UK employers risk compliance headaches, wasted benefits budgets and weaker retention if they fail to keep workplace pensions under regular review. Yet less than half of employers have reviewed their workplace pension scheme in the past year, raising concerns that many may not be meeting new regulatory expectations on value for money.
Research from Towergate Employee Benefits shows that only 48 percent of organisations had carried out a review of their pension scheme within the last 12 months, while more than a third (35 percent) had last done so within three years. One in ten admitted they had never reviewed their scheme, and 8 percent did not know when a review had last taken place.
The findings come ahead of the government’s planned Value for Money (VfM) regulations, which will require workplace pensions to be assessed across costs, performance and service. A new “red-amber-green” system will be introduced to score default investments, with results to be published from 2028. The framework is designed to incentivise underperforming schemes to improve, consolidate, or exit the market.
The research also highlighted governance gaps. Just over half (52 percent) of employers said they had a formal governance structure in place, such as a pension committee, governance board or external adviser, which leaves a significant minority without regular oversight of schemes that represent a substantial part of the benefits budget.
Sorangi Shah, client director at Towergate Employee Benefits, said: “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.”
Shah added that pension schemes are “not only a statutory obligation but an invaluable part of the employee value proposition” and argued that well-run schemes can boost engagement, retention and recruitment.
