TPR, The Financial Conduct Authority (FCA) and the Department for Work and Pensions (DWP) have been working to develop a framework for a consistent process for assessing VFM across defined contribution schemes.
The framework will improve transparency on investment performance, costs, and service quality enabling better comparisons and improvements across schemes.
By enabling comparisons to be made based on consistent metrics, the framework will drive competition in the market, encouraging providers and trustees to deliver better VFM and leading to improved long-term outcomes for members.
In the podcast, Patrick Coyne, TPR’s Interim Director of Policy and Public Affairs, and Nike Trost, the FCA’s Head of Asset Management and Pensions Policy discuss how the framework:
• is a clear example of regulators working together and will benefit the market through greater transparency and better trustee decision making, including on considering investment in all asset classes
• will shift schemes from competing on cost alone to genuine value
• is being developed iteratively by TPR, FCA and DWP in conjunction with the views of industry stakeholders and industry engagement
• is not intended to stop amber rated arrangements from moving to green
• will be balanced and proportionate in terms of the data schemes will need to deliver and that regulators will want to test solutions with industry
• could allow for the consideration of forward-looking metrics alongside backward-looking, factual metrics and be a starting point for VFM metrics in decumulation
• should empower employers to make the best pension decisions for their staff.
Listen to the podcast here.
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