Gail Izat, Workplace Managing Director at Standard Life, part of Phoenix Group said: “The Value for Money framework will play an important role in the pensions market in the years to come so we welcome the additional certainty that this consultation provides regarding its implementation. In recent years many of those who select pension schemes have focused on costs, albeit with a growing emphasis on additional factors. The framework will progress that trend towards a more rounded comparison including additional factors such as investment performance including forward looking metrics. As we all know, past returns are not a guarantee of future returns and so outlining expectations for the future is a helpful addition. We would have liked to see greater emphasis on service measures, which as currently envisaged, can maintain or downgrade but not improve a provider’s rating. There has clearly been a lot of interaction between FCA, TPR and DWP in developing the system and we’d like to see this continue as the framework is implemented to ensure consistency between the contract and trust-based worlds. Ultimately, the government’s broader push to drive scale in the workplace pensions market with fewer, larger schemes will help improve value for money across the market and the VfM framework is another helpful initiative that will help customers and those who select pensions to assess value.”
Emma Douglas, Wealth Policy Director at Aviva, said: “We welcome the consultation as a vital next step in moving the DC industry's focus from cost to value. We are glad to see that forward-looking performance metrics are under consideration and that there is recognition of the important role of Trustees and IGCs in exercising judgement when reviewing the VFM data. Ultimately, these proposals could be a game-changer for pension savers by making sure their money is working harder for them, providing clearer information and greater confidence that their retirement savings are being managed with their best interests in mind. Poorly performing schemes would be required to improve or transfer into better-performing ones, meaning savers shouldn't need to take action to benefit from stronger returns.”
Alison Leslie, Partner and Head of DC Investment, Hymans Robertson, said: "We're pleased to see the FCA's response to consultation CP24/16 today. From an investment perspective we particularly welcome the inclusion of forward looking metrics which we believe is essential as part of the value for members assessment. We also welcome the pragmatic approach shown to the disclosure of costs and charges for vertically integrated firms as well as the reduction in reporting period to 10 years from 15 years. We welcome the continued review of the member survey and when and what this will contain as its frequency and composition will be important to get right at the outset to ensure its success as part of the framework. The use of a central repository whilst on the face it makes sense needs to be used with caution particularly given the use of differing assumptions by schemes as this could lead to misleading and inconsistent comparison approaches. Finally, whilst we understand the purpose of the new category we still believe few schemes will use the not value category unless a bulk transfer is imminent, making the need for an amber category almost redundant. We are pleased to see the industry input being carefully considered and responses to them being balanced and pragmatic which we believe strikes the right balance between transparency and pragmatism in the interests of value for members."
David Brooks, Head of Policy at Broadstone, said: “We welcome the FCA’s updated consultation on Value for Money, particularly its focus on streamlining service quality metrics. However, a real challenge will be agreeing what ‘good service’ actually looks like and how it should be measured in a way that’s fair, comparable and transparent. The FCA’s consultation makes clear that service quality must sit alongside performance and cost, but it stops short of defining a final metric set, leaving the industry to help shape it. A credible approach requires objective, measurable indicators rather than vague notions of ‘good administration’. The most realistic service quality framework could measure across four areas. Firstly, operational accuracy, ensuring contributions, switches, retirements, and other transactions are processed correctly. Secondly, timeliness, with core tasks delivered within agreed service levels, reflecting the FCA’s focus on outcome-based performance. Thirdly, complaint handling, tracking both the speed of resolution and the underlying causes of issues. And finally, member experience, ensuring communications are clear, services are accessible, and digital tools are engaging - all from the saver’s perspective as suggested by the FCA. To meaningfully compare schemes, these metrics should be standardised, publicly disclosed, and benchmarked across the market - just as costs and investment performance already are. Only with that level of consistency will VFM assessments reflect the true quality of the service members. Ultimately, any assessment of Value for Money must recognise the unique strengths different schemes bring to their members. We look forward to seeing the outcome of this consultation and support the continued effort to create a clear, consistent framework for assessing DC schemes.”
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