Pension trustees will have to run a competitive tender with at least three firms before choosing a fiduciary manager to invest more than one-fifth of a schemes assets.
Trustees that have already appointed a manager without a tender must do so within five years under new rules confirmed by the Competition and Markets Authority (CMA) yesterday.
Moreover, fiduciary management firms will now have to provide potential clients with clear information on fees, and use a standard approach to demonstrate past performance.
It is hoped this will help boost competition after the CMA found that half of the UK's £1.6trn pension market use the same fiduciary manager that they do for investment consultancy.
This has given a competitive advantage to companies that offer both services, with investment consultants often steering trustees towards their fiduciary management services.
John Wotton, chair of the CMA's original investigation into the market, said the reforms would help ensure pension scheme trustees are getting value for money for members.
"Some lack the information they need to compare providers and so could be sticking with their existing fiduciary manager when there are better options available," he said.
"It's therefore imperative we make these changes so that the sector works better for those it is meant to support - pension scheme members."
The CMA also recommended that the government broaden the regulatory scope for The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) when overlooking the sector.
In addition, it suggested that the TPR produce guidance to help trustees with fiduciary management and investment consultancy services.
KPMG partner, Nick Evans, said: "The relationship between quality of advice and market share is not as it should be - more competitive tendering should reduce concentration in this market.
"The FCA regulating all investment advice is key move that will further underpin an improvement in the overall quality of investment advice to the market."
Implementation of the new requirements is expected to begin later in 2019.