Pensions - Articles - Hymans Robertson and Aegon on latest FCA consultation

Hymans Robertson and Aegon comment on the FCA driving value for money in pensions

 Laura Andrikopoulos, Head of DC Governance Consulting, Hymans Robertson, says: “We welcome the FCA’s launch of a consultation looking into how Independent Governance Committees (IGCs) compare value for money (VFM) in occupational pension schemes. VFM has become a familiar term across occupational pensions so the ability to make these comparisons will be useful for the industry. The move towards a standardised format to assess VFM is one that may well help drive greater independence of IGCs. We also welcome the increased collaboration with TPR to ensure VFM requirements share similar principles across both Trust and Contract based arrangements.

 It is vital however, that with the introduction of any changes, focus is not lost on member outcomes, which is critical to the assessment of long-term “value”. Value is not only about cost, but should be a holistic assessment taking into account the quality provided for that cost, levels of company contributions, and the ultimate outcome achieved through smart investment strategies and good retirement support. Concentration on governance regulation and cost through VFM should not come at the expense of these outcomes.”

 Aegon’s Pensions Director Steven Cameron comments: “It makes sense for a common definition of value for money to apply across the whole workplace pension market, covering both group personal pensions and master trusts. We are pleased that the FCA consultation avoids excessive prescription and is instead focussing on higher level principles as this will allow IGCs to continue to reflect the profile of their provider’s workplace pension book and the quality of services offered in their value for money assessment.

 “The requirement to identify and compare against comparable offerings across the market requires more detailed consideration. With different providers prioritising different aspects of their propositions in different target markets, it would be a backward step if ‘apples and pears’ comparisons led to unfounded challenges or worse still a flight to lowest charges rather than highest value.”

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