Q1:Do you agree with the proposed scope, thresholds and exclusions? Why or why not? If not, what alternatives would you suggest?
We have agreed in the past that the current purpose of VFM is to help employers and trustees assess the value of the workplace pension. In due course we hope VFM will extend to cover decumulation (including annuity and DC/DB conversions using capital backed pensions. In due course we’d like to see non-workplace pensions included. But for now, the inclusion of contract based workplace pensions in scope is a step in the right direction. We agree that EPPs should be excluded. We agree with the 80% usage definition for quasi-defaults on legacy workplace pensions. The 1000 member rule should apply to legacy but occupational pension schemes should not be exempt. . Pension Bee advertises itself as a SIPP and has a weak default (the BlackRock Flexi LifePath). I think Pension Bee would welcome being part of the VFM framework and should be approached to do so on a voluntary basis. If it does, smaller variants will follow.Q2: Do you agree with the proposed application of the 80% threshold to determine whether legacy arrangements are quasi-defaults? Why or why not? If not, what would you propose? 
As mentioned above, I do. Where choice architecture is creating a quasi default with >80% of savers. We note this is not 80% of the weight of money and relates to the weight of decisions not money

Q3: Do you agree with the proposed 1,000 member threshold? Why or why not? Do you think there are risks around this level, for example excluding too many savers? If you don’t agree, what would you suggest?
I do agree with the 1,000 member threshold. In practical terms, much can be done by occupational pension scheme trustees, not much can be done by IGCs about legacy DC schemes (without member consent) Occupational pension schemes can be wound up without member consent. More can be done by IGCs to improve legacy contract based plans and I will continue to urge them to do so with my IGG and GAA reports on henrytapper.com.

Q4: Do you agree with the proposed investment performance metrics? Why or why not? If not, what alternatives would you suggest? 
I agree with the principal but not the practice. People should be able to compare past performance with reference to what their workers or members actually get. Those who argue that only forward looking metrics count are asking us to speculate. I am of the view that the asset allocation adopted by a default should be a good predictor of future outcomes but to move to this metric would allow workplace pensions that have undelivered to phoenix. Savers demand accountability.Q5: Do you agree with the proposed calculation methodology? Why or why not? If not, what alternative methodology would you suggest?
Net investment performance is the key metric but in DC we should be measuring what members get. This can be easily calculated by using the Internal Rate of Return on a member’s pot. This is calculated by comparing the current pot value with the timing and incidence of contributions.

AgeWage has pioneered a means to convert member data into IRRs and has done so over 10 million times. Not only are IRRs easy to calculate, they are easy to understand and measure outcomes rather than fund performance. DC defaults can be complicated, IRRs simplify the process and make VFM something that empoyers and trustees find easy to understand.

The main reason IRRs have been rejected so far is because pension schemes say they are too hard to calculate. We would be happy to help them do this at no cost, using a simple program that can be integrated into any record keeping system. Right now, the calcualtion methodology proposed is complex and does not provide easily comparable metrics. It needs simplification to an intuitive metric that tell employers and trustees what workforce and members are actually getting. We can point to many IGCs who have successfully used IRRs and our benchmarking system

Q6: Do you agree with the proposed requirement for chain-linking? Why or why not? If not, what would you propose?
Chain linking is an unfortunate consequence of not measuring outcomes using IRRs. Provided that data is available to measure to the start of a scheme, there is no need to chain-link using IRRs. Chain linking will add cost to schemes which will ultimately feed through to poorer value for money.

Q7: Do you agree with the approach to in-scope legacy arrangement features? Why or why not? If not, what alternative approach would you suggest?
I agree with the legacy arrangement feature – see above

Q8: Do you have further feedback on the incorporation of forward-looking metrics within the Framework? If included, how prescriptive do you think we should be on assumptions and methodology, and what would you propose?
A firm I am associated with is about to launch a long-term assets fund investing in private markets. Based on back-testing, this would substantially improve IRRs, even with much higher charges than a comparable listed equity fund. I note the inclusion of asset allocation information in chapter 5 of the consultation and assume that the Government are planning to take consideration of “intent” of providers based on SMPI style projections using roll-ups on assets that are based on agreed returns. We would encourage Government to pursue such a course of action (rather than mandating allocations to productive finance).

