Value for money framework: overview for trust-based DC schemes

Practical information for trustees and scheme managers on the latest proposals for the value for money framework and how they can start preparing to comply.

Published: 11 August 2026

Why we have created this overview

This overview has been created to help trustees better understand the latest proposals for the value for money framework before the joint Department for Work and Pensions (DWP) and Financial Conduct Authority (FCA) consultation on the value for money regulations and rules ends. It also includes information on the expected requirements for in scope workplace defined contribution (DC) arrangements from 2028, particularly on:

data disclosure
assessing standardised information on investment performance, costs and charges, and quality of service

We will provide further communications on how schemes can start preparing once the consultation has closed, and will undertake to:

set clear expectations
show what good looks like
provide practical guidance
work with advisers, administrators and the wider market

Purpose

This overview will help you understand:

the current status of the framework
the main changes proposed to the value for money framework in the current consultation
some of the areas where DWP is seeking views
how you can start to prepare for the data collection and submission requirements to support your assessments

You should read it alongside the consultation and draft regulations.

Status of the value for money framework

The framework has been subject to a series of consultations but is not yet finalised. It is designed to support comparisons across arrangements and therefore identify arrangements that may not offer value for money, which may require trustees and managers to consider (and take steps to secure) improvements.

We expect to consult on a value for money code of practice in 2027.

The value for money consultation is part of a wider programme of pensions reform set out in the government’s workplace pensions roadmap.

Quick reference guide to proposed changes to the framework in the current consultation

The current consultation builds on the proposals set out in an earlier consultation in January 2026 – referred to as CP26/1.

The current framework includes several significant changes to the positions described in CP26/1. These are set out below and have been made to:

reflect consultation feedback
reduce delivery risk
make the first years of the framework more manageable for stakeholders

Issue raised in earlier consultation	Previous position	Current proposal	Rationale
Initial data collection period	Relevant metric data would be collected from January to December 2027.	For quality of service metrics, the first data collection period will be shortened to July to December 2027. (There will be no different treatment for the collection of the remaining metric data.) Collections for all metric data for following years (2028 onwards) will be from January to December.	For the first cycle, this gives more lead-in time before trustees need to start collecting the full suite of metric data.
Full assessment in first year	All in scope schemes would complete the full assessment in the first year.	A phased approach is proposed. In 2028, large single-employer trusts with 50,000 or more members and all master trusts will submit metric data, complete full assessments and assign ratings. Other in scope arrangements will only submit data to regulators.	This responds to concerns about proportionality and implementation capacity. It allows larger arrangements to complete the first assessment cycle while providing other arrangements with more time to prepare for assessment.
Consequences in year one	Formal consequences for poor value would apply immediately.	None of the trustee duties following an amber or red rating will apply in 2028. All consequences, including closure to new business measures, will apply from the second assessment cycle onwards.	This gives schemes and regulators time to embed the new process before consequences apply.
Public disclosure timing	Views were sought on when value for money metric data should be made public.	DWP is proposing that metric data submitted in March should be made public in November each year.	This is intended to align public disclosure of the metric data with assessment reports. Schemes will have access to comparator metric data to complete the assessments.
Comparator approach at retirement	The same commercial comparator group would apply at all years to retirement cohorts.	At 0 years to retirement, arrangements will be compared with commercial comparator group arrangements targeting similar decumulation outcomes.	This reflects that arrangements approaching retirement may have different objectives, such as annuity purchase or drawdown.
Backward-looking performance methodology	An arithmetic averaging calculation was proposed.	A geometric averaging methodology is proposed, based on representative member experience as members move towards retirement.	This is intended to better align with industry practice and reduce burden.
Years to retirement cohorts	Three points in the accumulation journey were sampled: 30, 5 and 0 years to retirement.	The 5 years to retirement data points are no longer required.	Given the shift in calculation methodology for backward-looking investment metrics, standalone data collection at 5 years to retirement is no longer necessary, reducing the data collection and submission burden.
Forward-looking metrics	Third-party advice on forward-looking metrics was proposed.	Mandatory disclosure of underlying assumptions is proposed instead.	This is intended to support scrutiny without imposing a separate third-party advice requirement.
Multi-employer cohort tables	Employer cohort level costs and charges metric data would form part of the assessment process.	In the first year, multi-employer cohort costs and charges tables are to be submitted with scheme metric data, but will not be used for assessments, shared with other schemes or published. DWP continues to explore options for future years.	This forms part of the phased implementation of the assessment framework.

In scope arrangements and phased implementation

Under the current proposals, the framework will initially apply to savings in accumulation in default and quasi-default arrangements within workplace schemes. See chapter 2 of the current consultation for further detail. While the framework is primarily designed around the arrangement, for practical reasons quality of service metrics are proposed to be considered at scheme or platform level.

