The UK government has announced plans to introduce public league tables for pension schemes, rating them from red (poor value) to green (outperforming) based on investment performance, costs, charges, and service quality. The Value for Money framework, part of the biggest pension reforms in a generation, will apply to larger schemes from 2028 and all workplace schemes from 2029.
Minister Promises to Level Up Private Sector Pensions
Minister for Pensions Torsten Bell said: "Our task is to level up the quality of the pensions private sector workers receive, towards those in the public sector. For the first time, we're making sure savers can see whether they are getting a good deal from the pension they're saving into." He added that the gap between best and worst performers could cost a saver with a £10,000 pot over £5,000 across just five years. The reforms aim to tackle the proliferation of small pension pots and simplify the process of turning savings into retirement income.
Experts Warn of Herding and Moral Hazard
Paul Denley, CEO of Oakham Wealth Management, said: "Sunlight is the best disinfectant, and pensions have sat in the shade too long, so transparency on performance, costs and service is welcome. But league tables come with health warnings. Rank schemes publicly and you risk herding, with trustees hugging the average to avoid a red rating rather than taking the long-term risks that build retirement pots." He stressed that value must be judged on net returns over meaningful timeframes to avoid a race to the bottom on cost.
Scott Gallacher, director of Rowley Turton, warned of unintended consequences: "For decades, regulators have rightly reminded consumers that past performance is no guide to future returns. Yet these league tables inevitably place significant emphasis on historic investment performance. The second is the risk of unintended consequences. If schemes know they will be publicly ranked, some may be tempted to take greater investment risk in an attempt to climb the table." He emphasised that long-term consistency, sensible risk management, and good governance matter as much as peer comparison.
Data Shows Stark Differences in Fund Performance
Antonia Medlicott, founder of Investing Insiders, said the plans were long overdue, citing her firm's data showing a 19,778% difference between the best and worst pension funds over five years. "The best pension returned 180% profit, but the worst lost 98.59% of its value. This means someone with a £50,000 fund would have just £705 left, whereas if they had the best, their value would increase to £140,140." She noted that 89% of all pension funds in medium-high and high risk categories underperformed the FTSE 100.
Implementation Timeline and Regulatory Powers
From 2028, larger schemes including Master Trusts, large single-employer schemes, and multi-employer contract-based schemes open to new employers must complete and publish Value for Money assessments. The changes will roll out to all workplace pension schemes from 2029. Regulators can issue compliance notices, levy fines, or wind up schemes that fail to act on poor ratings.
Call for Immediate Action by Savers
David Stirling of Mint Wealth urged savers not to wait: "The government is announcing it in July 2026 and rolling it out from 2028, which means millions of people currently sitting in underperforming schemes will spend the next two years none the wiser. The immediate message for anyone with a pension is not to wait for 2028 to find out where their scheme sits. The data on charges and investment performance exists today." Graham Nicoll of NCL Wealth Partners added that visibility is good, but education and better employee engagement are just as important.
