Around 52 per cent of employers haven’t reviewed their workplace pension scheme in the past 12 months to check value for money, including charges, default investments, offerings, and service, despite upcoming regulatory changes, according to research from Towergate Employee Benefits.
The research asked UK employers when they last reviewed their workplace pension scheme to check it offers value for money, and around 48 per cent said within the last 12 months, 35 per cent said within the last 3 years, 10 per cent said never and 8 per cent didn’t know. The research also found that just over half, 52 per cent, of companies have a formal pension governance structure, such as an internal committee, governance board or external adviser.
Upcoming regulatory changes, such as the introduction of new Value for Money regulations to assess workplace pensions more consistently, looking at costs, performance, and service, are expected to challenge schemes.
Schemes will be rated using a “red-amber-green” (RAG) system, with results publicly disclosed to encourage underperforming schemes to improve or exit the market. The regulations are expected in 2026/27, with the first data published in 2028.
Towergate Employee Benefits notes that the new framework is designed to give employers a clearer understanding of their pension offerings, and seeking expert advice not only ensures compliance but also helps optimise outcomes. It recommends that pensions and benefits professionals evaluate a scheme, confirm it offers value for money and recommend improvements to enhance the overall offering.
It suggests that pension professionals carry out a detailed analysis, covering charges, automatic enrolment compliance, salary sacrifice, member engagement, retirement options, and more. This ensures the scheme is up-to-date, delivers value for both employer and employee, and identifies alternative options if needed.
Towergate Employee Benefits client director Sorangi Shah says: “New regulations being proposed mean workplace pensions will need to demonstrably offer value for money; we’re surprised at how few employers have recently reviewed their pension scheme, and expect to see this figure increase, but it’s vital that any review encompasses the right criteria.
“Pension schemes are not only a statutory obligation but an invaluable part of the employee value proposition. Often pension costs can be a significant proportion of the employee benefits budget, therefore it is important they demonstrate value for money for employers and employees. A well-run pension scheme can be a huge asset to a company in terms of employee satisfaction, engagement and, therefore, recruitment and retention.”
