A new framework called “value for money” is being developed to assess the competitiveness of pension schemes. This framework will provide a standardized and transparent way for trustees, providers, and independent governance committees to compare schemes.
The implementation of this framework will begin with default workplace pensions, and then will extend to drawdown, non-workplace, and self-select schemes. It will take into consideration various factors such as charges, investment performance, administration, and communication levels, and assign a grade of amber, green, or red.
Rachel Vahey, the head of policy development at investment service AJ Bell, highlighted the importance of this framework: “Eventually, workplace pension schemes will disclose performance, charges, and service quality figures in a standardized and transparent manner. This information will enable consumers to assess their pension scheme’s performance. However, it may require the assistance of a financial adviser to fully understand the details behind the figures.”
A newly developed framework, known as “value for money,” is set to revolutionize the assessment of pension schemes. This innovative framework will provide trustees, providers, and independent governance committees with a standardized and transparent method to compare the competitiveness of schemes.
To ensure a smooth rollout, the framework will initially focus on default workplace pensions before expanding to include drawdown, non-workplace, and self-select schemes. It will carefully evaluate a variety of factors, ranging from charges and investment performance to administration and communication levels. Based on these assessments, schemes will be given an amber, green, or red grade.
Rachel Vahey, head of policy development at investment service AJ Bell, expressed her enthusiasm for this development: “Eventually, workplace pension schemes will be required to disclose performance, charges, and service quality figures in a standardized and transparent manner. This information will empower consumers to make informed decisions about their pension scheme. However, it is worth noting that the presented information may not be immediately comprehensible to all. Seeking guidance from a financial adviser is crucial to fully understand the context behind the figures and ensure the best deal.”
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