Q9: Do you agree with the approach to asset allocation disclosures? Why or why not? If not, what would you suggest? Do you think asset allocation disclosures will support better decisions in the interests of savers?
As mentioned in Q8, we do agree with the inclusion of asset allocation among the disclosures. We suggest that they are a first nudge towards stronger steps.Q10: Do you agree that asset allocation disclosures should be limited to firm designed in scope arrangements only? Why or why not? If not, how would you broaden this requirement and to what arrangements?
“In scope” should mean “in scope”. There are arguments that DB schemes and non-workplace pensions should follow suit but not a good one. Workplace pensions do a common job – provide a pension to people when they get too old to work. This commonality means that there should be consistency in asset allocation. Where schemes choose to be outliers to the herd , they should have to justify why and use that justification positively. If schemes cannot properly explain why they are not adopting standard practice, then regulators , employers and trustees should be nervous. We need to consider asset allocation as critical to choosing workplace pensions.

Q11: Do you agree that we should require the disclosure of the overall asset allocation of the whole arrangement, as well as for the YTR points? Will this be of use to firms, and will it be an added burden to disclose?
On balance, we think that schemes that involve dynamic asset allocation – lifestyling etc) , should be able to report on it. The phrase “if you can’t measure it, you can’t manage it” – applies.

Q12: Do you agree with the proposed definitions for UK assets? If not, what would you propose?
I agree with the definitions.

Q13: Do you think we should break out ‘Quoted but not listed’ (eg AIM) and if so, how would that be useful? Would there be additional cost to doing this and can you indicate how much?
I like the use of Quoted but not listed – for smaller companies using AIM. These are on a journey to full listing and if there is intent to reward allocations to growth stocks, then this definition helps.

Q14: Do you agree with the proposed costs and charges metrics? Why or why not? If not, what alternative metrics would you suggest?
It’s been argued by some commentators (Callum Stewart when at Hymans for instance) that quoting charges is unnecessary and that we should be simply quoting net performance (by IRR). I still think that reduction in yield from charges is a useful measure. It gives an idea of the hurdle that a member’s fund will need to clear to meet anticipated outcomes. Charges are one risk that can be managed and taken off the table. Work from Chris Sier of ClearGlass suggests that there is scope for renegotiation of IMAs to get best rates, so long as pricing advantage is passed on to savers, then VFM should improve as a result of full disclosure. Without charge disclosure, savers could be gamed.Q15: Do you agree that historic costs and charges information should be calculated in the first year of implementation, rather than waiting for this data to build over time? Please explain your answer. If you do not agree with either approach, what alternative would you suggest?
It should be published immediately. We don’t want aspirational pricing.

Q16: Do you agree with our proposed approach to converting combination charging structures to annual percentage charges? Why or why not? If not, what alternative would you suggest?
Anything that simplifies and makes for better decision making should be encouraged. Though why stop at converting combination charges into AMCs? Why not measure net performance properly – using IRRs

Q17: Do you agree with the proposed approach to unbundling? Why or why not? If not, what alternative would you suggest?
We strongly support the unbundling of service costs and investment costs. Firms which commit the bulk of their AMC to the investment budget are (subject to good price negotiation) likely to be prioritising return. High servicing costs are likely to hide hidden margin to providers.

Q18: Do you agree with the proposed approach to multi-employer cohorts? Why or why not? If not, what alternative would you suggest?
AgeWage has used the results of this approach (when used by Aegon’s IGC) to help Aegon’s clients understand their AMC relative to their peers. Sadly, most IGCs have not followed suit but I think this approach is really helpful – especially for contract based schemes which tend to have AMC only charging structures.

Q19: Do you agree with the proposals on scope? If not, what alternative approach would you suggest?
An approach needs to be adopted and this looks as good as any I have seen. i am pleased to see that the FCA has not fallen for the “engagement” argument where soft measures such as trust pilot scores are promoted to suggest high quality service. I have seen many poor quality arrangements with high qualitative scores and don’t trust them as far as I can throw them. Soft factors are easy to fiddle and generally distract from the matter in hand – good outcomes.Q20: Do you agree with the five proposed indicators of service quality? If not, what alternatives would you suggest, with metrics?
As mentioned in 19, they are as good as any. These measures are onerous and will probably be more relevant to the IGCs , GAAs and the FCA. But if turned into a RAG score, they will add to the other RAGs.

Q21: For each of the five proposed indicators, do you agree with the proposed metrics for measuring these? If not, what metrics would you suggest? We would particularly welcome views on these metrics.
I am happy for the proposals to measure in this way. I don’t underestimate the time taken to work this out or the time that will be needed to properly complete the tables. The FCA should reserve the right to do spot-checks on the results.

