Lizzie Holliday worries that the cost of measuring value for money might outweigh its value.  If I were Lizzie I’d keep my head down and look for a better job.

Lizzie works for NOW pensions and I wonder if the cost of the value for money framework for NOW will be measured in closure for new contributions and ultimately a requirement for the scheme to merge.

Since it has opted to make its second systems change (from new-owners Mercer to Tata) and since it now operates on the same system as Nest, I can foresee the direction of travel.

But high as the cost of measuring VFM at NOW might be, those whose pots have been diminished and employers who have suffered NOW’s dismal admin are the real losers.

I read with incredulity that rather than lament that the long arm of the Regulator is finally catching up with NOW, NOW is advising the DWP that measuring NOW’s net performance and service standards may not be a good idea,

But whatever the final detailed metrics, the VfM framework must drive more value for members than the additional costs such a framework adds. The system is seeking to create potential additional value, for example, by driving competition led reduction in costs and charges, increased investment returns and opportunities, plus consolidation efficiencies.

Potential additional costs arising from the framework include reporting, assessment and publication, effects of herding, transfer and wind up, time and attention diversion costs. There is also a potential cost from reduced competition and innovation – depending on how consolidation plays out. Not all providers serve all employers. Therefore, it’s important that consolidation doesn’t create an oligopoly or reduce choice and competition too far within the various defined contribution segments of the market.

The extent of this additional value and costs is not yet clear.

There is rich irony here and I will not tease out all the inconsistencies. NOW are consistent only in delivering relegation zone returns on their saver’s pots and dismal customer service ratings. They arrived in 2012 promising us the benefits of their Danish parent ATP’s  market experience. This turned out to be a fiendishly complex investment proposition that sort to hedge out most of the sources of return available to UK pension savers. This limited the upside of their savings without providing much in return.

NOW has underperformed its competitors for so long that even if it could find a way to make its complex strategy work, it would leave most of its long-term savers with a substantial loss relative to savers using Nest, People’s , Smart and Cushon (their peer group). It can face only one outcome from the implementation of the VFM Framework and that is extinction.

The best thing that Mercer, NOW’s latest owner, could do for it would be to sell it while it still has value. If it returns again to special measures it will have all the appeal of a an ageing footballer out of contract.

If the VFM framework is to have any credibility , it should call NOW out as the basket-case it is. For NOW to be preaching to Professional Pensions’ readers about the negative impact of us measuring pension schemes for what they deliver, takes some gall. If I were Lizzie I’d keep my head down and look for a better job.