DWP’s Value for Money Framework

Commenting on its response to the consultation, DWP’s Value for Money Framework, Anthony Ellis, Head of DC Trust Consulting, Hymans Robertson, said:

“As the DWP Value for Money consultation closes, we welcome the continued focus from Government, the FCA and TPR on improving member outcomes and creating a more consistent framework for assessing value in DC pensions.

“A stronger focus on long-term investment performance has the potential to improve decision-making and help drive higher standards across the market. However, the design of the framework will be critical. There is a fine balance, which the DWP must tread. between increasing transparency and creating incentives that unintentionally encourage schemes to converge on similar investment approaches. This must be offset with innovation alongside a spectrum of strategies available to members.

“It will also be important that the assessment framework reflects the genuinely long-term nature of pension investing. An excessive focus on shorter-term performance measures risks discouraging investment decisions that may improve member outcomes over decades but can be more difficult to justify over shorter reporting periods.

“While phased implementation may mean some members wait longer to benefit from the full framework, a careful and proportionate introduction should help ensure the measures support better outcomes without creating unintended consequences for trustees, providers and savers.”

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