Following the latest consultation on the Value for Money (VFM) framework, Philip Hodges, a director at Guiide, explains the importance of including decumulation strategies and outcomes in assessments of value.
The democratisation of pensions has been one of the defining shifts of the past decade. Auto-enrolment has brought millions into savings, while digital tools have expanded access to retirement planning beyond traditional advice models.
This progress matters – but access alone is not enough.
The Financial Conduct Authority’s CP26/1 consultation on the VFM framework signals a pivotal shift. The question is no longer simply whether people are saving, but whether they are on track for a sustainable retirement. The focus is moving from participation to outcomes.
This creates a growing tension. Democratisation has prioritised accessibility and inclusion. VFM demands measurable value and better end results. The challenge is whether the system can deliver both.
Democratisation without outcomes
The case for democratisation remains strong. Millions of UK savers are underprepared for retirement. Around 38% are not saving enough[1], nearly nine million are significantly under-pensioned[2], and over 15 million risk falling short of adequate income[3].
At the same time, engagement remains low. Many savers rarely review their pension and approach retirement without a clear understanding of their options.
This exposes a critical gap. Increasing access does not automatically lead to better decisions. Without the right support, it can simply expose more people to complex choices at the point where those decisions matter most.
Nowhere is this more evident than at retirement.
“Without engagement, even the best-designed system cannot deliver strong outcomes. This is why decumulation matters.”
Philip Hodges, Guiide
Rethinking value
A central issue in the VFM debate is that value is often treated as static. In reality, it evolves across the lifecycle.
Early in a career, value is driven by contributions and compounding. In mid-career, tax efficiency and consolidation become critical. As retirement approaches, planning quality and risk management take centre stage.
At retirement, the equation changes. Value is no longer about pot size, but about generating sustainable income. Decisions around withdrawal strategy, sequencing and inflation risk become the primary drivers of long-term financial security.
This is where outcomes are determined.
Behaviour underpins value at every stage. Without engagement, even the best-designed system cannot deliver strong outcomes. This is why decumulation matters: it is where decades of saving are translated into income. Small differences in decision-making here can outweigh years of marginal fee differences during accumulation.
The risk in current thinking
CP26/1 is a positive step towards greater transparency and comparability. However, there is a risk that the framework focuses on what is easiest to measure, rather than what matters most.
Costs and past performance are visible and comparable. Engagement, decision quality and retirement outcomes are harder to quantify.
But complexity should not be a reason for exclusion.
An overemphasis on cost risks reinforcing a system optimised for accumulation efficiency, while underrepresenting the factors that determine retirement income. It may also encourage providers to converge around similar strategies, limiting innovation.
Most importantly, if decumulation is not fully embedded in how value is assessed, a significant part of the retirement journey is overlooked, precisely where value is realised.
What good looks like
A more complete vision of VFM must reflect the full retirement journey.
This means shifting from inputs to outcomes, measuring income sustainability rather than just cost. It means embedding decumulation within core value assessments.
It also requires meaningful engagement at scale. Savers need support that helps them make better decisions, not just more information. Guided pathways and technology-enabled planning tools can play a critical role here.
Crucially, this support must reflect real-world complexity. Retirement planning is not about a single pension pot, but about integrating multiple assets, tax considerations and income sources into one strategy.
Democratisation 2.0?
The next phase of democratisation is not just about bringing more people into the system. It is about ensuring the system works for them.
That requires a shift: from participation to outcomes, from information to guidance, and from accumulation to income.
CP26/1 is an important step. But its success will depend on whether it captures how value is truly created and realised in retirement. If Value for Money fails to reflect how people turn savings into income, it risks measuring the system rather than improving it.
The question for the industry is simple: are we democratising access to pensions, or the ability to achieve a secure retirement income?
It should be the latter.
Philip Hodges is a director at Guiide.
References
[1]https://www.forbes.com/advisor/uk/investing/average-pension-pot-in-uk/
[2]https://www.gov.uk/government/statistics/analysis-of-future-pension-incomes/analysis-of-future-pension-incomes
[3]https://www.scottishwidows.co.uk/about-us/media-centre/press-releases/million-at-risk-of-retirement-poverty.html
