Driving Value for Money in Defined Contribution Pensions (FCA, TPR)

This is the PLSA’s submission to the joint FCA/TPR discussion paper (DP) seeking views on a new framework with which to assess and compare the value for money (VFM) in DC pension schemes. We support the regulatory intent to ensure savers can be confident of receiving good value irrespective of what type of scheme they find themselves in. However there are challenges in implementing such a regime, in large part due to the variety within the pensions market, so we will continue to work with the regulators to develop one which is both effective and workable for savers.

Our response covers the following broad points:

• Purpose – a clear view of the intended outcome would help inform the VFM assessment process. Enabling like-for-like comparisons across a wide-ranging market will be challenging, so establishing specific areas the Regulators wish to increase value would be helpful, and help ensure solutions are practical for schemes and providers.
• Audience – the parties intended to be making the comparisons will dictate suitable levels of data disclosures, so we would welcome further discussions with regulators on the expectations, and any likely mandatory requirements, on IGCs and trustees in particular.
• Existing requirements – linked to the audience is the question of existing requirements on schemes and alignment with these. It is vital significant additional regulatory burdens are not placed on already stretched schemes; the costs of which would be passed on to members.
• Investment performance – we welcome the importance attributed to investment growth in the DP, especially in light of DWP’s drive for greater allocations to illiquid assets. We also support the requirement for net performance disclosure.