For people with pensions, it can be hard to find out whether you are enrolled on the best possible scheme.
Therefore, the government along with the Financial Conduct Authority (FCA) and the leading UK pension regulator are creating a framework called Value for Money (VFM).
“The aim of the VFM framework is to deliver an easy way for schemes to compare themselves against their peers to find out if they offer equally good service to customers,” said Rachel Vahey, head of policy development at AJ Bell PLC (LSE:AJB).
Under the plans, the metrics will analyse schemes' past investment performances, charges, and communications.
Ultimately, these metrics will be boiled down to a red/amber/green rating system, which can then help place the different funds into a league table.
However, Vahey warned that these metrics are meant for industry professionals, who are equipped at analysing the figures.
She said: “The danger is pension customers view any league tables out of context and make poor decisions on the back of them.”
Instead, hopes are that schemes being able to closely compare performances with rivals will spur them on to being more competitive.
“This will hopefully encourage, or even shame schemes, into improving their offering to customers – whether that means better investment performance, lower charges, slicker service or a combination of everything,” Vahey added.
This is just the first step of the VFM journey, she pointed out, claiming a similar framework could be developed for retail investors.
Vahey concluded: “However, in doing so, the FCA needs to be careful to not just roll out the same version.
“Measuring and comparing value for money for pension customers requires an entirely different approach so the figures make sense.”