UK pension schemes could find themselves thrust under the spotlight, as industry bodies look to get savers better offers and quality of service.
Schemes will need to publish clear data on their performance, costs and quality of services under proposals brought forward by bodies including the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).
If a pension is found to have a poor value, firms and trustees must work to fix it, either by moving savers to schemes which offer greater value or through internal improvements, as well as providing both trustees and providers clear expectations on how to conduct themselves.
The proposals also aim to make it clearer to savers how certain pension schemes perform, their costs and quality of services, allowing them greater clarity upon choosing, while also pushing underperformers to improve in order to attract customers.
Nausicaa Delfas, TPR chief executive, said: “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 sounded the alarm on pension saving in the UK, with the cost of living crisis and rise in average life expectancy leaving people needing to save more for a comfortable retirement.
Generating the best value for money
In the UK, over 16m workers have defined contribution (DC) pension schemes, where both employers and employees pay into the pot, with the minimum allocation at three and five per cent respectively.
However, in a poor-performing pot, £10,000 can turn into just £10,400, while in a high-performing one it can reach £15,100, according to the FCA.
The proposals also focus on long term value, using feedback from the 2025 consultation on the matter, with new measures showing what returns and risk savers can expect from their pot over the next ten years.
Sarah Pritchard, FCA deputy chief executive said: “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 also noted that the current standards make it “simply too difficult” for people to know if their pension savings are setting them up effectively for retirement.
Bell said: “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.”