FCA Pensions Regulatory Priorities 2026: Targeted Support Live, VFM Incoming and the Private Assets Push
Credit: FKGB Accounting
Context:
The FCA published its Pensions Regulatory Priorities report on 10 March 2026 as part of the new annual sector reporting framework. It addresses the FCA's expectations for contract-based defined contribution (DC) workplace pension providers, self-invested personal pension (SIPP) operators, and other FCA-regulated pension firms.
The backdrop is one of significant policy change: targeted support went live on 6 April 2026, the Pension Schemes Bill 2025 is progressing through Parliament, bringing VFM requirements for trust-based schemes, and parallel FCA rules for contract-based schemes are being developed. Meanwhile, the FCA is concerned about technology obsolescence, 'ageing technology and difficult-to-contact customers, including those who have savings locked in older products' as a systemic consumer harm risk.
The pensions market is also at the centre of the UK government's productive finance agenda, with the FCA encouraging pension providers to consider private assets allocations where they can deliver better long-term returns for savers.
Rules and Guidelines:
Four priority areas are outlined. First, well-run schemes providing value for money: the FCA expects firms to engage actively with the VFM framework being developed (CP26/1) and prepare to implement assessments from 2028. Firms should track DWP-led consultations on trust-based schemes alongside the FCA's parallel process for contract-based schemes.
Second, effective consumer support: targeted support has gone live, allowing firms to make suggestions to groups of customers with common characteristics, for example, alerting a customer who is drawing down at an unsustainable rate to consider alternatives. The FCA expects firms wishing to provide targeted support to apply for permissions via Connect and to engage with its pre-application support service (PASS). Firms that do not wish to provide targeted support should still consider how they can better support non-advised consumer understanding.
Third, supporting growth and innovation through private assets: the FCA wants firms to be confident in exploring opportunities for private asset investment in DC pensions, subject to proper risk management. This includes engaging with the FCA's work on Mansion House Compact commitments and the British Growth Partnership Fund. Fourth, modernising technology: firms must address barriers caused by legacy systems that prevent customers from accessing or transferring pension savings, and engage with the FCA's framework modernisation work.
Businesses Affected:
Contract-based DC workplace pension providers, including providers of GPPs, master trusts operating under FCA permissions, and SIPP operators.
Providers with significant legacy backlogs of older products face the greatest operational risk from technology obsolescence and the greatest customer harm from inaccessible products.
Firms considering targeted support must now apply for the new targeted support permission category and ensure their systems, training, and governance are ready.
Any DC provider with potential private assets allocation capability, in light of the FCA's productive finance agenda.
Next Steps:
Apply for targeted support permissions if not already done. Engage with the PASS pre-application service before submitting through Connect.
Review VFM assessment readiness against CP26/1 proposals. First assessments are targeted for 2028, but preparation should begin now, given the data infrastructure required.
Audit legacy technology infrastructure. Identify customer populations who may be locked in older products and develop a remediation strategy.
Engage with the FCA's private assets guidance and consider whether DC default strategies should be reviewed in light of the productive finance agenda.
Review consumer communications and decision-support tools at key decumulation stages, ahead of pensions dashboards becoming available.
Source | Prudential Regulation Authority, Regulatory Priorities - Pensions
