Legacy pensions: the FCA turns closed books into a board problem

The FCA has put legacy pension books on notice. In a multi-firm review published on 2 July, the regulator concluded that people holding legacy pension products, now closed to new savers, could be receiving poorer value than those in newer ones, blaming complex charging structures, older product design and weakness in firms' data (FCA). The framing matters: this is not a thematic curiosity, it is a Consumer Duty price and value finding aimed squarely at unit-linked non-workplace pensions, and it comes with named good practice that other firms will now be measured against.

The uncomfortable message for boards is that the FCA has already identified peers who are moving. Some providers are simplifying or rationalising legacy products and funds, capping or reducing charges, comparing outcomes across customer groups, and moving customers to better-value alternatives (FCA). Once the regulator has published what good looks like, the defence that closed books are too complex, too data-poor or too expensive to remediate becomes progressively harder to sustain. 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' (FCA).

For CFOs and chief actuaries, the economics are awkward. Closed books have historically been managed for run-off margin, with legacy charging structures embedded in policyholder economics and, in some cases, in the price paid for acquired portfolios. A regulator-endorsed template of charge caps, fund rationalisation and cohort-level outcome testing changes the assumed cashflows. It also raises a governance question about who owns the comparison between legacy and open-book customers, and whether product committees have the data to make that judgement credibly. The FCA has explicitly flagged that it is engaging with firms on barriers they face in improving value, particularly in closed books (FCA), which is both an offer of dialogue and a warning that excuses are being logged.

The review does not sit in isolation. The FCA has tied it to wider reforms including targeted support and pensions dashboards, and to its Pensions Regulatory Priorities and broader work on modernising pensions and long-term savings (FCA). It also lands alongside proposals for the self-invested personal pension market in CP26/20, which closes on 24 August 2026 (FCA). Read together, the direction is clear: dashboards will make relative value visible to customers, targeted support will make it actionable, and the Duty will make firms accountable for the gap. Legacy books that look poor on a dashboard, next to a provider's own modern proposition, will be difficult to defend to a board, let alone a supervisor.

Senior leaders should treat this as a scoping instruction, not a discussion paper. The immediate questions for the next board meeting are whether the firm can evidence outcome comparisons across cohorts, whether it has a plan to cap or rationalise the worst-value legacy charges, and who signs off the trade-off between run-off profitability and Duty compliance. The FCA has published the benchmark. The next supervisory conversation will start from it.