Regulators and the Labour Party government jointly unveiled plans to force pension schemes to publish clearer performance data using a traffic light-style rating system.
A pension system overhaul could boost retirement savings by £4,700. The UK pension system is set for a major shake-up after regulators and the Labour Party government jointly unveiled plans to force pension schemes to publish clearer performance data using a traffic light-style rating system.
Over 16 million workers have defined contribution (DC) pensions. Value for money makes a real difference for pension savers: over 5 years, a £10,000 pot could grow to £10,400 in a poor scheme or £15,100 in a high-performing one – 46% more.
The proposals focus on long-term value and build on feedback from last year’s consultation, with new measures showing what returns and risks savers can expect over the next ten years. This latest consultation is for decision makers across the DC market, including trustees.
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Value for money assessments will be shown in a colour rating, with dark green for strong performance, light green for good value, amber for improvement, and red for poor value-making comparisons clear and easy.
FCA deputy chief executive, Sarah Pritchard, 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. By working with government and The Pensions Regulator, we will help secure better returns for pension savers.”
TPR chief executive, Nausicaa Delfas, 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.”
Minister for Pensions, Torsten Bell, said: “It is simply too difficult for people to know whether their pension savings are working for them. That’s not right when we’re talking about something as important as people’s security in retirement.
“These proposals change that. Pension schemes’ performance will be public with a simple rating system. In future, savers will know if they are getting a good return or not.
“This is about being straight with people and making sure people’s savings work as hard as they did to earn them.”