More than 20 major employers have committed to prioritising pension value over cost, in a move designed to improve outcomes for millions of UK workers ahead of the expected introduction of the government’s Pension Adequacy Review.
Launched by the Lord Mayor of London, Alastair King, the Employer Pension Pledge asks firms to prioritise net returns when selecting or reviewing defined contribution (DC) pension providers. It also encourages employers to demand greater transparency from schemes on how they invest, including in private markets.
While DC pension schemes are projected to be managing more than £1trn by 2030, only 30% of the population are currently on track to achieve a moderate standard of living in retirement, according to the City of London Corporation, announcing the pledge today (14 July).
“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.”
Alastair King, Lord Mayor of the City of London
In response, a group of the UK’s largest employers have publicly committed to improving outcomes for savers by focusing on long-term value, not just cost.
The announcement comes ahead of the chancellor’s Mansion House speech on 15 July, where Rachel Reeves is expected to confirm the launch of a new Pension Adequacy Review and outline the next steps for the government’s ambitious and wide-ranging pensions reform.
However, while previous Mansion House initiatives have focused on engaging DC providers on investing in the UK, the Employer Pension Pledge targets the demand side of the investment chain, encouraging employers to take a more active role in driving long-term outcomes.
So far, more than 20 household names have signed the pledge, including Tesco, BT, Legal & General, Nationwide, Aviva, M&G, FirstGroup, Octopus Energy and Standard Chartered. Collectively, signatories support over half a million UK workers and nearly a million workplace savers.
Lord Mayor Alastair King, who led the initiative, said: “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.”
Although separate from the Mansion House Compact and Accord, the Pledge supports the same goal, according to the City of London Corporation: improving member outcomes. It is also designed to align with the Financial Conduct Authority’s upcoming Value for Money framework, which will make it easier to compare performance, costs and service across schemes.
Pensions minister Torsten Bell applauded the initiative. “Workers rightly want their pension savings to work harder for them… so I welcome this pledge to encourage employers to focus on what matters most to their workers: how fast pension pots grow,” he said.
Tesco’s Ruston Smith confirmed that the supermarket giant’s £5bn DC scheme was already looking for “the best UK and international private market and listed opportunities” to maximise net returns for members.
Other signatories also highlighted the potential benefits of better investment diversification. Richard Oldfield, chief executive at Schroders, said the pledge would help shift the industry away from a “cost-first mindset” and unlock capital for investment in asset classes such as infrastructure.
Rain Newton-Smith, chief executive of the Confederation of British Industry, added that the pledge was “a vital step forward” in rebalancing the UK pension system toward long-term value. “For too long, the focus has been solely on reducing costs, without enough focus on diversification and long-term value,” she said.
