# Pension Schemes Act 2026, Section 18: Compliance and oversight

Extent: E+W+S

(1) Value for money regulations may make provision for ensuring compliance with value for money provisions.
(2) In this section “value for money provision” means a provision of or made under any of sections 11 to 17.
(3) Value for money regulations may in particular—
(a) provide for the Pensions Regulator to issue a notice (a “compliance notice”) to a person with a view to ensuring the person's compliance with a value for money provision;
(b) provide for the Pensions Regulator to issue a notice (a “third party compliance notice”) to a person with a view to ensuring another person's compliance with a value for money provision;
(c) provide for the Pensions Regulator to issue a notice (a “penalty notice”) imposing a penalty on a person where the Pensions Regulator is of the opinion that the person—
(i) has failed to comply with a compliance notice or third party compliance notice, or
(ii) has contravened a value for money provision;
(d) provide for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of the issue of a penalty notice or the amount of a penalty;
(e) confer other functions on the Pensions Regulator.
(4) Value for money regulations may make provision for determining the amount, or the maximum amount, of a penalty in respect of a failure or contravention.
(5) The amount of a penalty imposed under value for money regulations in respect of a failure or contravention must not exceed—
(a) £10,000, in the case of an individual, and
(b) £100,000, in any other case.
(6) Value for money regulations may provide that where the Pensions Regulator has, in compliance with a requirement of regulations under subsection (3)(c)(ii), imposed a penalty on a person the Regulator is to be authorised to withdraw the penalty if—
(a) the Regulator considers it appropriate to do so having regard to the circumstances in which the contravention took place, and
(b) any prescribed conditions are met.
(7) Value for money regulations may provide—
(a) that if the Regulator determines that a rating assigned by responsible trustees or managers for the purposes of section 11(4)(a) is not correct, the Regulator may by a notice (a “directions notice”) substitute for that rating the rating the Regulator considers should have been assigned;
(b) that, where the Pensions Regulator substitutes a rating by virtue of paragraph (a), that rating is to be deemed for all purposes to be the rating assigned to the scheme under section 15(1).
(8) A directions notice under subsection (7) must set out the reasons for the Pensions Regulator’s determination.
(9) Value for money regulations may provide for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of a determination of the Pensions Regulator under subsection (7)(a).
(10) The Pensions Act 1995 is amended as follows.
(11) In section 7 (appointment of trustees)—
(a) in subsection (3), after paragraph (a) insert—
“(aa) where subsection (3A) or (3B) applies, to secure that the trustees as a whole have the skills and knowledge necessary for ensuring that the scheme, or an arrangement under it, improves its performance as regards the provision of value for money;”
(b) after subsection (3) insert—
“(3A) This subsection applies where—
(a) the trust scheme is a regulated VFM scheme (as defined in section 11(1)(a) of the Pension Schemes Act 2026), and
(b) the most recent rating assigned to the scheme under section 15(1) of that Act was an intermediate or “not delivering” rating.
(3B) This subsection applies where—
(a) an arrangement under the trust scheme is a regulated VFM arrangement, and
(b) the most recent rating assigned to the arrangement under section 15(1) of that Act was an intermediate or “not delivering” rating.”
(c) at the end insert—
“(7) In this section “regulated VFM arrangement” and “regulated VFM scheme” are to be interpreted in accordance with section 21 of the Pension Schemes Act 2026.”
(12) In section 11 (powers to wind up schemes), in subsection (1)—
(a) omit the “or” after paragraph (b), and
(b) after paragraph (c) insert—
“(d) the scheme is a regulated VFM scheme and—
(i) the rating most recently assigned to the scheme under section 15(1) of the Pension Schemes Act 2026 is “not delivering”, and
(ii) the Authority are satisfied that the scheme is not capable of providing value for money, or
(e) the following conditions are met in relation to a regulated VFM arrangement (“A”) under the scheme—
(i) that the rating most recently assigned to A under section 15(1) of the Pension Schemes Act 2026 is “not delivering”, and
(ii) the Authority are satisfied that A is not capable of providing value for money.”;
(c) at the end insert—
“(8) In subsection (1)—
(a) “regulated VFM arrangement” and “regulated VFM scheme” have the same meaning as in Chapter 1 of Part 2 of the Pension Schemes Act 2026 (see section 21 of that Act);
(b) the reference to the provision of value for money is to be interpreted in accordance with that Chapter.”

---
Source: https://www.legislation.gov.uk/ukpga/2026/22/section/18 (the official version)
Page: https://openlegislation.uk/pension-schemes-act-2026/section-18
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.