Talk to most people about pensions and there are two things that matter, the amount coming out of the payslip and the pension they will get at retirement. The more savvy may talk about “pot” rather than “pension” but for most people “pot” equals a retirement income in later life.

Value for money for most people is not a measure of the service they get, most people have no interaction with their pension company/scheme till they near the point when they want their money back (which is a long way off for most people).

To suppose that value for money should be judged on the quality of interaction is simply playing into the marketing departments of commercial providers who can fight it out to lead league tables of interaction.  Service standards of providers are way down the things that people think about. What they think about is what kind of retirement they are going to have from the state pension (first and foremost) and their private pensions (supplementary). That is because people do not have any idea of what has happened to the money that went out of the payslip.

To me “value for money” is a way of getting people back in contact with their money, giving them an historic view of how their pension has done. This can be good news, bad news or not much news because it’s average.

What people have no idea about , is that there is a difference from Aon Master trust and NOW Master trust and that difference can make a huge difference to the amount of pension (or pot with an opt-out) they can have. I take these examples because NOW is traditionally bottom of any league table and Aon top.

But if you read what is put out be trustees and (for GPPs) IGC reports, you get a statement that says that savers are getting value for money. There was only one GPP IGC which ever said the workplace pension (Virgin stakeholder) wasn’t giving value.

Until we recognise that not every workplace pension is giving VFM , VFM will be a hopeless measure.  Unsurprisingly we have not found a way to report VFM in a way that matters to consumers

Well done Nick Reeves of Pension Expert.

Actually, people aren’t interested in how their pension provider is doing, they are interested in how their money is doing – what it’s going to buy them as a pot or a pension.

It seems that another version of the Trustee/IGC report from the data reported by providers isn’t what people want, I know what I want and I made it clear at a meeting in Manchester , I want to know how my money has done, what I will get for the money paid to the providers by my employer (including by me by way of deduction.

It is not the pension provider we are interested in, it’s how our money had done. If we get an objective report on how we have done, we can then take action – to whoop or sit tight or moan, those are the thing that people do when they’ve worked out what’s happened.

The only way to tell people how they’ve done is to look at the data kept on their contributions, work out what has been paid and when and then work out the return that each person has got. That sounds pretty hard (Nest now has more than 14m savers) but it’s not. Nowadays it’s simply a mechanism that processes millions of numbers and produces a report that can be consolidated into a few simple numbers of interest to the Trustees or IGC (how everyone in the scheme did), to the employer (how everyone who works for me did) or the saver/member (how I did). And if people knew how other schemes, staff or individuals just like theirs did, that would be fine.

But of course there is no way of putting together a league table of how schemes/workforces or members from how they’ve done unless there is a benchmark. If you have a benchmark price track which people’s payments can be paid, you can get a benchmark pension or pot that each person gets. Compare the benchmark pot or pension with the achieved pot or pension and you can see if that person, group of people or total membership have done.

If everyone is using the same benchmark and the same method of testing performance then there is a universal way for everyone to see how much value they’ve got for their money against everyone else. You can even use an algorithm to convert the difference to how you have done with the benchmark average. You can give that comparison a number which is rather more exact than traffic lights and rather less subjective and complicated than what the FCA has just thrown out!

Value for Money to most people is simple;

“money saved v pensions paid”!