Tisa calls for greater consideration of ESG in pension value for money definition

The Investing and Saving Alliance (Tisa) has called for greater reference to environmental, social and governance (ESG) considerations in the Financial Conduct Authority’s (FCA's) value for money (VfM) assessment.

Responding to the FCA's Driving value for money in pensions consultation, the group agreed that the three elements identified by regulator should form part of VfM considerations, clarifying however, that further work should still be undertaken around individual elements.

Tisa head of retirement, Renny Biggins, stated: “There are some key aspects which need to be considered in determining what constitutes VfM and how the Independent Governance Committee assessment can be undertaken in a way which achieves the desired outcomes.

“VfM is subjective so priorities will differ from person to person. They will be influenced by various factors including a general personal preference, accumulated pension wealth, how close retirement is, their status within the scheme i.e. active or deferred, and level of engagement.”

In particular, Biggins emphasised that given the strong focus being placed on climate change and ESG factors, there needs to be reference to this within the VfM definition, with all elements holding “equal prominence”.

He continued: “Additionally, the consumer view of what they consider as VfM needs to be taken into account, with a further reference to the creation of good consumer outcomes.

"The level at which the assessment takes place is also crucial to the success of the proposals and consumer outcomes.”

Biggins stated that the scope of the consultation also provides an “excellent opportunity” to give additional guidance and support IGC’s in carrying out their VfM assessments and achieving good financial outcomes for savers.

"Aside from the legacy scheme focus, this will help drive forward the continued success of workplace pensions within the contract-based landscape," he concluded.

    Share Story:

Recent Stories

Sovereign bonds and climate change considerations
In Pensions Age's latest podcast, Laura Blows is joined by Hilary Norris, Product Manager, Sustainable Investment, EMEA, FTSE Russell, to discuss sovereign bonds and climate change considerations

Climate Investing
Laura Blows speaks to Aled Jones, Head of Sustainable Investing for Europe at FTSE Russell, and Adam Matthews, Director of Ethics and Engagement for the Church of England Pensions Board, about the role of climate investing within a pension fund portfolio.

Managing volatility
In the latest Pensions Age podcast, Laura Blows speaks to Cambridge Associates head of European pension practice, Alex Koriath, about the Covid-related market volatility and how pension funds can prepare for the challenges ahead

Risk transfer opportunities
Laura Blows speaks to Lisa Purdy, Head of Fiduciary Distribution at Legal & General Investment Management and Gavin Smith, Pricing and Execution Director - UK PRT at Legal & General, about the impact of the recent market volatility on the bulk annuity and risk transfer market and the potential opportunities for the future

De-risking options for pension schemes
In this latest Pensions Age podcast, Linklaters' Sarah Parkin talks to Laura Blows about the wide range of choice available to pensions schemes for the partial, or full, removal of their risks