Prime Highlights :
- DWP unveils biggest pension shake up in a generation for UK savers.
- Average earners could see pension pots grow by up to £29,000.
Key Facts :
- New Value for Money framework rates pension schemes from red to green.
- Ratings based on investment returns, costs and charges, and service quality.
Background :
The Department for Work and Pensions has announced a major package of pension reforms, described as the biggest shake up of the retirement system in a generation.
The changes aim to help around 20 million pension savers across the country get better value from their retirement savings and make it easier to convert those savings into a steady income.
Under the new plans, a worker earning an average salary who contributes to a pension throughout their career could see their retirement pot grow by as much as 29,000 pounds.
The government said the reforms target long standing gaps in performance between pension schemes, gaps that have often left savers with significantly less money than they should have.
Central to the reforms is a new Value for Money framework, which will require pension providers to measure their performance and publish results compared against the best schemes in the market for the first time.
The framework has been built in collaboration with the Pensions Regulator, the Financial Conduct Authority, HM Treasury, and several industry partners.
Pension schemes will receive a rating ranging from red, indicating poor value, to green, marking the strongest overall performers. These ratings will rest on three core measures, namely investment returns, costs and charges and the quality of service each scheme provides to its members.
Officials expect the new framework to push underperforming schemes to improve and give savers clearer information to make better decisions about their retirement savings.
The changes reshape how pension schemes report their performance nationwide, giving millions of workers access to clearer data and the chance at stronger long term returns.
