New service for trustees to assess value of DC Schemes
Friday, September 4, 2015
A new service from Buck Consultants at Xerox allows trustees to meet new governance standards laid out by the Pensions Regulator.
The 'value for money dashboard' also allows them to assess whether their DC scheme is providing value for money to its members.
As of April 2015, the statutory scheme governance requirements mean trustees are now required to assess the value for money of their scheme within the governance reporting in the annual chairman's statement.
However, with no common definition of what constitutes 'value for money' trustees have to determine their own criteria.
Buck Consultants' new value for money (VFM) rating system is a structured and full-scale annual analysis that evaluates a range of factors that are applicable to a trust-based pension scheme, providing each scheme, or scheme section with a total score out of 100.
Each contributory factor is weighted by importance and added to the overall total score, with the trustees receiving a dashboard breaking down the scheme's strengths and weaknesses.
A company's VFM rating incorporates analysis of three things - benefits, investment and charges.
Sue Curley, principal at Buck Consultants at Xerox, said: "DC schemes need to undertake annual VFM assessments in line with the new statutory minimum governance standards, but with the new standards leaving 'value for money' up to interpretation, trustees have been left unclear on how they should be reporting on their scheme.
"The VFM score we have developed provides them with a clear and trackable measurement of how their scheme is performing, which can be easily understood, and regularly evaluated."
Trustees should not leave it too late to look at this part of their governance requirements, she added, as value for money can be difficult and time-consuming to assess without a structured approach.
"We would advise all trustees to take a thorough approach to tracking whether the pension scheme arrangement they are responsible for is providing value for money," she said.
First published 04.09.2015
Lindsay.sharman@wilmingtonplc.com
