London, 5 March 2026: Plans that encourage ‘crystal-ball gazing’ in regulatory proposals to create ‘Value for Money’ pension comparisons could financially harm savers and encourage excessive risk-taking by pension schemes, PensionBee has warned.
In its response to the Financial Conduct Authority’s Value for Money Framework (VfM) consultation, PensionBee, a leading online retirement savings provider, said it strongly supports the regulator’s ambition to improve transparency, comparability and accountability across the pensions market. However, it cautioned that incorporating ‘forward-looking metrics’ (FLMs) into performance scoring risks financial harm to savers.
It argued that return projections – particularly those linked to illiquid private market assets – are effectively ‘educated guesswork’: inherently uncertain, difficult to standardise and heavily dependent on modelling choices. Differences in valuation methodologies, smoothing techniques and assumptions about future risk mean these predicted returns may not be meaningfully comparable across schemes and, at worst, could be outright misleading.
PensionBee warned that blending backward-looking metrics, based on realised performance, with forward-looking projections could create headline scores for pension schemes that give an illusion of precision, but mask different underlying assumptions. Over time, this could distort the central database against which VfM is judged and influence DWP comparative benchmarks used to generate commercially consequential ratings for pension schemes.
The response also highlighted the risk of “gaming” and herding behaviour if projected returns form part of comparative scoring. Schemes with weaker historic performance may face incentives to rely more heavily on optimistic assumptions – or increase allocations to higher-risk private markets – in order to improve their relative position. Those that do not follow suit could be commercially disadvantaged through lower ratings.
PensionBee urged the FCA to drop plans to incorporate the risky forward-looking metrics and use observable, risk-adjusted historic outcomes within the framework. It also called for independent validation of modelling assumptions, clear and repeated risk warnings where private markets exposure increases, and a full industry dry run before any public disclosure of ratings to avoid unintended market disruption.
Lisa Picardo, Chief Business Officer UK at PensionBee, said: “Forward-looking metrics amount to crystal-ball gazing. Even in transparent public markets, regulators rightly stress that past performance is no guide to future returns. In private markets – where valuations are infrequent, methodologies vary and outcomes hinge on timing and exit conditions – the scope for over-optimism is far greater.
“Private market projections rely on complex assumptions about long-term returns that may be familiar to institutional investors, but are far harder for ordinary pension savers to interrogate. To pension savers, projected returns could carry enormous but unwarranted weight in decision-making and risk creating a false sense of certainty about inherently uncertain outcomes.
“Embedding these metrics into comparative scoring could distort Value for Money ratings and incentivise schemes to prioritise projected returns over realised performance. A credible Value for Money framework must focus on clarity, robustness and observable member outcomes. Protecting mass-market savers from misleading forecasts should remain front and centre.”
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