IGG Responds to Government Consultation on Value for Money Framework

We have submitted our response to the Government’s proposed Value for Money (VFM) Framework, calling for broader measures that look beyond investment performance and charges to support better member outcomes.

A broader approach to value for money

IGG supports the objective of creating clearer and more consistent assessment across investment performance, costs and charges, and service quality. We also welcome a number of pragmatic changes to implementation, including the proposed phasing, an initial six-month data collection period, the return to geometric averaging for backward-looking investment metrics and a simplified approach during the first year.

However, we believe the proposed service quality measures remain too basic to reflect how trustees assess value in practice. We are calling for further development of the framework to capture member understanding, confidence and the ability to take action, alongside more consistent measures of administration performance.

Our response calls for:

• A broader assessment of investment value, with risk, portfolio resilience, ESG integration, decumulation aims and differences in investment strategy reflected alongside past performance and charges.
• A more meaningful assessment of service quality, moving beyond basic administration measures to consider factors such as member understanding, communications, digital journeys, targeted support and the ease with which members can understand and act on their options.
• A genuinely transitional approach to implementation, with the first year used to test and improve data quality and comparability, rather than drawing overly firm conclusions or driving decisions from immature data.
• Careful application of consequences for poor value, ensuring that the framework supports better trustee decision-making without inadvertently driving inappropriate consolidation or transfers based on immature or inconsistent data.
• Clearer guidance on data and disclosure, recognising the practical challenges around historic data, chain-linking and asset allocation. This is particularly likely where schemes have undergone transfers or consolidation, or invest through pooled, layered, multi-asset or private market structures.

Louise Davey, Trustee Director and Head of Policy and External Affairs at IGG, commented:

“We strongly support the ambition behind the Value for Money Framework and the move towards a more consistent focus on the outcomes members receive. But for the framework to work, we need to make sure we are comparing like with like. Data needs to be robust and comparable, while giving trustees sufficient flexibility to reflect differences in investment strategy, risk and retirement objectives. That is particularly important in the early years, when the focus should be on testing the framework and improving the data, rather than allowing immature comparisons to drive potentially significant decisions.

“Value for money also extends well beyond investment performance and charges. The quality of service members receive, whether they understand their pension and retirement choices, and whether they can act on that information are all fundamental to good outcomes. Getting those measures right will be critical if the framework is to give trustees better information, raise standards and ultimately improve members’ retirements.”

Explore our full analysis and recommendations in our consultation response here.

Key Contact