The Pensions Regulator (TPR) and Financial Conduct Authority’s (FCA) plans to develop common measurements to help compare the value for money (VFM) of defined contribution (DC) pension schemes “is not about consolidation”, TPR has stated.

Speaking at the PLSA Investment Conference in Edinburgh, TPR lead consultant, Fred Berry, noted that “yes there is a consolidation agenda out there but this VFM project is not about consolidation, which seems to be happening quite nicely anyway”.

FCA executive director for markets, Sarah Pritchard, also reassured that the VFM common measurements plan is not intended to replace the role of Independent Governance Committees (IGCs), “but what we have heard is a consistent framework to assess VFM would be useful for those that are making decisions around schemes and pensions generally”.

Both Berry and Pritchard highlighted that the focus of the VFM common measurement plan was “all about retirement outcomes”.

“It is about changing the narrative from when auto-enrolment (AE) was set up, being all about cost and charges and the charge cap, as a thing in itself, to costs and charges as one component that leads to value for money”, Berry explained.

Commenting on the feedback paper published on Tuesday, Pritchard noted that there are “areas of great alignment but there are also areas where there are some differences and those are the differences that we absolutely will need to unpick and explore to help inform future policy development”.

Pritchard highlighted that examples of this were the “the huge difference” of views about benchmarking, “how you construct the benchmark, how you look at cohorts and what that might mean in practice”.

According to Berry, the ‘elephant in the room’, is “balancing having some sort of template or benchmarking with the needs for trustees and IGCs to have the freedom to translate how it relates to them in their specific circumstances”.

“That is what we are working through very carefully and will be taking soundings from the industry on this as we are very aware of the differences between schemes, but in a personal view, I think it is sometimes rather too easy for those running schemes to plead special circumstances. To think that they are doing, ok thank you very much. So maybe developing an industry standard that then enables scheme governors to actually have a look and take on board how well they are doing relatively.”

He added that the regulators will initially focus on default funds in accumulation in workplace pensions “but that is not where we are going to end. You start where there are the most people you can reach through leveraging your effort”.

The regulators will also be seeking input from the pensions and investment industry, he added, “as we do not know everything, so this is an appeal for help. If we come knocking on your door for help please respond”.

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