A phased implementation is proposed from 2028, and assessment requirements will not apply in 2028 in the same way to all in scope arrangements.

2028 metric data

All in scope trust-based arrangements will have to submit their 2027 value for money metric data by 31 March 2028. In the specific case of the majority of quality of service data – and for 2027 only – the required metric data will cover the period from 1 July 2027 to 31 December 2027.

2028 value for money assessments

Only single-employer trusts with 50,000 or more members and master trusts will be required to complete a value for money assessment and to assign a rating in 2028. The proposal is that there will be no enforcement consequences for red and amber rated arrangements in 2028.

The full framework will come into force for all in scope arrangements from 2029.

We have created a flowchart that reflects the current proposals to help you understand whether or not your scheme is in scope and what the requirements will be in the first year.

Summary of metric data collection and disclosure requirements

The framework is built around standardised metrics. The consultation proposes collecting and disclosing metric data across the following four areas.

Investment performance

Allows trustees to consider past performance using standardised metrics and take into account future expectations.

See chapters 3 and 4 of the consultation for more detail.

Asset allocation

Provides transparency on how arrangements are invested and supports interpretation of performance and risk.

See chapter 5 of the consultation for more detail.

Costs and charges

Supports comparison of an arrangement’s costs and charges and how charges affect outcomes.

See chapter 6 of the consultation for more detail.

Quality of service

Used to assess service factors that may contribute to member outcomes.

See chapter 7 of the consultation for more detail.

Timeline for collecting and submitting data

Now until mid-2027: prepare systems, governance, adviser or provider roles (see section on what trustees should be doing now).
Throughout 2027 and in each subsequent year: collect metric data (for the first year quality of service data only needs to be collected for the period of July to December 2027).
By 31 March 2028 and in each subsequent year: submit required value for money metric data to the value for money digital service.
April to October 2028 and in each subsequent year: use own and comparator metric data to assess the arrangement and assign value for money rating.
By 31 October 2028 and in each subsequent year: publish value for money assessment report and rating.
Within 5 business days of publishing value for money assessment report: inform us of the rating.

Investment performance metrics

Investment performance is the principal element of the proposed framework. This is divided into backward-looking metrics and forward-looking metrics. They are to be collected at both 30 years to retirement and 0 years to retirement.

Backward-looking metrics

Gross investment performance

Tracks the experience of a hypothetical deferred member as they age over the 1, 3 and 5 years (where available) and 10 years (where reasonably practicable to obtain).

Investment performance net of all costs

Calculated by deducting the total costs and charges from gross investment performance.

Investment performance net of investment costs

Calculated by deducting investment costs from gross investment performance. It is only required over 1 year.

Annualised standard deviation

Calculated over the corresponding investment performance time periods (1, 3, 5 and 10 years, where applicable) and by reference to the underlying gross monthly returns that make up the gross investment performance metrics.

Proposed changes for backward-looking metrics

The latest proposals change the calculation methodology for backward-looking performance metrics. Previous proposals set out an arithmetic averaging calculation. A geometric averaging methodology is now proposed. This tracks the experience over 1, 3, 5 and 10 years (where applicable) of representative deferred members as they move towards retirement. This approach is intended to allow for compounded experience and better reflect trustees’ investment strategy construction.

Because of this change, it’s no longer necessary to sample the 5 years to retirement point on a standalone basis, as the multi-year performance and risk metrics now capture the experience over the pre-retirement phase. As such, the current proposals remove the 5 years to retirement data point.

Forward-looking metrics

Expected performance net of all costs

The expected return over 10 years of the investment strategic allocation held at 30 and 0 years to retirement, using the scheme’s own assumptions and modelling methodology.

Expected annualised standard deviation

The expected annualised standard deviation over 10 years of the investment strategic allocation held at 30 and 0 years to retirement, using the scheme’s own assumptions and modelling methodology.

Proposed changes for forward-looking metrics

It is no longer proposed that trustees must obtain third-party advice. Instead, the proposal is for mandatory disclosure of underlying assumptions. This is intended to support scrutiny and reduce costs.

Costs and charges metrics

The framework requires calculation and disclosure of the costs and charges over the same time periods for which investment performance metrics are disclosed. These are critical inputs into the calculation of net investment performance (either net of all total costs and charges, or net of investment costs).

Calculation of costs and charges can range in complexity depending on the charging structure of the arrangement or whether – for multi-employer schemes – the costs and charges vary by employer. The current proposals attempt to reflect this complexity.

‘Simple’ charging structure

The fees are entirely based on a percentage of assets which does not vary depending on pot size.

No variability by employer: no need for calculation – simple disclosure of percentage set out in the charging structure.
Variability by employer: minimum, maximum and median (on a member-level basis) costs and charges to be disclosed.

