FCA to force pension schemes to publish performance data
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The financial regulator (The FCA) has confirmed it will force pension schemes to publish ‘clear data’ on their performance, as well as on their costs and quality of service.
If a pension is considered ‘poor value’, pension firms will have to fix it or move savers to better value schemes.
Pension schemes will be rated according to a traffic light colour code, with dark green for strong performance, light green for good value, amber for improvement, and red for poor value.
The regulator said it had found that over 5 years, a £10,000 pot could grow to just £10,400 in a poor scheme compared to £15,100 in a high-performing one – 46% higher. That’s a huge discrepancy between the value savers are getting.
Our view:
This is a great move by the FCA, but is long overdue. Savers have been being ripped off by poor value pension schemes for years and have already lost out on thousands of pounds in returns.
The government has warned that millions of savers do not have enough set aside to live comfortably in retirement, and greater action to ensure pension schemes are offering good value for money years ago could have helped to mitigate this sooner.
Our own research tracks the performance of workplace pension funds and has shown many are underperforming against their peers.
Last year, we found that almost 90% of workplace pensions were underperforming against standard benchmarks, particularly those in lower risk categories nearing retirement.
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