Speaking at The Investing and Saving Alliance’s Annual Retirement Conference on February 9, Louise Sivyer, TPR’s interim head of policy, listed value for money as a top priority for defined contribution schemes.
TPR has been working with the Financial Conduct Authority to “try to design a framework for measuring value for money in a consistent way right across the pensions market”, she said.
TPR and the FCA published a discussion paper on value for money last September, which suggested ways of forcing DC schemes to disclose more data around investment performance, scheme oversight, and costs and charges, with the aim being to create an “holistic framework” for assessing value for money in the sector.
“This is a big focus for us to try and get this consistent approach, so the people who are running pension schemes […] have a good view of how their schemes are performing relative to other pension schemes in the market,” Sivyer noted.
She added that the regulators’ value for money push compliments other initiatives, such as consolidation, as well as the move to encourage more investment in illiquids and other alternative assets, moving away from a restrictive focus on costs and charges towards a more “holistic view” of value.
Asked whether the regulator’s aim to establish industry-wide benchmarks to allow schemes to compare their performance against their peers would lead to the implementation of league tables, Sivyer said that these were an option, albeit not one TPR is currently “leaning towards”.
“We’re not specifically looking at listing names of schemes,” she explained.
“I think what we were wanting to look at initially is making sure that we’ve got consistent disclosure of the metrics, […] so that people can see where they sit and [where] they ought to be providing better value for money.”
There would be “a lot to think through” before the introduction of league tables as they can have “unintended consequences”, Sivyer continued.
TPR would “want to go through a period of developing a position on that, but it’s an option that is there to think about.”