Occupying 5 pages of a 120 page consultation, chapter 5 of the FCA’s VFM report is odd. Though the FCA will require disclosures from contract based providers – on how defaults are invested, these disclosures will not form part of the IGC’s VFM assessment.

Instead , disclosure is intended to allow greater comparison across industry, so firms and IGCs can better assess how an arrangement’s asset allocation might be adjusted to produce the best results for savers.

I doubt that the regulator, the provider and the saver really believe this is the primary purpose of disclosure. The primary purpose is surely to name and shame providers not moving to best practice and to promote providers who are.

The eight asset classes to be disclosed include categories of assets that few GPP defaults have any exposure to

I can see a lot of zero returns towards the bottom of the form as insurance companies struggle to include expensive assets within investment budgets that are typically less than 0.1% of the assets under management.

But it is not just cost, it is expertise. The major insurers have at best arms length agreements with their investment teams – often they have no fund manager of their own and operate on fund platforms that are shared with a wide variety of the insurers clients.

Building products specifically for the GPP default is unlikely. Only Royal London offer a GPP as a flagship workplace product and Royal London are principally concerned with the non-workplace pension market – which is not covered in this consultation.

So it will come as a shock to many insurers that the contract based workplace pensions, which were their flagship products prior to the advance of master trusts , are now going to have to disclose to this degree of detail.

UK v non UK –  currency hedged and unhedged

There are here political issues at play. It is well known that the majority of defaults invest the bulk of the default in either hedged or unhedged market weighted global equity funds where the money tracks listed indices.

This means that allocations to UK stock markets are less than 10% of the growth portfolio and can be less than 5% of the portfolio as a whole.

This is not just about the returns to members, it is about the return to the tax-payer who will be able to see for the first time , what the £48bn a year of tax foregone to incentivise pension investment is buying.

Unless there is a wholesale shift towards the kind of productive assets envisaged in the Mansion House agreement (and itemised in the boxes towards the bottom of the table) , providers will start looking politically exposed.

Scrutiny extends beyond the asset allocation to include the currency hedging strategies of the providers. Do they use the risks and rewards of world currency as a diversifier or to they rely on the assets to diversify and immunise by paying a premium to hedge? It’s an awkward question for those who hedge, suggesting that there is a fundamental trust in overseas markets which does not exist for the UK.

The little and large picture

The bulk of the chapter deals with detailed questions of definition which I don’t have space to go into here (even if I properly understood the implications of  “double counting”, “synthetic exposures” and of whether an investment on the AIM UK market is “listed” or not. The answers to these questions will be determined by experts in these fields, this is not the stuff of a consumer or even employer facing VFM standard.

Little things are important as Dave Brailsford taught us, performance is an aggregation of 1% wins. Consequently, the minutiae of asset allocation helps us understand the attribution of out and under performance and the story behind the big numbers that go into VFM reports.

But the really big picture, the view of what pensions are really up to, is the view that is taken by Government and in particular the Treasury. Disclosure of the allocations via the table above will enable those who are considering Value for Money from the point of the taxpayer’s £48bn annual spend.

While these disclosures don’t form part of the VFM framework, it will be central to the Government’s view of who is providing them with value for our money.