The Financial Conduct Authority (FCA) has found that people holding legacy pension products, now closed to new savers, could be receiving poorer value than those in newer arrangements.
Its review, published on 2 July, looked at how insurers set price and value for unit-linked non-workplace pensions and savings, the older insurance-based products many people accumulated over decades of saving.
The regulator identified some good practice, but concluded that complex charging structures, older product design and weaknesses in firms' data meant some savers are not getting as much value as they could.
Around half of the policies in its sample sat in legacy or closed products no longer open to new business.
What the review examined
Unit-linked funds are pooled investments offered by insurers through life insurance-based pensions and savings products.
The FCA's review tested these products against the Consumer Duty, under which firms must be able to show that all products deliver fair value and support good outcomes, including for customers who are less engaged.
The regulator drew data from life insurers covering most of the market. It found the market to be highly complex, with hundreds of closed product variants and thousands of unit-linked fund variants.
In many cases, firms did not have a clear understanding of the exact nature and value of legacy policy benefits, partly because data from older systems was incomplete or inconsistent.
Why value matters over time
On the face of it the primary issue is that some older products carry higher charges. But beyond that, the concern is that pension charges, like investment returns, compound over the years an investment is held.
A difference in annual cost that looks modest in any single year works steadily against the saver over the life of the pension and the effect is larger the longer the money is invested.
For a pension held over decades, the gap between an older, higher-charging product and a modern equivalent can be substantial by the time it is drawn.
The FCA's point is that this gap is not inevitable. It found firms that were capping or reducing charges on legacy products, simplifying or rationalising older funds and moving customers to better-value alternatives where appropriate.
Some had identified large numbers of customers who would be better off in newer options and had found ways to preserve valuable legacy benefits, such as guarantees, while giving those customers access to lower charges.
What the regulator expects next
The FCA has called on all pension providers to consider the report and adopt the good practice it identified.
Charlotte Clark, director of cross-cutting policy and strategy at the FCA, said: "Consumers in older products should not be left behind and the good news is that some firms are already showing it doesn't have to be this way. We want to see that progress reflected right across the market."
The regulator has been clear that data and systems limitations do not remove firms' obligations under the Consumer Duty and that an inability to contact "gone-away" customers does not remove the responsibility to monitor outcomes.
Where it does not see timely progress or evidence of fair value, it has said it will take appropriate supervisory or regulatory action.
The review sits within the FCA's wider work on modernising pensions and long-term savings, which includes the Value for Money framework, pensions dashboards and provisions in the Pension Schemes Act 2026.
What it means for savers
If you hold an older personal pension or savings plan taken out with an insurance company, particularly one you have not reviewed in some years, this is a reasonable moment to consider whether it still represents good value.
That does not mean an older product is necessarily poor value, while some carry guarantees or other benefits that would be lost on moving. The right course depends on the specific policy and your circumstances.
If you have any questions about an older pension and whether it still suits you, don’t hesitate to get in touch.