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Getting Ready for The Value for Money (VfM) Shake-Up

The government’s Pension Schemes Bill (PSB), informed by the Pensions Investment Review (PIR), sets the stage for one of the biggest shifts in workplace pensions. At its core is the new Value for Money (VfM) framework, with the first full regulatory assessments expected in 2028.

The PIR made it clear that the DC market has focused too narrowly on cost, often at the expense of quality. “The VFM Framework will require underperforming funds to improve, wind up or consolidate into better performing ones … enabling decision makers to assess performance and see whether it is in savers’ best interests to remain in their current arrangement.”

From 2028, providers and trustees must publish annual disclosures across three comparable areas using a traffic-light (RAG) format:

  • investment performance
  • costs and charges
  • service/administration quality
Getting ready for the value for money shake up

Further Changes From The VFM Framework

The PSB also introduces a contractual override regime for contract-based schemes, allowing bulk transfers without individual consent where VfM tests are failed. Safeguards and certification will apply, but the goal is consolidation into stronger defaults.

In addition, DC Master Trust providers must have £25bn AUM in one main default by 2030 or follow a pathway if they can reach £10bn by 2030 with plans for £25bn by 2035. The PIR argues that scale lowers costs and widens investment access. But does bigger mean better?

CAPA data points to some smaller providers outperforming larger peers. As one provider interviewed as part of the Pi Partnership DC Decumulation Report (July 2025) put it: “Scale is not the driver of performance. Characteristics of the organisations drive performance. Better performance drives better outcomes – not being big.”

That said, considering the new legal requirements, consolidation is inevitable. NatWest’s recent move to sell Cushon, its £3bn workplace pension arm, underlines how quickly the market is shifting.

For DC schemes, the message is clear: start preparing now.

Align reporting systems to the new VfM metrics, benchmark investment performance against peers, and ensure governance structures are robust enough to interpret and act on the results. Smaller DC Master Trust providers will be thinking seriously about their growth trajectory against the £10bn and £25bn scale thresholds, while larger ones must evidence how size translates into genuine member benefit.

Equally important is improving member communication and education, so that disclosures can be understood and used to build trust. By getting their house in order well before 2028, schemes can show regulators, employers and most importantly members that they are focused not just on compliance, but on delivering real value and better outcomes in retirement.

Here at Pi Partnership, we are working with not just our DC based trust schemes, but also where we have hybrid arrangements to help assess potential governance requirements and decision making milestones to make sure we are ready for the PSB changes.

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Amanda Burden

Director and Governance Specialist

Amanda is a Board Director of Pi Partnership Group and leads the development of Pi’s services. She works closely with clients, the Pi team and professional advisers to ensure all of Pi’s services meet the changing needs of the pension market and deliver clear value to Pi’s clients.

Amanda has over twenty-five years’ experience in the pensions industry and, as well as ensuring Pi’s services continue to meet the needs of our clients in a rapidly changing pension landscape, is also a member of Pi’s Executive Management Team. She provides specialist project management for clients on a range of services, including adviser selection and review, trustee board assessment and governance design.

As well as being a Fellow of the Pensions Management Institute (PMI) and Chair of the PMI London Group, Amanda holds PMI certificates in Pensions Automatic Enrolment and DC Governance, was a past Prince2 practitioner and is a Certified Risk Management Practitioner.

What do you most enjoy about your role:  Successfully delivering complex projects and creating a happy team environment.

Interests outside work: Travel, theatre and as part of Abundance London helping create beautiful spaces in urban settings.

Top achievement to date: Competing in the 2005/06 Round the World Clipper race.