New pension rules to boost average UK retirement pot by £29,000
Key Points
- New DWP rules will boost the average UK pension pot by £29,000 by retirement
- Pension schemes must publish red-to-green performance ratings from 2028, all schemes from 2029
- Poor performing schemes face fines or closure by regulators
- The current performance gap leaves the average saver £5,000 worse off over five years
- Auto-enrolment schemes must reach £25 billion in assets by April 2030
UK pension savers will see their retirement pots boosted by an average of £29,000 under reforms set out in a delivery timetable published by the Department for Work and Pensions on Monday (13 July).
The timetable, developed with the Pensions Regulator, the Financial Conduct Authority, the Treasury and industry partners, sets out how measures in the Pension Schemes Act will be rolled out over the coming years.
Its centrepiece is a new Value for Money framework that will for the first time require pension schemes to measure and publish how they perform against the best in the market.
Schemes will be assessed on investment performance, costs and charges, and quality of service, and rated from red for poor value through to green for outperforming on value.
Where poor performers fail to act, regulators can issue compliance notices, levy fines, or in serious cases take steps to wind up the scheme.
Larger schemes, including master trusts, large single employer schemes and multi-employer contract-based schemes open to new employers, must complete and publish assessments from 2028, with the requirement extending to all workplace pension schemes from 2029.
The performance gap the framework targets is currently leaving the average member £5,000 worse off over five years.
Annualised five-year returns for younger savers range from around 5% to 13% across a sample of large schemes, according to CAPAdata figures from Q1 2026, meaning a £10,000 pot with no further contributions and a 0.5% annual charge would differ by more than £5,000 depending on the scheme after five years.
“We can’t have people working hard to earn the money they save towards retirement, only to have those funds sitting in schemes that aren’t working just as hard on their behalf,” said Torsten Bell, Minister for Pensions.
“The stakes are high, when the gap between the best and worst performers could cost a saver with a £10,000 pot over £5,000 across just five years.”
The Government has also published a discussion paper on its scale policy, which will require automatic-enrolment schemes in scope to reach at least £25 billion of assets under management by April 2030, or hold at least £10 billion with a credible growth plan to reach £25 billion by 2035.
Default pensions will also be introduced so savers reaching retirement can convert their savings into a reliable retirement income without navigating complex financial decisions alone, though individuals remain free to choose a different option.
“For the first time, it creates a consistent way to compare value across workplace pensions, bringing transparency to the outcomes that really matter,” said Sarah Pritchard, the FCA’s Deputy Chief Executive.
