Regulators outline new value for money framework for DC pension schemes

The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have outlined a new framework for measuring value for money in defined contribution (DC) pension schemes.

The two regulators have published a joint discussion paper that aims to drive a long-term value for money focus across the pensions sector.

To allow good value schemes to compete, the FCA and TPR are proposing a common framework for disclosing information on investment performance, scheme oversight – including data quality and communications – as well as costs and charges.

The FCA indicated that improving data disclosures will be a starting point and the regulators will continue to work with stakeholders to improve saver outcomes over the longer term.

FCA executive director for markets, Sarah Pritchard, described the issue as “complex” and suggested it impacts almost all pension savers.

“Consumers work hard for their pensions savings and it’s important that schemes are really delivering good value products,” she said.

“The proposals will help all those making decisions on behalf of consumers really challenge providers on value and allow better comparisons between products.”

TPR executive director for regulatory policy, analysis and advice, David Fairs, added: “Regulators, industry and others must be able to effectively assess value for money to ensure good pensions outcomes. The discussion paper sets out our ambitions for an industry-wide value for money assessment framework.

“DC savers rely on the pension system working as best as it can over the lifetime of their saving - every penny counts. That's why independent governance committees and trustees need a framework which provides a holistic assessment of what value for money means – beyond cost and charges – to allow them hold their providers to account and deliver the best possible outcomes for savers.”

The FCA and TPR are inviting comments on the discussion paper by 10 December and will publish a feedback statement that sets out the next steps in 2022.

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