Q22: Do you agree with our proposal to include a non-employer related email address and phone number when defining common data? If you don’t agree, please explain why not.
Very much so. An alternative would be for the saver to include their linked in profile URL as these tend to be backed by the latest email address. Very few Linked in profiles are abandoned. For those who don’t’ use Linked in , Facebook is another alternative. Email is of course behind most social media.

Q23: Do you agree with our proposals for an event-based member satisfaction survey? We would particularly welcome feedback on the trigger events and proposed questions.
Yes I do. Key trigger points are joining , deferral and claim (pension – death – transfer)

Q24: Do you think that a firm should be able to provide a saver specific view of access to tools and saver use across its digital offerings? If not, what metric would you suggest?
I think that this is nothing to do with Value For Money, it is a marketing issue for providers.

Q25: Do you agree with our proposed conditions for the selection of comparator arrangements? If not, what would you suggest?
The market will pick up on these scores and organisations such as Corporate Adviser and Professional Pensions are likely to collate league tables. These will be syndicated to the national press. It is much better to allow external organisations to publish this information than to leave it to providers. IGC experience suggests that left to their own devices, IGCs will bury bad news between themselves.My suggestion is that rather than use selected comparators, the long term aim is to create league tables that don’t allow IGCs and GAAs to choose its competition

Q26: Do you agree with the assessment process we have outlined above? Do you have views on what should be considered a material difference in value relative to comparator arrangements? If you think that RAG ratings will not be sufficiently comparable, what refinements would you suggest?
I think a RAG mark suffices for most people. A simple distribution of scores with a third a third and a third getting red, orange and green will suffice. The “choose the competition” approach is too easy for IGCs and GAAs to game. The FCA could and should group types of providers and ensure that mini-leagues develop. The granting of RAGs should not be discretionary but based on distribution of quantitative data.

Q27: Do you agree that a multi-employer arrangement should be rated amber if it fails to deliver value for a material number of savers in relation to at least one employer cohort? If not, what would you suggest?
I suggest a much simpler means of granting RAGs – not based on something as arbitrary as a “material number of savers” but using a simple distribution of scores so that a certain proportion of scores are red, orange and green. I have seen where discretion has taken the IGCs and GAAs and generally it has led them to side with their providers. If we are to have a VFM system, it must be seen to be fair and not be allowed to be gamed.

Q28: Do you have any concerns about our proposals for assessing bespoke in-scope arrangements? If you do have concerns, please explain them. If you anticipate negative effects, what can be done to address those?
The temptation is to allow failing schemes to declare themselves “bespoke” and sidestep evaluation. In scope arrangements should be measured consistently and not be granted exemptions. I am aware that there are some schemes that adopt investment strategies on an ethical basis that do not offer conventional value for money. It is for them to argue for special status but they should be granted it by exception.

Q29: Do you agree that IGCs should consider and report on whether their firm’s current scale may prevent it from offering value to savers? If not, what would you propose?
If a scheme is not at scale then it needs to explain how it is likely to get to scale, if there is no business plan then it can be assumed that a failure to deliver value for money will continue. If a sub-scale (eg growing scheme) is not providing VFM but has a business plan that suggests it will , the IGC may mark it with a “p” – this is what happens with improving horses who may not be winning today but are rated as likely to do so. But such an assessment should not change the VFM RAG rating.

Q30: Do you agree that IGCs should consider how ESG considerations have been taken into account across firm-designed in-scope arrangement? Do you think this is sufficient and if not, what would you suggest?
ESG considerations should be baked into member outcomes. If investments are not being managed for sustainability, it is likely that the investment management is poor and this will be reflected in performance. ESG should not be a discrete VFM factor.

Q31: Do you agree that firms should inform employers of amber and red ratings and proposed steps to address the poor value, where an employer’s current and past employees are at risk? If not, why not and what would you suggest?
Of course they should. This should not be discretionary, it should happen to all employers whether the employee’s are at risk or not. All employers should get their RAG rating and if this has to be delivered as “stage 2”, so be it. Employees should eventually be able to see RAG scores against the pots they view on the pensions dashboard.Q32: Do you agree that firms should not be allowed to accept business from new employers into an arrangement rated amber or red? If not, why not and what would you suggest?
I think the sanctions applied to scheme in amber and red measures are right. I worry that IGCs and GAAs will not find it within them to give their provider anything other than a green rating. In 8 years of assessing VFM , I have only seen one IGC report that would have rated the provider red and maybe two or three that could have been rated amber. I do not think that

Q33: Do you agree with our proposed actions and timings for firms with arrangements rated amber or red? If not, what alternative approach would you suggest?
I like the sanctions and agree with the timetables outlined in the consultation paper.

