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A group of pension providers, brought together by People's Pension, met with the pensions minister, civil servants and regulators on Tuesday, discussing their new ‘Pound for pound’ initiative to test value for money metrics, informed by experience from Australia.
The ‘£4£’ pilot group of providers was brought together by master trust the People’s Pension and includes Aviva, Smart Pension, TPT Retirement Solutions, Legal & General and NatWest Cushon. It is supported by Australian firm SuperRatings.
The initiative will explore how to assess performance through value-based metrics in defined contribution schemes, a requirement set to come in through the value for money framework included in the pension schemes bill. The DC value framework has created much debate among providers, who will need to disclose their net performance and have their service quality assessed.
“As a pension provider, shining a light on how we ‘measure up’ on value in a transparent and consistent way is a major shift but one that we must all rightly embrace. This needs to be introduced in a well-planned and effective manner that aligns to government reforms, enables effective regulatory oversight and most importantly, instils greater confidence in the pension system for savers,” said People’s chief executive Patrick Heath-Lay.
Emma Douglas, wealth policy director at Aviva, said the ‘Pound for pound’ initiative offers an opportunity to test the key metrics of the value for money framework in advance and to learn from this, as well as from the Australian experience.
Zoe Alexander, director of policy and advocacy at lobby group Pensions UK, said: “We need clarity and evidence to establish the most effective data points for this new framework to ensure savers get the biggest bang for their buck, and to avoid excessive red-tape reporting. Though no system is perfect, there's a lot to learn from our colleagues in Australia about their value for money outcomes regime and we look forward to testing this in the UK context.”
The event on Tuesday was hosted by Torsten Bell and chaired by Heath-Lay and Douglas. The Financial Conduct Authority, the Department for Work and Pensions and industry lobby group Pensions UK were represented, along with several Mansion House Accord signatories and SuperRatings chief CEO Kirby Rappell.
People’s said that insights from Australia’s superannuation system were central to the session. The UK’s £4£ pilot draws on lessons from Australia, providing anonymised benchmarking reports to UK schemes and assessing how qualitative and quantitative data can be used to assess value.
What is the most contentious metric in the VfM framework?
