Are Workplace Pensions Value for Money? FCA Review

Workplace personal pension schemes are to be reviewed and today the Financial Conduct Authority (FCA) will submit proposals aiming to make it easier for Independent Governance Committees (IGCs) and Governance Advisory Arrangements (GAAs) to compare the value for money of pension products and services.   

IGCs and GAAs act in the interest of members of workplace pension schemes and the publication will ensure the members receive value for money.

The review saw a number of IGCs are working well and do provide value for money for their members,  but there was a lack of consistency in the way IGCs and GAAs operate meaning some members may not be receiving value for money.

The review found:

• Those IGCs which maintained independence from the firms whose pensionschemes they had responsibility for delivered better outcomes for pension scheme members
• Some IGCs lack the necessary independence and were ineffective at challenging firms to ensure value for money for workplace pension scheme members
• GAAs operated by third-party firms on behalf of pension providers were less effective at delivering meaningful improvements in value for money
• Over the period of our review (2017-2019) we found there had been a small reduction in charges across all pension savings, although this cannot be directly linked to the work of IGCs and GAAs.

The FCA has sent letters to firms ensuring they make improvements to the way they work with their IGCs and GAAs.