Q34: Do you think that we should require firms to transfer savers out of red-rated arrangements, subject to enabling legislative changes? What are the costs associated with the proposed actions and are they proportionate? If you don’t agree with our proposed actions, what would you suggest?
I think that bulk transfers should be mandatory. This will require enabling legislation which I hope would be in the Pension Schemes Bill (act) so that occupational and contract based schemes treat savers the same way.

Q35: Do you think that requiring transfer from arrangements could benefit one group of savers to the potential detriment of others? If so, please explain and can you suggest an approach that doesn’t risk detriment to some savers?
The older the member, the more they will have been exposed to poor performance. Younger members will have been affected less. There is no reason to delay anyone’s transfer. I don’t think we will see cohorts of members advantaged/disadvantaged – bulk transfers should treat everyone the same

Q36: Do you agree with our proposals for how Chair’s annual reports should be expanded to include the results of VFM assessments? Are there any proposed elements that in practice would not be useful?
I agree that Chair statements should be expanded to include upgraded VFM statements. In time I would like IGC and GAA chairs to publish league tables showing where their arrangement sat against other workplace pensions.Q37: Do you agree with requiring a narrative explanation for the RAG rating for all firm-designed in-scope arrangements including those rated green? Do you think this requirement should be limited to amber and red ratings?
Yes, a narrative from the IGC is helpful, so long as it doesn’t turn into a lengthy explanation of why a scheme is green (eg marketing blurb)

Q38: Should IGC Chairs be required to produce a plain-language summary of their reports?
No – their report should be plain-language in the first place. I report on the readability of IGCs , over time you recognise that some IGC chairs can do this and others can’t. I expect that all reports will ultimately be written by Chat GPT

Q39: Do you agree with the need for a features table and the contents we are proposing? Are there changes we should consider? Do you think that the disclosure requirements for bespoke arrangements should be different and if so, in what way?
No! The less space is allowed for IGCs to promote “features” by way of mitigation for poor performance the better. An explanation why a bespoke arrangement is exempt from assessment had best be agreed with the FCA in advance and not a matter for IGC/GAA judgement.

Q40: Do you agree with our proposed approach to publication including requiring publication of a flat file? What other solutions would best support the aims of the Framework in due course?
The publication of a flat file would be helpful to those using the data professionally (journalists , consultants and regulators). We want to be able to see data that can be managed into comparative tables to allow employers, trustees and finally savers – the chance to take informed decisions on their workplace pension provision

Q41: Do you think we should require machine-readable RAG ratings and potentially other information from IGC Chair’s annual report? What do you think are the benefits and costs or possible negative effects of this?
Machine readable everything please. AI will be able to pick up most of what is needed in time, we only have a need to publish data for a limited time.

Q42: Do you agree that the proposed new rules should be under existing requirements for IGCs, with carve outs as appropriate? If not, what alternative approach would you suggest?
The IGC /GAA framework isn’t perfect, but it is in place and this work could and should be the making of these fiduciaries.Q43: Do you have suggestions for further amendments to existing requirements for IGCs and if so, why do you think these are needed?
I have no suggestions beyond those within this consultation

Q44: Do you agree that we should exempt “accidental workplace SIPPs” from COBS 19.5 and the requirement for an IGC or GAA? If not, what would you propose?
I have read a few proposals from accidental workplace pensions (SJP/Pension Bee etc). I think it should be at their discretion whether they wish to participate in the VFM framework.

Q45: How do you think the use of data will evolve and what other measures may be needed?
As discussed above, I would like schemes to move to an IRR based performance measurement system with appropriate benchmarks (being the typical IRR for the given data set). The member’s outcome should be measured over the entirety of saving and cuts of performance produced to understand whether dynamic allocation (lifestyle) is working.I would like to see RAGs on the pension dashboard in time. Every consumer should know the VFM of what they are saving into

Q46: We invite views on the roll out, evolution and future phases of the framework, over what time periods, and on the correct sequencing of these developments.
I would like to see performance measurement for drawdown arrangements (again based on IRRs). We have done quite a lot of work on this already and note the wide variety of returns created by different investment strategies. I would like to see drawdown benchmarked against annuities and scheme pension conversions.*

This should be next in the sequence and the inclusion of non-workplace pensions should follow.

Dissemination of VFM scores to savers should be the third sequential development.