David Butcher says his goodbye to his appearance this week, with his assessment of what the VFM Framework is doing

“It’s a masterpiece of analytic thinking but there is zero of emotional thinking in there”.

Having spent a morning watching freestyle skiing  and listening to David, I spent the afternoon out on a walk listening for 95 minutes to Darren and Nico trying to make sense of what Robin Ellison has called a “masterpiece of dross“.

It is a very good listen with Nico doing most of the talking and Nico tagging along with good humour. The trouble for Nico is that the VFM Framework exposes everything that has been wrong with the Framework when it was announced in 2017. It is not measuring a pension , the Framework measures the accumulation of money in the  remaining 12 commercial mastertrusts that matter.

A demonic punishment awaits the DC pension that falls foul of the performance measurement and, as Nico point out, a DC pension can fall foul and go red without doing anything wrong but take a position and show conviction. Nico reckons the answer will be the CIOs of the trusts looking over their shoulders to make sure they are in line with everyone else. The alternative will be last trust standing and Nico reckons the last trust will be Nest.

The lads decide they aren’t going to answer the 42 questions but instead ramble on in a very relaxed way about how DC schemes have been measured since the GPPs got into trouble with the Competition people in 2013. The measurement has been by the disclosed charges (though fund transactional costs and the costs of investment and contribution administration don’t get a look in.

I’m not sure after 95 minutes I’m any more clear about what employers let alone savers will get from the framework. Since individuals take all the risk of things going wrong (and pleasure from them going right) it would be nice if they knew how performance worked in terms of money in and money out. Kim Gubler had suggested this a couple of weeks back.

But here I find that Nico and Darren come to the end of a cul de sac. DC savings plans whether master trust, own occ trust or GPP are not pensions. The DWP reckon that CDC will provide up to 60% more pension which makes the question of VFM for DC pensions a bit redundant. CDC doesn’t get a mention in the 95 minutes and I did wait till the very end to make sure I didn’t miss a conversation about it.

Nico and Darren’s final view of the VFM Framework is that it has been made redundant by the Pension Schemes Bill that will demand of DC schemes “default” retirement income.  A quick search of my blogs takes me back to January 2017  at which point the FCA was pursuing IGCs for a consistent way of measuring their performance and service.

In the nine years since we have seen the two regulators and the DWP looking for ways to get a satisfactory way to impose a mandatory measurement since the IGCs could find no consistent way to assess (other than that value was good).

I agree with Nico and Darren’s view that the VFM Framework is of no value since this Government has demanded workplace savings evolve to pensions.

It is very hard to work out what good the VFM Framework will do . Well said Nico and Darren for calling it redundant. Well done Butcher for nailing the Framework’s shortfall in emotional thinking.