The Pensions Regulator (TPR) has urged UK trustees to respond to its value for money (VFM) consultation, highlighting that trustees will be the ones driving improvements in value and challenging advisers and service providers to deliver more for savers.
The regulator said it worked closely with the Financial Conduct Authority (FCA) and the Department for Work and Pensions (DWP) to develop the value for money framework
It added that the consultation and discussion paper, launched jointly with the FCA and DWP on 8 January, sets out proposals designed to make it easier to assess and compare value across the market to support better decision-making.
Under the new framework, trustees will need to publish clear data on their schemes’ performance, costs and quality of service. TPR added that through driving greater transparency and setting clear and consistent expectations, the framework is designed to raise industry, identify underperforming arrangements and drive meaningful improvements.
It added that where a pension fund is not delivering value, trustees or providers would be expected to improve performance or consolidate out of the market, so that savers get the value they deserve.
The key adjustments to the proposals include:
- a new colour-coded rating – Value for money assessment outcomes will be shown in a colour rating, giving a clear, at-a-glance picture of whether value is being delivered and where action is needed. The trio proposed a four-point rating system to allow top performers to be identified: dark green for strong performance, light green for good value, amber for improvement, and red for poor value;
- forward-looking investment metrics – Regulators introduced forward-looking metrics, alongside existing backwards-looking metrics, as part of the VFM assessment, to reflect what an investment strategy aims to deliver over time;
- a centralised data solution – Regulators want trustees’ feedback on a proposed single route for easily submitting and analysing VFM data to streamline reporting, support consistent comparisons across the market and strengthen oversight.
The regulator said that trustee engagement in the value for money consultation is vital “especially now” because the framework will apply across contract- and trust-based defined contribution pension funds, regardless of size, ensuring that all savers benefit from strong value and robust oversight.
The regulator said: “We need your views to help shape the framework.”
