CP24/16: The Value for Money Framework

Read CP24/16 (PDF)[1]

Under the measurement and disclosure element of the Framework, we are proposing that firms be required to produce a machine readable 'flat file' that contains the raw data they will be publishing arranged and presented to a specific template.

Download a template showing our proposed approach (xlsx)[2]

Why we are consulting 

We want to:

• reduce the number of savers with workplace personal pensions that are delivering poor value
• drive better value for money across the workplace DC market through greater scrutiny and competition on long-term value rather than predominantly cost 

The Framework introduces 4 elements. It:

• requires the consistent measurement and public disclosure of investment performance, costs and service quality by firms for all such arrangements against metrics we believe allow VFM to be assessed effectively
• enables those overseeing and challenging an arrangement’s value – Independent Governance Committees (IGCs) and Governance Advisory Arrangements (GAAs) for contract-based schemes – to assess performance against other arrangements and requires them to do so on a consistent and objective basis
• requires public disclosure of assessment outcomes including a 'red, amber, green' (RAG) VFM rating for each arrangement
• requires firms to take specified actions where an arrangement has been assessed as not VFM (red or amber)

While this consultation relates to rules for FCA-regulated firms operating contract-based pensions, they are based on previous work with the Department for Work and Pensions (DWP) and the Pensions Regulator (TPR) and are designed to be suitable for application across the DC workplace pensions market.  

Who this is for

We encourage firms operating contract-based workplace pensions, their IGCs and GAAs, and the trustees of trust-based schemes to respond to this consultation. We welcome feedback from:

• firms operating contract-based workplace pensions
• IGCs and GAAs
• trustees and sponsors of trust-based schemes  
• DC pension scheme savers and beneficiaries  
• pension scheme service providers, other industry bodies and professionals
• employers
• civil society organisations
• consumer organisations / representatives with an interest in pensions capability / financial capability
• pensions administrators
• any other interested stakeholders

Next steps

This consultation has now closed. We will consider responses jointly with DWP and TPR and use these to inform development of the Framework. 

We expect to consult further and will publish feedback on the responses in due course.

We will consider implementation timings following stakeholder feedback and in discussion with DWP, the Treasury and TPR.

Background

We have evolved our proposed VFM Framework through our earlier Discussion Paper and subsequent Joint Consultation[3] with DWP and TPR.

We set out our overall proposed approach in a Joint Response[4].