Most UK employers have not assessed whether their workplace pension scheme still offers value for money, despite looming regulatory changes that will require greater scrutiny.
New research from Towergate Employee Benefits shows that only 48 percent of employers have reviewed their pension offering in the past 12 months. A further 35 percent have done so in the past three years, but 10 percent have never reviewed it at all. Another 8 percent were unsure when it was last checked.
The findings raise questions about how well employers are preparing for the Value for Money (VfM) framework, a regulatory overhaul being introduced under the Pension Schemes Bill, which entered Parliament in June 2025 and is expected to become law in 2026.
New Rules on the Horizon
The VfM framework is being designed to hold workplace pension providers accountable across three areas: cost, investment performance and service. It will introduce a red-amber-green (RAG) rating system for default investment performance, with public disclosure aimed at encouraging underperforming schemes to either improve, consolidate or exit the market.
It’s expected to take effect in 2026/27, with the first data publication due in 2028.
Sorangi Shah, client director at Towergate Employee Benefits, said the research findings were surprising given the increasing focus on scheme performance.
“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.”
Governance Structures Lacking
The research also found that only 52 percent of employers currently have a pension governance structure in place. It may include an internal committee, formal board or use of an external adviser.
That leaves nearly half of organisations without a formal oversight process, despite pensions being one of the most significant and regulated employee benefits.
Shah said workplace pensions must be treated as more than a legal requirement, pointing to their wider strategic role.
“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.”
Why Reviews Matter
The Department for Work and Pensions (DWP) and The Pensions Regulator have repeatedly emphasised the importance of governance, particularly as schemes become more complex and performance scrutiny increases.
Without regular reviews, employers risk:
- Paying excessive charges
- Offering poorly performing default funds
- Failing to meet automatic enrolment obligations
- Lacking proper retirement planning support for staff
- Falling behind on engagement and communication
A well-run pension scheme, by contrast, can strengthen employee satisfaction and support recruitment and retention.
What Employers Should Do Now
Towergate advises employers not to wait for regulation to force action. Instead, they recommend involving a qualified pensions professional to conduct an in-depth assessment. This should cover:
- Charges and value for money
- Investment options and performance
- Salary sacrifice arrangements
- Automatic enrolment compliance
- Member education and engagement
- Retirement planning support
- Suitability for workforce demographics
The review process can highlight whether the existing scheme is still fit for purpose or if a different provider might offer better outcomes for both employer and employee.
The VfM framework is expected to place increased pressure on providers, but employers also have a duty to ensure they are offering a suitable, fair and cost-effective solution. Many schemes may appear compliant but fail to deliver true value in terms of performance, transparency or employee experience.
“A well-run pension scheme can be a huge asset to a company in terms of employee satisfaction, engagement and, therefore, recruitment and retention,” said Shah.
Regulatory Backdrop
The Pensions Scheme Bill, introduced in June 2025, sets the stage for the regulatory changes to come. While the final framework is still being developed, the direction is clear: default pensions will be assessed against a unified standard, and those falling short will be publicly identified.
Employers who have not reviewed their scheme recently may find themselves under pressure from both regulators and employees once comparative data becomes widely available.
The RAG rating system in particular is expected to bring more visibility and accountability into the workplace pensions market.
A Strategic Opportunity
While the figures from Towergate suggest many employers are underprepared, those who act early have an opportunity to get ahead.
Seeking professional advice now can ensure compliance, improve employee experience and mitigate the risk of reputational or financial consequences later.
Ultimately, regular pension scheme reviews are not just about ticking boxes but also delivering long-term value to both business and workforce.