The VFM podcast is again a discussion between the boys about legislation and in particular the comments of  the Pensions Regulator on value for money delivered by DC savings plans that aren’t up to scale. Can being considered “VFM” give sub £25bn schemes grace to stay un-consolidated?

It’s rather like the arguments that Kensington’s LGPS fund  has been making the same point when being shoe-horned into an LGPS pool.  Sometimes small schemes can win the performance stakes by sticking with passive indexed funds (as Kensington’s funds have been managed).

This of course is a problem with a value for money measure that simply picks up on performance, there will be periods that the fancy work of the likes of Nest (DC) or Border to Coast (LGPS) can be ridiculed by those who pile money into American’s Magnificent seven (Kensington’s LGPS section).

I’m sure that’s not what TPR mean to promote sub scale DC funds but it’s what small DC schemes can do if they take no positions with UK stocks and avoid the Mansion House Accord’s commitment to private funds.

This is exactly the risk that performance measured over a relatively short term throws up.

Although the blog continues for a further 40 minutes, it’s made it’s excellent point in the first five (if you discount the football chat). If you start allowing small schemes to justify themselves by VFM measurement, then we are not going to get consolidation , just continuing sub-scale DC savings schemes.

I enjoyed this gossipy discussion of politics that included rehearsal of the mandate saga (which we’re told will be overturned if Conservatives get to be in power after the next election). Stranger things have happened than of a washed out party turning things around, but not many. In the past, Nico has professed himself a supporter of the Green party. I would have thought they’d have better chance of being in power, in which case Nico can advise the Greens or perhaps become a pensions minister.

Another reason for enjoying it was that it only lasted 54 minutes (being truncated by a fire alarm in Nico’s office).

I cannot remember too much of the discussion but it seemed to revolve around the work of multi-asset managers of which BoNY has two (Newton and Insight). Apparently there’s some jeopardy running a multi-asset management fund that invests in the UK and in private funds as it could go wrong and lose the fund manager its reputation and possibly a lot of money in compensation.

Chief of Investment Options get paid a lot of money and I think for all that money they should take on some risk. Frankly , if you f@ck up a multi-asset fund then losing your job should be the least of your worries.

This is of course many miles away from what ordinary people are concerned about. But if you listened to Martin Lewis in his last week’s pension special, you’d realise Martin or any of his questioners really don’t give a damn for these niceties.