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Pension consulting
25 March 2022
Author: Nick Frankland

Are you ready for the hard truths?

The potential outcomes of your Value for Members assessment

With the new Value for Members regulations now in force, trustees are feeling the full effect of their requirement to demonstrate the value they, as a board of trustees, are providing, as well as the pension scheme they look after.

From our recent experience, this often results in some hard-hitting truths during the introspective review process, following which one of three decisions must be made:

  • The scheme is providing value for members and no immediate action is required.

  • The scheme is providing reasonable value for members but it is identified that there is room for improvement if the scheme is going to achieve the desired level of value for member.

  • More immediate actions are required to ensure value for members, and so it is time for change.

We discuss each of these further below.

Providing value

In a review, the most desirable outcome is that everything is running as The Pensions Regulator would like and, importantly in our view, that members of the plan are benefitting as a result. The hard work doesn’t stop there, though, as defined contribution (DC) pensions are continually evolving with improved investment sophistication and member engagement tools.

At Punter Southall Aspire we’re delighted to continue this good work, helping to further improve the potential retirement outcomes of our clients’ pension scheme members.

As a business our vision is to build a more financially informed and secure society, and our dedicated team of experts supports our clients in moving towards this.

Room for improvement

A very common outcome of most assessments is that there is room for improvement. This isn’t necessarily a criticism of the trustees or sponsoring employer, but a feature of how fast our industry has moved in recent years. If, following the assessment, it becomes clear that your scheme isn’t quite hitting the mark, our experience and resources can also help bridge the gap to deliver the required level of value to your members.

The most common areas for improvement are poor engagement and guidance undermining the value of building a pot for retirement, poor administration and in some cases outdated investment strategies. Working with over 1000 pension schemes and carrying out detailed research of the pensions market, we pride ourselves on our expertise and the fact that DC pensions are our central focus. We can support clients by giving a clear and manageable strategy for developing value for members over short-, medium- and long-term time horizons.

Time for change

While the new regulations now leave nowhere to hide for some pension schemes that are not providing value for members, other schemes may be delivering value and the sponsoring employer may still decide to look for an alternative which provides equal value for a much lower operating cost. For these schemes the assessment may become a focal point to begin winding up the scheme and securing members’ benefits in a more future-proofed arrangement. In both cases our provider research group has significant experience in finding the best solution in the market, which meets your members’ needs now and in the future.

We’re proud of our fiercely independent review process, providing trustees and employers with the comfort that the whole market is considered to find the best possible alternative to the current scheme.

If you’d like to discuss any of these outcomes and what they could mean to you or your members, please feel free to contact us.

Get in touch today

At Punter Southall, we have a team of highly skilled risk, compliance and legal experts with deep in-house practical experience. Get in tough if you would like a friendly chat with one of us.