The Financial Conduct Authority has announced plans to consult on changes to the pension charge cap in the second quarter of 2026, to ensure consumers are not disincentivised from investments due to higher performance fees. 

The FCA said that it is looking to consult on the changes to the charge cap, intended to ensure it does not disincentivise investments that may provide higher returns for consumers despite having higher performance fees, whilst ensuring the consumers are protected,  which will align the trust and contract systems, reducing the regulatory burden for firms in both. 

The charge cap, which is a government-set limit that has applied since April 2015, is currently set at 0.75 per cent of funds under management within the default arrangement, or an equivalent combination charge.

The cap applies to all scheme administration and investment charges, excluding transaction costs, meaning it doesn’t currently include costs that are incurred by the investment manager when assets are bought, sold or lent by the fund.

The consultation is expected in the second quarter of 2026, with a further milestone expected in October-December 2026.

This was one of 12 pension and retirement initiatives, six of which were new, highlighted as part of the Financial Services Regulatory Initiatives Forum Regulatory Initiatives Grid, which sets out the planned regulatory initiatives for the next 24 months. 

This provided confirmation on the timing of several broader pension initiatives, confirming that regulations for DB surplus release will be consulted on by the end of 2026 and The Pensions Regulator's (TPR) guidance will be expected to be published by the end of 2027. 

The impact of these changes is still unclear, however, as the regulatory grid reported an "unknown" industry impact for this, whilst the work on the charge cap, for instance, is expected to have a low industry impact.

Guided retirement duty work was another new addition to the grid, as the grid confirmed plans to consult on rules and regulations in 2026, with implementation of guided retirement by firms and occupational pension schemes expected in 2027/2028.

Further details on these timelines will be confirmed in due course.

TPR's engagement with professional trustee firms is set to continue, extending to 11 firms by the end of the year. The impact of this work was also currently listed as unknown.

This is also true for TPR's recent work with administrators, as the update confirmed that, following the publication of updated administration guidance by the end of 2025, an administration strategy is expected in the first half of 2026. 

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