Note to pension schemes; “Non-Compliance = Non-Existence”.

By emailing, you can tell Darren and Nico how long their podcasts should be, you can see that their latest opus (13) weighs in a full 12 minutes shorter that last week’s epic with Mike Berners-Lee (12).

I think there is an optimum length for a podcast which is around 30 minutes for most people but longer for enthusiasts (like me). But the key to maintaining interest is to be on point and my criticism of last week’s was it was both too long and lacking in focus.

My breaking news this week is that putting “VFM” into the headline of my blog reduces readership by around 80%. So far, the VFM debate is not exciting even my super-engaged readers. If you feel hood-winked by this week’s headline read on – and then listen to the podcast 13.

Like ignoring consumer duty, ignoring the VFM does not make it go away.

Back to pensions

I’d urge you to listen intently to the debate that follows Mark Austin’s news , four minutes into the podcast that only 17% of small DC pension schemes have  complied with TPR’s dictate that they conduct value for money self-assessments. Feedback to Nico and Darren, this is precisely what I tune in for.

Like most people apart from Michael Klimes of Money Marketing and Mark Austin of Northern Trust I had missed this story

Under the regulatory initiative, TPR will be checking that trustees of DC schemes with assets under management of less than £100m comply with new value for member (VFM) regulations that came into force in October 2021.

The move follows a survey of DC schemes carried out by TPR last year that found just 17% of schemes required to complete the new value for members assessment had done so.

And that 64% were unaware of this statutory obligation.

This is a truly shocking set of statistics. Incoming CEO Nausicaa Delfas, will need to put this high on her “to fix” list. Small wonder that the DWP has taken on the VFM framework.

Delfas comes from the FCA where

Non-Compliance = Non-Existence

The only thing that moves the dial on engagement is “bad-news”

Having introduced the bad news that small DC pension schemes aren’t listening to the Pensions Regulator, Mark Austin suggests that the best way to engage staff is to talk about the “bad news” from their pension.

Do a seminar on why a property fund is gated or why the default fund has lost 15% of your pension and you are going to get a wider and more engaged audience than if you rock up to explain why everyone should be saving more money.

Perhaps the best way for TPR to engage with its audience is to give them the bad news; it is the same news that the FCA is giving those it authorizes with regards the consumer duty.

Non-Compliance = Non-Existence

Custody = control , flexibility , speed and transparency

There followed an excellent pitch for the custody rather than life platform approach to managing DC assets followed.

We often talk about the economies of scale that are created by master trusts getting bigger, but too rarely do we look into how these economies arise. One way is that at some point trustees of larger DC schemes can move away from life platforms and grab the control , flexibility, speed and transparency of the custody approach. Nico has written well on this.

Is value for money too subjective to be standardized?

If the end-point of the VFM framework is, as Mark Austin suggests it should become – (valuable for savers) – then we might answer answer the headline “yes” as “value is in the eye of the beholder”.

This is the problem that the DWP has made on the  VFM framework , it has purposefully turned its back on the saver (for now) and focused on making adoption compulsory for providers (trusts and contract based schemes) and consequences mandatory

Non-Compliance = Non-Existence

Failures of the institutional system

The failure of occupational pension schemes to justify its existence by explaining that it is delivering better outcomes is a point made very well by Nico.

I think we are back on the same page when we conclude that retail consolidators are winning the battle for people’s hearts, minds and money, through making this point better.

And we are probably on the same page in saying that pound for pound, there are economies of scale in industrial sized workplace pensions that should deliver better outcomes.

Forward looking or backward looking metrics?

Surprisingly, (and happily), Mark Austin endorsed league tables on past performance with Regulators playing a large part in deciding who is relegated to compulsory consolidation.

The VFM framework requires trustees to post the RAGs of their pension schemes on either a centralized (DWP created and maintained) website, or a decentralized (open source and privately maintained dashboard). Either way, I would hope that any employer sponsoring an occupational DC scheme that did not green on its “Red- orange- green” metrics, would be asking why they were bothering to pick up the Trustee’s expenses.

The DWP may yet allow achieved performance to be trumped by a forward looking measure which could turn red to green with the flash of a marketeer’s pencil, but I doubt it.

Value for money is not too subjective to be standardized. Trustees and IGCs have got to accept they will not be marking their own homework and the people who pay their expenses have some tough decisions ahead if the traffic lights show red or amber.

Non-Compliance = Non-Existence


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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