UK pension schemes to be rated red, amber and green
interactive investor comments on FCA framework for driving long-term value for workplace pension savers.
8th August 2024 09:52
by Myron Jobson from interactive investor
Yesterday, the Financial Conduct Authority (FCA), the Department for Work and Pensions (DWP) and the Pensions Regulator (TPR) announced a new proposed framework for workplace defined contribution schemes.
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Commenting, Myron Jobson, Senior Personal Finance Analyst at interactive investor, says:“We welcome efforts to drive better value for money for pension savers. The simplicity of the proposed red, amber and green rating system could work well for employers, but it remains to be seen how the framework will account for the long-term nature of investing and the subjectivity involved in judging service quality when assessing whether a scheme is performing poorly.
“While value for money relies on the harmonious triad of cost, investment performance, and service quality, better engagement will ultimately lead to better decision-making and outcomes for savers. At present, millions of pension savers could be sleepwalking into pension arrangements that offer poor value through sheer inertia.
“Various estimates suggest that workers move jobs 10 times during their working lives, with each move potentially creating a new pension scheme with a new provider. Far too often, pension plans are neglected, and with every job change, they can all too easily end up in the rear-view mirror, making them easier to lose track of.
“Pensions dashboards, which have been long in the making, can’t come soon enough to help savers make better-informed decisions regarding their retirement nest eggs.”
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