At the end of the Pension Minister’s rambling confession at the PLSA’s conference yesterday , he was called to dish out awards to the three occupational scheme which had got the PLSA’s new “Retirement Quality Mark”. The three were all commercial mastertrusts. One is the Nations Pension (Xafinity), another the Lifesight master trust (Willis Towers Watson ) and the third’s the L&G master trust.
It is hard to escape the conclusion that the RQM is just another way for the PLSA to make cash for kite marks – an extension of its range of commercial activities devised to denude employers and their advisers of money that might otherwise go to people’s pensions.
The Retirement Quality Mark is running a ping pong table on its stand at the PLSA exhibition and its website boasts events that include afternoon tea parties.
More sporting exploits. @RoyPorter_ beats @darren_philp 11:3 at table tennis… #PLSAannual @ThePLSA pic.twitter.com/plQfBOztN8
— The People’s Pension (@PeoplesPension) October 19, 2016
Enough said.
How many new PQMers were there this year?
While this is all very creative it is not very productive. There is no mention on the website on how much cash you have to fork out to get RQM accreditation. If it’s anything like the cost of PQM, PQM ready and the soon to be launched PQM distinction, then it will be too much for most non-commercial schemes.
The point of these kite marks is outlined in the PQM FAQs , the point is laudable- it should increase confidence in the pension scheme. But the PQM is not being taken up – as far as we can tell from its website and the absence of PQM newbies on stage, there are no new PQM’ers this year.
Cost
The question of cost is an interesting one. The PQM website does not tell you the cost to apply and get PQM and clearly you need to add in internal management time to that overt amount. Reliable sources tell me that the cost of getting PQM is around £18,000. I don’t know whether this cost includes the marketing paraphernalia itemised below!
Pension Schemes have long been healthy trees to tap for sap. But pension schemes no longer have surpluses and defined contribution schemes often don’t even have marketing budgets. The employer struggles to absorb the extra costs of including new workers into the scheme (from auto-enrolment) and may be less than keen to sign up to a quality mark that ties him to an ongoing maintenance expense that includes a commitment to a high level of contributions for both staff and employer.
We know of at least one UK PLC which has withdrawn from the PQM because of the restrictions it places on its overall reward strategy.
But the problem for PQM is not the hard core of PLSA members who will pay cash for kite marks, but the legion pension schemes – trust and contract based, being set up for auto-enrolment. Of the quarter of a million employer arrangements set up this year, not one appeared on the PLSA stage yesterday.
The conclusion is that employers are ploughing every available penny into the funding and operation of the workplace pension and side-stepping the opportunity to pay the PLSA to tell them what a good scheme they have.
They are also ignoring the opportunity to buy at the PQM Shop where a free standing acrylic trophy can be yours for only £150
£150 (+vat!)
PQM under threat?- Perhaps it should be.
The PLSA has announced its intention to do a comprehensive governance review so it can remain (become?) relevant to the UK pension schemes it serves.
I would suggest that it looks particularly closely at the various kite marks it is selling and ask itself whether they are doing more harm than good.
Employers need to know they are buying the right thing for their staff. Staff need to know that their employers have done the right thing for them. They can ask an IFA who will refer them to a Defaqto rating or they can ask the PLSA – who will refer them to their own pension ratings site https://www.pensionsolution.co.uk/.
Other comparison sites are available but – as far as I know, none use the PQM or RQM or PQM plus or the PQM distinction award – to tell whether what they are buying really offers value for money. Of the 4000+employers who have signed up to workplace pensions via http://www.pensionplaypen.com , not one has asked about any of these kite marks in their due diligence.
Value for Money
Value for Money is what Trustees and Employers and workers should be looking for, from the pensions they run/buy/invest into.
Value for Money is something that IGCs and Trustees must consider by law. It is part of the Pensions Regulator’s and the FCA’s requirements to run a workplace pension. You can find out whether your trustees or IGC thinks you are getting VFM by reading their 2016 Chair Statements. If it subsequently turns out that you have got no value for money, you can point to these statements and ask what went wrong. You can hold your trustees or your IGC to account.
These governance mechanisms are there to help the consumer and they are doing so. Every master trust, single employer trust and GPP being used as a workplace pension has to issue a value for money statement once a year.
This is the way forward. Instead of spending a lot of money buying kite marks, employers should use every penny to pay their staff and pay their staff’s pensions into schemes that are Value for Money.
The RQM tea party
My concern with PQM and RQM is that it smacks of sending in three tops of cereal boxes and a postal order in order to be the proud owner of a piece of acrylic by having shown that you ticked a few boxes along the way.
The SME’s I see don’t know about these awards and they are more concerned in ensuring that something they know little about is fit for the purpose of providing a future benefit for their members. How much will this cost the staff? is the frequent question and whilst on it’s own it certainly is not the answer to the Value for Money question it is at least a place to start from.
Everything else is simply a distraction.