Over 20 of the UK's largest employers have pledged to maximise employee pension value by prioritising retirement outcomes for their workforce, rather than focusing on cost reduction, when selecting or reviewing pension providers.

The voluntary Employer Pension Pledge is led by the Lord Mayor of London, Alastair King, in partnership with leading employers and pension industry experts, and aims to transform the UK’s pension investment culture, in order to move beyond a narrow, cost-focused model to champion a value-for-money approach.

Signatories to the pledge include: Aberdeen Group, Aviva, BT, Canada Life UK, First Group, Goldman Sachs, Legal and General, London Stock Exchange Plc, M&G, Nationwide Building Society, NatWest Group, Octopus Energy, Octopus Investments, Phoenix Group, Samworth Brothers, Santander, Schroders, Standard Chartered, Tata Steel UK, and Tesco.

The pledge, which will be signed by the Lord Mayor at the Mansion House Financial and Professional Services Dinner, is separate to the Mansion House Compact and Mansion House Accord.

However, it is expected to complement these efforts, as while the compact and accord focus on the supply side, the Employer Pension Pledge activates the demand side of the value chain, mobilising employers who influence the direction of pension fund investment.

The pledge is also aligned with the principles of the upcoming value for money (VFM) framework.

Commenting on the launch, King stated: "Employers have always played a decisive, if underappreciated, role in shaping retirement outcomes. This pledge is about making that role visible, responsible, and focused on value.

"The pledge harnesses the convening power of the City of London Corporation in support of growth and shared prosperity across the United Kingdom. I am grateful to the major employers who have helped lay the foundations of the pledge.

"In the months ahead, I look forward to welcoming many more organisations – large and small – to join the existing signatories. This is an example of the mayoralty working across the entire pension investment value chain to deliver better outcomes for savers.”

Adding to this, Pensions Minister, Torsten Bell, said: “Workers rightly want their pension savings to work harder for them - ensuring they get the maximum bang for every buck saved.

“It is normally employers, not employees, who choose which pension scheme workers are invested in. So I welcome this pledge to encourage employers to focus on what matters most to their workers: how fast pension pots grow.”

The pledge has also received support from several industry organisations, including Pensions UK, the Association of British Insurers (ABI) and the Federation of Small Businesses (FSB).

Pensions UK director of policy and advocacy, Zoe Alexander, said: “With defined contribution (DC) assets continuing to grow, workplace pension funds designed for automatic enrolment contributions are pursuing more sophisticated investment strategies.

"The Employer Pension Pledge is a welcome initiative, demonstrating that leading employers recognise the potential for higher net returns and are prioritising overall value for money when selecting a pension fund to deliver the best retirement outcomes for their employees.”

Adding to this, ABI director of long-term savings policy, Dr. Yvonne Braun, said: “It’s encouraging to see leading employers rally behind the Employer Pension Pledge.

"Championing value for money over cost alone puts employees’ interests at the heart of employer decisions on pensions. It will help usher in the saver-focused culture across the whole pension system that we’ve long called for.”

In addition to this, FSB policy chair, Tina McKenzie, suggested that the pledge could have a positive knock-on effect for smaller employers seeking improved schemes for their employees.

"So we welcome that the City of London Corporation has led the way with its pledge, initially signing up a number of major large employers to press for good returns," she added.

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