On 8 January 2026, the FCA, DWP and TPR jointly published a consultation on the proposed new Value for Money (VFM) framework. The Pension Schemes Bill 2025, which is currently progressing through Parliament, provides the legislative powers to mandate the VFM framework for trust-based schemes with defined contribution benefits. In parallel, the FCA is developing rules for contract-based schemes based on the same principles.

Published 12 January 2026

The consultation builds on the previous consultation issued in August 2024 by providing updated proposals taking into account the feedback received. The FCA, DWP and TPR are working together to develop a framework that is consistent across both trust-based and contract-based schemes while taking into account the different regimes.

The new framework is intended to “deliver better retirement outcomes” and to “provide greater transparency over how arrangements are performing.” Schemes will be publicly rated, with poorly performing arrangements required to improve or transfer benefits elsewhere.

A four-point rating system

The previous proposals featured a red, amber or green rating system following assessment. However, following feedback, the updated proposals suggest a four-point rating system (red, amber, light green or dark green).

The new proposed categories are:

• dark green: the arrangement is clearly outperforming most of the comparator group and there are minimal areas where improvements could be made (the “Fully Delivering” category in the Pension Schemes Bill).
• light green: the arrangement is delivering value, but there are areas that could/ should be improved (the “Intermediate” category in the Pension Schemes Bill).
• amber: improvements are possible within three years to make the arrangement value for money (the “Intermediate” category in the Pension Schemes Bill).
• red: a bulk transfer must follow where this is in the best interests of members. A transfer may not always be possible (i.e. would not be in best interests). In those cases, the firm and trustees must still take action to improve value where possible (the “Not delivering” category in the Pension Schemes Bill).

Comparing value against a commercial market

Instead of comparing arrangements against three other arrangements, the updated proposal is that arrangements should be compared against a much wider commercial comparator group.

It is proposed that an online central data repository is set up to disclose VFM data from all in-scope arrangements. That repository would provide the comparative data required and allow an “objective and consistent approach to measuring value in the assessment process”.

Forward-looking metrics

It is now proposed to introduce forward-looking metrics alongside backwards-looking metrics in the VFM assessment. The proposals are intended to encourage arrangements to have “forward-focus” in mind as part of their investment strategy. It is proposed that firms and trustees should be required to report on the expected net investment returns and expected annualised standard deviation over the next ten years for each entire asset portfolio for each year to retirement cohort in each in-scope arrangement.

It is also proposed that firms and trustees must obtain and consider advice from an appropriate third-party on the reasonableness of any assumptions used for forward-looking metrics.

Looking forward

TPR and the FCA are targeting 2028 for the first VFM assessments to be provided under the framework.

DWP intends to consult on draft regulations implementing the VFM framework for trust-based schemes and TPR also intends to consult, as required, on any necessary guidance or updates to the General Code. The FCA is developing rules to create the VFM framework for the contract-based market and will likely undertake further consultation.

Key takeaways

Trustees and employers of trust-based schemes should keep up to date with the progress of the VFM framework. Those using schemes which are likely to receive a ‘red’ rating should be particularly alive to the possibility of being required to transfer benefits out to another arrangement.