The Department for Work and Pensions (DWP), Financial Conduct Authority (FCA), and The Pensions Regulator (TPR) have launched a consultation on the value for money (VfM) framework.

Under the proposals, pension schemes will be required to publish ‘clear data’ on their performance, costs, and quality of service.

If a defined contribution (DC) pension scheme is deemed to be offering poor value for money, firms and trustees will need to move savers to better schemes or drive improvements.

The government and regulators said the proposals aimed to make it clearer how pensions perform, what they cost, and the quality of service, so members could get good value and poorly performing schemes were encouraged to improve.

Building on last year’s consultation, new measures included showing what returns and risks members can expect over the next 10 years, reducing the maximalist set of data requirements, and the assessment of service quality through administrative and engagement metrics.

VfM assessments will use a colour rating system, whereby dark green shows strong performance, light green for good value, amber for improvement, and red for poor value.

It also proposed for Independent Governance Committees and trustees to be compared against a wider commercial comparator group than the three other arrangements outlined in the previous consultation.

The framework also outlined stronger governance with ‘clear expectations’ for trustees and providers, and steps to take when schemes are not offering members good value, including closing them to new business and moving members to better-performing schemes.

The consultation is open until 8 March 2026, with final rules to be confirmed once responses have been considered and subject to the Pension Schemes Bill receiving royal assent.

Pensions Minister, Torsten Bell, commented: "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."

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.”

FCA deputy chief executive, Sarah Pritchard, added: "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 TPR, we will help secure better returns for pension savers."

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