The Association of Consulting Actuaries (ACA) has called for the Value for Money (VfM) framework to be tested before it publishes ratings.
It warned that the proposed methodology could produce misleading comparisons between pension schemes.
The ACA said a minimum-compliance scheme invested in low-cost passive equities could appear to offer better value than a more diversified scheme investing in private markets, depending on the period assessed.
It welcomed the phased introduction of the framework but said the first assessment cycle should operate as a regulator-supervised “dry run”, and results should be kept unpublished while the methodology is tested.
The ACA also recommended delaying data collection from July 2027 to 2028, giving schemes more time to prepare once the final rules are settled.
It called for DC decumulation products and non-workplace pensions to be brought into scope, with the government setting out a timetable for both.
The ACA also called for greater alignment between trust- and contract-based schemes and warned that consolidation and M&A could increase inconsistencies as providers, platforms and administration systems change.
It welcomed forward-looking investment measures but said external advice should be reinstated on the assumptions used. It also called for public reporting to focus on assessment reports and context rather than raw data.
Its other recommendations include more proportionate asset-allocation disclosures and a review of governance requirements to remove duplication and reduce costs.
ACA DC Committee chair Tess Page says: “The VfM framework should help employers and savers identify schemes that genuinely deliver better long-term outcomes. However, there is a risk that some of the proposed comparisons could produce the opposite result.
“Under current proposals, a minimum-compliance scheme invested in very low-cost passive equities could look strong because equity markets have performed well over the period being measured, while a well-governed scheme with a more diversified strategy, including productive assets such as private markets, could appear less favourable despite being designed to deliver more robust outcomes over the long term.
“The methodology needs to be tested before results are published. Once ratings are public, they will influence decisions and businesses immediately. A regulator-supervised dry run would allow anomalies to be identified and corrected before they risk rewarding the wrong behaviours or undermining confidence in the framework and the wider pensions system.
“Building up a pension pot is only part of the journey. The framework should ultimately follow savers beyond the workplace and into retirement, with a clear timetable for bringing non-workplace and retirement products into scope. It should also treat trust- and contract-based arrangements consistently, so similar schemes are not subject to different rules simply because of how they are regulated.”
