If you are retirement planning in Cheshire, new proposals are afoot for workplace pension plans.
A rating scheme is currently being considered to help savers maximise their retirement savings. Approximately 16 million workers currently save for their retirement by contributing to pension pots, often delegating responsibility for investments by relying on their employer’s default pension scheme. Such schemes are currently estimated to be worth over £130 billion.
Under plans by the Financial Conduct Authority, the Pensions Regulator and the Department for Work and Pensions, three colour-coded metrics would offer pension holders comparative value indicators.
Of these, only green schemes would represent value for money, an amber rating would require improvement to add value within a specified time period, while a red rating would offer an indication that that was not possible. In the event of the latter, companies running red-rated schemes would be forced to redirect savers to a different arrangement that demonstrably does offer value for money.
The consultation paper envisages these proposals will lead to better value pensions, without savers needing to take action. It stressed that value for money was not simply focused on charges and that inexpensive schemes would not necessarily guarantee the most rewarding pensions in the long term.
For her part, Emma Reynolds, the pensions minister, said that the government’s Pension Bill and Pensions Review is designed to modernise pension planning and provide better eventual outcomes, and that an effective Value for Money framework will provide a solid basis moving forward.
