The Financial Conduct Authority published CP26/1 setting out its response to CP24/16 and consulting on updated proposals for a UK-wide Value for Money (VFM) Framework for workplace defined contribution pensions. The paper includes draft FCA Handbook rules for contract-based arrangements and, for trust-based arrangements, a discussion paper to inform future Department for Work and Pensions regulations under the Pension Schemes Bill 2025, with the framework intended to standardise data, enable market-wide comparisons and require improvement or member transfers where arrangements deliver poor value. The proposals would initially apply to workplace default and quasi-default arrangements in accumulation that have operated for at least one calendar year, excluding Executive Pension Plans and Small Self-Administered Schemes, and bringing into scope defaults and quasi-defaults with at least 1,000 members or those that are the largest or only default or quasi-default in a scheme. Changes since CP24/16 include introducing forward-looking metrics alongside backward-looking metrics, reducing data requirements (including removing the 15-year lookback), moving to arithmetic averaging for multi-year performance, replacing maximum drawdown with a dispersion metric, and widening comparisons beyond three hand-picked comparators through a central VFM database. Forward-looking disclosures would cover expected net returns and expected volatility over the next 10 years for each years-to-retirement cohort using a firm’s or trustees’ own assumptions, supported by external third-party advice and record-keeping for at least six years, and (for contract-based arrangements) carved out from COBS 13.5 projection rules. Costs disclosures would focus on total costs and charges over 1, 3, 5 and where reasonably practicable 10 years, with an investment charge and service cost split only for the most recent year, and minimum, maximum and median disclosures where charges vary; service quality metrics are streamlined around record-keeping, key transaction times, complaints metrics (at “platform” level) and the proportion of savers with a nominated beneficiary, with member survey-based engagement metrics deferred. The assessment model is redesigned as a three-step process using commercial market comparator group statistics generated by the central database, culminating in a four-point RAGG rating (red, amber, light green, dark green) and requiring “not value” arrangements to notify employers and regulators, close to new employer business, and submit improvement or action plans, with transfers expected for red-rated arrangements where in members’ best interests. The consultation also seeks views on operational design choices for the central VFM database, including how firms should submit data and when data should be made publicly available, and states that both contract- and trust-based regimes are intended to commence at the same time, with work underway towards first VFM assessments being required in 2028 and a further FCA consultation anticipated alongside those of the Department for Work and Pensions and The Pensions Regulator; feedback was requested by 8 March 2026.
Financial Conduct Authority 2026-01-08
Financial Conduct Authority consults on revised Value for Money Framework for workplace DC pensions with forward-looking metrics, four-tier ratings and a central database
The Financial Conduct Authority released CP26/1, responding to CP24/16 and consulting on a UK-wide Value for Money Framework for workplace defined contribution pensions, including draft FCA Handbook rules and a discussion paper for future Department for Work and Pensions regulations. Key updates include new metrics, reduced data requirements, and a redesigned assessment model with a central VFM database, with feedback due by 8 March 2026.