The Australian Regulator has produced a simple way for Australians saving into DC workplace pensions to look at their savings product and make a reasonable assessment of whether they are getting value for money.
They are not using the complex VFM frameworks beloved of IGCs or referring to the 31 characteristics of a DC scheme (as our pensions regulator would have us do).
The Australian Regulator cuts to the key components of Value for Money – what are you getting and what are you paying.
Having collated information from the limited number of workplace pensions ,
Unlike the feeble benchmarking going on the UK, this benchmarking names and shames failing schemes
The Regulator leaves these schemes (and those using them) in no doubt as to expectations of scheme managers
Australians are encouraged to engage with these issues and change their Workplace “Super” Scheme if they are not happy.
I guess if I was happy I would choose a performing scheme , using the comparison tool provided
Above are the performing schemes.
Below are the non-performing schemes.
Note the absence of mincing regulatory warnings about past performance not being a guide, note the absence of risk-adjusted metrics condoning poor-performance on grounds of “de-risking”. Note the absence of nuance – nothing here about quality of communications etc.
Why Brits loathe pensions
We loathe pensions because they are too complicated.
But who makes pensions complicated? Why do we have so many pension schemes? Why can’t we have common measures of value and money like the Aussies? Why can’t we make decisions on who manages our retirement money like the Aussies do?
I got an insight into how we have got where we are at yesterday’s Pension Playpen coffee morning
Here the conversation about value for money was couched in terms that were very comfortable for those on the call. Rona Train explained that small DC schemes can do things that big workplace pensions can’t – like knowing their members and dealing more personally with claims. Simon Grover spoke feelingly about the need to communicate with members better.
I asked the question “can we find a single measure for value for money” that allows members and employers to compare the schemes they are in. It appeared that this was too hard.
Next month, we expect to hear from the Pensions Regulator and the FCA about the FCA’s consultation CP20/9 which looked for a single definition of Value for Money so that employers and members could choose the right workplace pension for them.
I hope they are talking with their Australian counterparts.