If we’d made some of the changes 10 years ago (e.g. consolidation, superfunds, dashboards and growth investment) we would be in a better place now.
Still, having said that, government is thinking bigger and bolder and there is an opportunity for provisions in the Pension Schemes Bill 2025 to join things up to a better whole – as long as we don’t overthink it.
Value for money (VFM) is a big part of the Bill, however, some things that need to change remain elusive, including paying for innovation, investing in data, product simplification and government thinking on victims of wrongdoing. This is a shame.
Value for money is crucial, but it’s been a decade in the making and we are still working on how to measure and disclose it. It won’t come in until 2027/28 and won't apply to all pension schemes. At least we know it is no longer just about cost, but about service quality, asset strategy and investment performance to name a few metrics. But VFM should be more comprehensive – do the regulations add value, do governance and reporting add value?
We just love to sweat the small stuff, but it adds to the cost of pensions and therefore perversely gets in the way of VFM – are we sure that all the tinkering and piling on of bureaucracy truly results in better outcomes for members, or does it just make us feel better?
Some of the changes we want to see now are being made more difficult by the lack of investment in data, operations and technology over many years. Our eyes were off the ball and the increasing complexity and attention to the small stuff opened the door to more fraud and scams. Unbending rules have resulted in perverse actions such as punishing victims of third-party fraud while those third parties remain free and clear.
It’s no use crying over spilt milk, but it will be great to get back to basics with value for money. VFM does not mean saving money and cutting corners, it means doing the right things for customers every single day. It does not mean getting everyone to conform to a single approach, but means celebrating innovation. It means getting data right, working smarter.
However, VFM can’t exist without fairness, trust, information and efficiency. This means that to restore trust we must ensure that the best people manage our pension schemes, that we should let them and not suffocate them. We must invest in data quality. In 2017, I wrote about data being the oil in the digital economy. I still believe this. Pensions data is a national asset and we should invest in it and use it to know our citizens better.
To help improve fairness, government should take immediate steps to change the lives of many of those victims who have suffered at the hands of rogues that were able to take advantage of weak regulations and controls. It would take little to end the tax pain and the victim blaming by HMRC – it’s not about cost, it’s about value.
Margaret Snowdon, Chair – PSIG
