I find myself in agreement with Aegon’s Steven Cameron in his position on the FCA’s value for money proposals as reported in Pension Age
Steven Cameron, has highlighted concerns with proposed responsibilities for Independent Governance Committees (IGCs) in the Financial Conduct Authority’s (FCA’s) Driving value for money in pensions consultation.
Specifically, Cameron warned that the proposal for IGCs to carry out comparisons at individual employer level and to inform employers where they believe better value for money may be accessible elsewhere was “not realistic”.
He noted that the change would involve “significant complexity and huge extra cost” if it was agreed to and employee benefit consultants and corporate advisers would be better placed to shoulder the responsibility.
IGCs are not resourced to carry out VFM assessments for every scheme variant within their books of workplace pensions. The only people who could do this would be employee benefit consultants and corporate advisers and that would be at huge extra costs to employers who have no intention of shouldering huge extra costs for no clear benefit to the corporation.
Infact the cost of measuring value for money , either the DWP way or the FCA way will never be justified by the value until we have a standardised system of measurement, Which is where I again agree with Steven Cameron.
“For any comparison or benchmark to be helpful, it must include the key elements that improve member outcomes, objectively comparing like for like, while avoiding scope for misinterpretation. A poorly designed, incomplete or subjective approach could do more harm than good.”
It is time to ditch the old subjective value assessment and install a system of diagnostics that objectively measure what is going on within these employer schemes. When I consider the value I get from my car , I do not refer to the manufacturers claims for performance and fuel consumption, I check my own experience. The diagnostics on my car tell me how efficiently my engine runs and I can assess the quality of service I am getting because everything I need is provided me on a simple dashboard which costs me nothing.
The MPG assessment my car gives me – is based on my car’s MPG. The performance of the car is expressed by the speedometer and the quality of service given by my motor is gauged by the state of my back when I get out of the car. In short, I get a report on the value I am getting from my car every time I drive it. I do not need to pay a lot of money to compare my car with my neighbour’s, I just need to share a ride.
We are making VFM very difficult when it is very simple and I will keep saying so to whoever I can – thank you for reading
Spreading the word!
Tonight I will be discussing this at the Pensions NetWork with Kim Gubler and Mick McAteer. Early next month I will be discussing this at a round table with the Pensions Ministers , leading civil servants and people keen to establish a standard way of assessing value.
This is one of the key issues of our time. If we can get employers and employees engaging with the value they are getting for the money they put into pensions , then a lot of good things could follow. But the means to do this must be both engaging and value for money to those who pay for the assessments.
My car tells me the value I am getting from it and that is what matters to me. Simple data analysis made available to everyone on the value they are getting from their pension could be as freely available as my auto’s diagnostics.
What is holding us back? Why the reluctance to embrace the data within the employer schemes Steven Cameron talks of? There is only one thing – we face the dark hour of innovation with dread. But that dark hour, is the hour when the innovator is working hardest!
I very much hope that Steven and I can have a conversation!