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Value for Money

11 September 2015

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PTL's Alison Bostock draws on her experiences to address the topic of Value for Money in pensions

As Independent Governance Committees and defined contribution (DC) trustees grapple with what Value for Money really means, I was reminded of a special occasion from over 20 years ago that draws similar comparisons.

My parents had organised a family dinner at a renowned Michelin-starred restaurant in Mayfair to celebrate my qualification as an actuary.

As we sat to peruse the menus, it became evident that only my father, as the presumed host, had the version with the prices shown.

He was just able to stifle a small splutter when my mother declared that as it was a celebration, of course we should all have the five course "menu exceptionnel", although as they were driving home, we would go easy on the wine.

We enjoyed a truly exceptional meal and indeed I can still picture and almost taste some of the food. At the end of this fine meal, my father settled up and happily declared it to be "the best value meal I have ever eaten".

I'm also pretty sure that it would also have been the most expensive meal that he had ever eaten, as my glance at the bill showed it was a three figure number starting with a five.

Now let's try and compare this celebratory gastronomic experience with a much needed and apparently delicious cheap burger or kebab grabbed on the way home after a night out at the pub.

It is straightforward to compare price, taste and ambience. But it's not so easy to say which provides the better VFM.

To me, this is similar to comparing a Diversified Growth Fund with a passive equity tracker.

We need to look at the investment objectives, returns and volatility as well as comparing the charges to find out which provides the best value for money.

Written by Alison Bostock, client director, PTL, www.ptluk.com