Autumn Statement: Government welcomes Value for Money framework update

Back-to-basics on defined benefit to defined contribution transfersThe government has welcomed next steps towards implementing the Value for Money framework in the defined contribution (DC) pensions market.

The Financial Conduct Authority (FCA) will launch a consultation next spring on the next steps of the new Value for Money framework and rules for contract-based DC schemes.

As part of this, schemes will be required to compare themselves against others in the market, to ensure they are delivering long-term value for their members. The FCA’s requirements around comparisons will consider the latest evidence on the different potential benefits of scale.

The FCA will work with the government and The Pensions Regulator (TPR) for consistency with the development of legislative requirements across all DC and trust-based schemes.

The Value for Money framework was designed to shift the focus from cost to longer-term value and aims to ensure transparency and delivery in the market.

The FCA stated: “The FCA consultation will be an opportunity for industry and other stakeholders to give their views and any feedback will be shared with [the Department for Work and Pensions] DWP and TPR. We support TPR’s immediate focus on the value that customers of trust-based schemes are receiving. Ensuring fair value is a central expectation under our consumer duty across firms’ product ranges, including in respect of master trusts.”