I think we can all agree in principal with this statement from Pension Age

Defined contribution (DC) schemes must put investment performance and member outcomes ahead of marginal differences in charges as the industry moves towards a more consolidated system of larger schemes and stronger retirement defaults, The Pensions Regulator (TPR) chair, Emma Douglas, has said.

It’s clear that to manage more ambitious growth strategies for DC pots to grow, you need more than a small fund and an ultra low annual management charge. The price compression that we’ve seen from master trusts fighting for assets at “virtually no cost” has done little for performance and such strategies have just seen money sent overseas to get easy wins from American tech stocks.

But here I cannot agree with Emma or TPR.

Speaking at the Sackers Pensions Conference, Douglas argued the forthcoming value for money (VFM) framework would be one of the most important tools for improving outcomes, adding that the market had historically focused too heavily on fees because they were easier to measure than future investment performance

So what does the expensively created VFM analysis in Brighton and Stratford got to do with getting value for money? It is simply requiring data from DC schemes to tell us what has happened in terms of investment performance.

This does not tell TPR whether people have got value for money because it doesn’t translate into how member outcomes compare with contributions paid. There will be no attempt to analyse whether money was invested on time, whether savers got their contributions or their payments back conducted well or badly. Despite each saver having to take all the risk individually, the value for money analysis will be assuming money is collectively invested as if it were DB or CDC.

The fees issue has demonised confusion of a small part of the member’s outcome with the bigger picture of whose won and whose lost in terms of money in the pot. But this is a measurement itself confusing the half time score with the final result. The point of a workplace pension is to pay a wage in retirement not to pay a pot of money at the halftime when you start to take your money

So what do we make of Emma Douglas’ claim that after nearly a decade struggling to get a system that explains accumulation, we are yet to have started on an analysis of a workplace pension at full time?

She argued that the next phase of reforms should focus on sustainable retirement income, stronger investment performance, clearer information and better default options at retirement.

For many people , the true value for money of their pensions is not in their workplace savings pot but in what pension in retirement it converts to. If we go down this path then we start to ask questions about whatever DB we got in the past and what VFM we’re getting on CDC in the future.

When most people first encounter their future retirement income, they will find information thrown at them which totally ignores the most important comparator, the increases that state, occupational DB and workplace DC pensions. If we can’t even get a means for people to see the outcomes of their differing pensions in a way they can compare, how can we expect to comprehend the VFM of their workplace DC pension?

The VFM train crash has been inevitable since the Government abandoned the people who everybody says most matter – the future pensioners. They need a way to compare the value of their pensions from all the sources in a consistent way. The Government tried to make such a comparison last October when they said a pound into a CDC plan would pay up to 60% more than a pound paid into a workplace pension.

This attempt at a VFM analysis was shot down , including the Pension Regulator who asked that I did not mention “60% better” in promotions of collective pensions.

Here we are at the nub of it. No one wants to compare pensions on what people get (outcomes), instead we want to create complex mechanisms that tell the ordinary person very little but give the pensions industry a sense that they have done their bit.

So sorry Emma and the Pension  Regulator, though you are right to dismiss the AMC comparison as a means to find VFM.  TPR, you’re wrong to think a traffic light set by the provider will have more impact than the IGC reports the FCA set up a decade ago. We want scores at full time not just half time. Can we have results in a league table so savers can figure out the Value For their Money?