deliver better outcomes for savers. We look forward to playing our part in delivering these reforms and continuing to work\u00a0on wider priorities including pension adequacy, consolidation and supporting productive investment.<\/p>\n
Helen Forrest Hall, the PMI\u2019s Chief Strategy Officer, said:\u00a0<\/p>\n
The Pensions Roadmap is a vital opportunity to provide the long-term certainty and strategic direction needed to build a stronger, more resilient pensions system. At a time when public and private sector capacity is stretched, finite resources must be focused on the reforms that will have the greatest impact for savers.\u00a0The Government\u2019s commitment to a clear, phased plan must now be matched by decisive action across the\u00a0pensions\u00a0community. We cannot afford to stand still. Working together, the industry can build a pensions system that delivers lasting value for savers and the UK economy by investing in professional education, strengthening governance and driving transparency.\u00a0<\/p>\n
We welcome the Government\u2019s roadmap for pension reform and the clear timetable it sets out for delivering the measures in the Pension Schemes Act. Providing greater certainty on the direction and pace of change will help the industry plan effectively and continue its focus on improving outcomes for savers.<\/p>\n
It is particularly encouraging to see the close collaboration between the DWP, Treasury, FCA, TPR and industry partners in shaping and implementing these changes. This approach will be crucial to ensuring changes are delivered successfully and in a way that works for savers.<\/p>\n
At the heart of the roadmap is the Value for Money framework. Moving beyond a historic focus on cost alone, towards a broader assessment of long-term value and savers outcomes is an important step in helping more people achieve a better retirement.<\/p>\n
Gareth Stears, Deputy Chair of the SPP\u2019s Administration Committee, said:<\/p>\n
The pensions industry has never shied away from change, but the volume of reforms currently in train shows clear planning is more important than ever.<\/p>\n
A roadmap is valuable because it allows schemes, administrators and providers to plan investment, allocate resources, train staff and deliver change in a way that maintains good outcomes for members. Without that certainty, there is a real risk that multiple reforms compete for the same finite operational capacity.<\/p>\n
If the government can maintain a clear sequence of reforms, avoid unnecessary changes of direction and allow sufficient implementation time, the industry will be in a much stronger position to deliver lasting improvements for pension savers.<\/p>\n
Good pensions policy isn\u2019t just about deciding what to change. It\u2019s about ensuring those changes can be implemented successfully. The roadmap is an important step towards achieving that.<\/p>\n
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