Proposed changes for simple charging structures

For simple charging structures variable by employer, DWP is seeking feedback on whether employer-level medians are preferable to member-level medians. This may mitigate the risk that few or no actual members are in the 30 or 0 years to retirement cohorts in any given year, as employer-level median calculations could be carried out without reference to actual members.

‘Complex’ charging structure

The fees are not entirely based on a percentage of assets, or the percentage varies depending on pot size.

No variability by employer: costs and charges are calculated by aggregating the costs of all members in the 30 and 0 years to retirement cohorts (as applicable) and dividing by the cohort members’ average aggregate assets.
Variability by employer: costs and charges are calculated individually for each member in the 30 and 0 years to retirement cohorts (as applicable) and minimum, maximum and median (on a member-level basis) costs and charges metrics to be disclosed.

Proposed changes for complex charging structures

An alternative calculation methodology is proposed. This breaks down the complex charging structure into its components (flat charges, contribution charges and percentage of assets charges) and asks trustees to apply these charges on arrangement-specific model portfolios of varying size. The components can then be combined to derive minimum, maximum and – with some approximation – median costs and charges. Such an approach is approximate but does not rely on actual member calculations and may reduce burden.

The consultation further identifies that the variability in costs and charges can originate not only from different commercial agreements across employers, but also – in the case of complex charging structures – due to different pot sizes. DWP is seeking feedback on whether the two sources of variability may be best dealt with separately, and a further modification on the alternative proposal for complex charging structure calculations is proposed to split out these two effects.

Quality of service metrics

Quality of service is the final data element of the framework. The proposal is for quality of service metrics to be considered at scheme or platform level rather than at arrangement level.

The key areas covered by the proposals are record-keeping, core financial transactions and complaints data. There is currently a standalone metric relating to member engagement, with a commitment to work with industry to develop this area further and to introduce a customer satisfaction survey.

The consultation includes proposals on the detail of the service information to be disclosed and used in the assessment. The intention is to capture the member experience, so the proposals require the measurement of processes on an end-to-end basis rather than a stop/start approach for recording process timings. Unusually excessive delays can be explained in the contextualisation section. Trustees should refer to chapter 7 of the current consultation when considering whether the proposed measures are clear, proportionate and useful for assessing member outcomes.

Assessment and ratings

The value for money framework aims to ensure members are invested in arrangements that deliver value. Trustees must complete an annual assessment and disclose both the underlying metrics and the resulting assessment report, enabling transparency and comparison across schemes.

A digital solution is proposed to enable:

the collection of value for money metric data
access to comparator data to support trustees in their assessment
the publication of value for money assessment reports and ratings

See the value for money digital service: technical overview for more detail on the digital solution.

Assessment comparator groups

Two comparator groups are proposed to be assessed:

30 years to retirement – against all open multi-employer arrangements.
0 years to retirement – against open multi-employer arrangements with similar decumulation aims (drawdown, annuity, cash or other).

The proposal for arrangements targeting different retirement outcomes to be compared only with arrangements targeting similar decumulation outcomes is to reflect the reality that arrangements close to retirement may have different objectives, such as targeting annuity purchase or drawdown.

Worked example: comparator group at retirement

Scheme E has a default strategy that de-risks towards an annuity purchase objective. Scheme F has a default strategy that targets drawdown. At 30 years to retirement, both arrangements may broadly be seeking pot growth. At 0 years to retirement, they are aiming at different outcomes. The consultation therefore proposes a more tailored comparator approach at the point of retirement.

The assessment process

The proposed assessment is based on a three-step process that results in one of four ratings: red, amber, light green, or dark green (RAGG).

The process assesses:

Investment performance and costs. Trustees will need to assess their arrangement’s investment performance using backward-looking metrics, forward-looking metrics, risk and charges for 30 years to retirement and 0 years to retirement cohorts.
Service quality and costs and charges. Trustees will then assess their service quality against what those services cost. Poor service can downgrade a value finding, but good service cannot be used to uplift a rating.
Scheme-specific features and rationalisation. Trustees may provide rationalisation against the outcomes of previous steps and determine their final rating.

This overview explains the process at a high level. See chapter 8 of the consultation for the detailed assessment proposals.

Ratings

Trustees will need to assign a RAGG rating for each of their in scope arrangements. This is to align with the categories in legislation.

Dark green (defined as ‘Fully Delivering’ in the Pension Schemes Act 2026)

The arrangement is fully delivering value, and there are no or minimal areas where improvements could be made. We still expect trustees to focus on continuous improvement. We expect few arrangements would reach this standard.

Light green (defined as an ‘Intermediate Rating’ in the 2026 Act)

The arrangement is delivering value, but there are areas that could or should be improved. We would expect this would be a more common value rating than dark green.

Amber (defined as an ‘Intermediate Rating’ in the 2026 Act)

The arrangement is not delivering value, but independent governance committees or trustees believe improvements are possible within three years to make the arrangement value for money. Despite this, trustees may still decide at a future point that a bulk transfer is the best course of action for members.

