The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have confirmed plans to develop common measurements which will allow industry professionals and pension savers to better compare defined contribution pension schemes so they can see which offers more value for money.
A new common approach across industry should allow access to consistent data on investment performance, costs and charges and service standards. Over time, this greater transparency should improve competition, encouraging pension schemes to improve the value they provide and help deliver more secure retirements for savers.
TPR and FCA launched a discussion paper last year to establish how best to measure value for money. Currently, it is hard to consistently compare fees and charges, investment performance and quality of service, making it hard to gauge whether savers are receiving value for money. Responses demonstrated clear support across the industry for a consistent approach to the issue.
However, respondents also highlighted complex questions about how to achieve this. Further work is needed on what should be disclosed and how.
The two regulators will continue to engage with industry and consumer groups in the coming months. TPR, FCA and the Department for Work and Pensions will work together and publish a consultation towards the end of 2022, setting out proposals.
Minister for Pensions Guy Opperman said: “Ensuring value for money for the record number of Brits now saving for retirement is one of my key priorities.
“While cost continues to dominate decision-making, this does not always lead to the best member outcomes. We want those making choices about where people save their money to take into account more than just price, and I look forward to progressing this work alongside TPR, the FCA and industry.”
David Fairs, TPR’s Executive Director for Regulatory Policy, Analysis and Advice, said: “We and the FCA are determined to drive a long-term focus on value for money across the pensions sector and welcome the depth and breadth of responses to our discussion paper on a common framework.
“Particularly welcome is the broad consensus from industry that we need a better assessment of value for money to deliver stronger outcomes for savers in areas such as costs and charges and investment performance. But we acknowledge this is a complex area and there were many views on our proposals which need further consideration.”
Sarah Pritchard, the FCA’s Executive Director for Markets, said: “Consumers should be able to have confidence that their pension is delivering value for money.
“The changes we and TPR propose will help achieve this – and over the long term, help deliver a more secure retirement for pension savers. We will continue working with industry over the coming months to make sure we get this right.”