Pensions minister Torsten Bell has announced changes to the “sequencing” of pension reforms to support the implementation of developments related to Value for Money, guided retirement, and superfunds.
The government has announced a new “roadmap” for reforms setting out deadlines for implementation and compliance, relating to several aspects of the Pension Schemes Act and other new legislation.
The Value for Money (VfM) framework will launch in 2028, but smaller schemes will not be required to complete full assessments until 2029, while automatic consequences – such as closing schemes to new members if they underperform – will be held back in the first year.
The government will limit the first VfM assessments to larger schemes when the framework launches in 2028, while smaller schemes will submit data but will not complete or publish full assessments until 2029.
Under an updated workplace pensions roadmap published on July 13, master trusts, large single-employer trusts and multi-employer contract-based schemes open to new employers will complete assessments in 2028 using 2027 data.
Launching the roadmap at Mansion House, Bell said the government had responded to concerns about implementation but would not allow the framework to drift.
“There is not going to be a world in which people say, ‘I’d rather not be producing the information on that timeline.’ We are going to deliver this,” he said.
Schemes will be assessed on investment performance, costs and charges, and service quality, with results graded from red for poor value to green for schemes that outperform. The assessments will be made available to consumers, the government said, having previously indicated that they would remain for regulatory purposes only.
“The government and regulators should consider how VfM can cover the whole pension sector, not just workplace schemes.”
The Department for Work and Pensions said annualised five-year returns for younger savers ranged from about 5% to 13% across a sample of large schemes. For a £10,000 pot, assuming no further contributions and a 50 basis point annual charge, the difference in outcomes could exceed £5,000 after five years.
Patrick Heath-Lay, chief executive of the People’s Pension, welcomed the decision to make VfM assessments visible to savers.
“We’ve long called for VfM to be consumer-facing, and for the first time, the government has made it clear that savers must be able to see the value provided by their workplace pension provider, rather than VfM being a solely professional-facing tool.
“The government and regulators should now consider how VfM can cover the whole pension sector, not just workplace schemes,” he said.
Guided retirement and CDC aligned
Meanwhile, another change has brought the planned guided retirement policy for defined contribution (DC) schemes into line with legislation governing collective DC (CDC) schemes. The government said this was to ensure schemes considering retirement CDC as a default option have time to develop and secure authorisation.
Master trusts and FCA-regulated workplace schemes are expected to comply with the guided retirement rules by the third quarter of 2029. The deadline for single-employer trusts and schemes using retirement CDC defaults is the third quarter of 2030.
Ministers will consult in the autumn on a targeted, time-limited extension for schemes committed to pursuing a retirement CDC default approach.
Responding to a question from former pensions minister Steve Webb, Bell said the government was considering making the point at which a member first starts drawing income the main consent stage for “flex first, fix later” products, although the policy remains subject to consultation.
Lydia Fearn, head of DC consolidation at LCP, said coordinating the reforms was sensible, but the revised timetable meant some members could wait longer for default retirement support.
“The key now is to make sure this revised timetable leads to better implementation, not simply slower progress,” she said.
Scale, small pots and DB changes
The roadmap also confirms that auto-enrolment schemes covered by the scale policy will need at least £25bn in a main default arrangement from April 2030.
Schemes with £10bn and a credible plan to reach £25bn by 2035 may enter a transition pathway.
A contractual override allowing providers to move members out of contract-based arrangements that do not offer value is scheduled for March 2028, while small pots consolidation is expected to begin in April 2030.
For DB schemes, regulations allowing trustees of well-funded schemes to share surplus with employers and members are expected to take effect on 6 April 2027, alongside related tax changes.
The government has pushed consultation on the permanent superfund regime back to early 2027, although it still expects the full framework to take effect later in 2028.
Laura Amin, head of defined benefit consolidation at LCP, said the delay was likely to frustrate potential market entrants, although the interim regime remains available.
Bell said the government would continue to listen where individual deadlines created practical problems, but insisted that changes to specific elements could not be allowed to derail the wider programme.
“We’ve made some changes reflecting that, but we need to stay focused on making sure the actual overall reform agenda stays on track,” he said.