Red (defined as ‘Not Delivering’ in the 2026 Act)

The arrangement is not delivering value and a bulk transfer, at arrangement level, should follow where this is in the best interests of members. A transfer may not always be possible (for example if trustees determine it would not be in best interests of their members). In those cases, trustees must still take action to improve value where possible.

Actions following an assessment (from 2029 onwards)

If an arrangement is rated red or amber, and is therefore not offering value, trustees will be required to take action – either to improve value or to move members to an arrangement that does provide value. In addition to the specific requirements following a red or amber rating, trustees should, as a matter of good governance, keep evidence in support of decisions, particularly where transfers are not pursued, and continue to act in members’ best interests and comply with fiduciary duties.

Amber rated arrangements

An amber rating means the arrangement is not currently providing value, but trustees believe it can be improved within three years.

Actions for amber ratings

Notify participating employers, within one month of publication, of: the rating, planned actions and, where the arrangement had been rated amber in the previous year.
Prepare and submit an improvement plan.
Set out specific improvement actions, expected outcomes and implementation timelines.
Explain how and when improvements should be reflected in value for money.
Provide annual progress updates if the arrangement remains amber.
Consider transferring members where this would reasonably result in improved value and, if assessed to be beneficial, prepare an action plan setting out proposals for the transfer.
Close the arrangement to new business (unless where permitted for automatic enrolment purposes).
If the arrangement is still not delivering value after three years, expect a red rating unless an extension can be justified.

Red rated arrangements

A red rating means trustees consider the arrangement incapable of delivering value within a reasonable period through improvement alone.

Actions for red ratings

Notify participating employers, within one month of publication of the rating, of actions appropriate for employers to take in light of the red rating.
Prepare and submit an action plan within one month of the assessment publication.
Close the arrangement to new business (unless where permitted for automatic enrolment purposes).
Transfer members to a value-rated arrangement where this would reasonably result in improved value.
Where transfer is not appropriate, document the reasons and alternative protections or improvement actions.

Publication and transparency

The Pension Schemes Act 2026 requires disclosure and publication of value for money metric data and assessment reports.

The current proposals include:

A central value for money digital solution (managed by TPR) to disclose metric data and reports. The proposals and scope of the digital solution are set out in the consultation and our digital service technical overview.
Trustees are responsible for data accuracy.
Trustees must explain how they have used backward-looking metrics and forward-looking metrics.
Trustees must publish ratings and rationale.

What trustees should be doing now

Trustees can begin preparing now for:

data collection and submission governance
decision-making tasks that the framework will require

Suggested preparation steps

Map scope: identify all default and quasi-default arrangements and understand which of these are likely to be in scope arrangements.
Review data availability: work with advisers, providers, administrators and investment managers to identify the data that will be required for value for money and to agree how and when this will be made available to you.
Test costs and charges data: consider performing a gap analysis exercise of your ability to provide the metric data required for the framework.
Review investment data processes: think about how you will approach the calculation of backward-looking and forward-looking metrics, what assumptions you will apply and how those assumptions will be documented.
Consider service metrics: identify the sources of your service quality data and test how robust and consistent that data is.
Plan governance: start to put in place mechanisms for the trustee board or relevant committee to manage readiness, verify data quality, and provide assurance for the assessment process and sign-off value for money ratings.

Expected implementation timeline

Period	Planned activity	Trustee focus
July to September 2026	DWP consultation period. DWP is seeking views on the proposed framework, draft regulations and rules.	Review consultation, identify scheme-specific issues and prepare response.
By January 2027	DWP intends to publish a response and final regulations for trust-based schemes.	Review final policy and assess changes from consultation proposals.
First half 2027	TPR expects to consult on a value for money code of practice.	Review and respond where relevant.
By 31 March 2028	Deadline for all in scope arrangements to submit value for money metric data for year 1.	Submit required metric data. Prepare for assessment where in first phase.
First half 2028	TPR code of practice in force.	Use code to inform initial value for money assessment and rating.
By 31 October 2028	Deadline for those in scope arrangements that are required to complete a full year 1assessmenttosubmitassessment report and value for money rating.	Complete assessment if in first phase. Use first cycle to test governance and reporting.(No enforcement applies in year 1 to red and amber ratings).
By 31 March 2029 and in subsequent years	Deadline for all in scope arrangements to submit annual value for money data.	Embed annual cycle. Prepare for consequences where amber or red ratings arise.
By 31 October 2029 and in subsequent years	Deadline for all in scope arrangements to submit assessment report and value for money rating.	Embed annual cycle. Prepare for consequences where amber or red ratings arise.
By 7 November 2029 and in subsequent years	Publish metric data.	Embed annual cycle.