Marvin OnumonuBroadstone has responded to the Financial Conduct Authority’s (FCA) proposals for a Value for Money Framework for defined contribution schemes.
The FCA aims to improve value for money in workplace personal pensions by pushing for more scrutiny and competition based on long-term value rather than just cost.
Broadstone said it supported the Government’s goal of harmonising value for money measures across various defined contribution (DC) schemes, allowing savers to focus on outcomes instead of specific scheme types.
However, Broadstone said the framework should take into account the different needs of members and employers.
Smaller employers might prefer consistent, high-quality pension providers, while larger firms often seek tailored services with diverse investment options.
Broadstone emphasised that comparing different schemes should not penalise simpler arrangements for not meeting unnecessary standards.
The framework should also recognise the advantages of single-employer trust-based schemes, which foster close relationships with providers, enabling bespoke communication and better data quality.
David Brooks, head of policy at Broadstone, said: “We welcome the consultation and fully support the FCA’s efforts to create a consistent, transparent measure of value for money across all colours and stripes of defined contribution schemes.
“It’s a crucial step towards enhancing member engagement and improving long-term outcomes for savers.
“However, while standardised and clear-cut performance metrics are essential, it’s equally important that the framework recognises the unique characteristics of different pension arrangements.
“A one-size-fits-all approach risks overlooking the individual strengths of various schemes, especially those offering tailored services to specific employers or members.
“The proposed ‘Red, Amber, Green’ (RAG) rating system, in its current form, may unintentionally subject high-performing schemes to unfair scrutiny, meanwhile, a heavy focus on accumulation risks long-term VfM for savers in later life.
“It’s critical that any framework preserves the nuances that make different schemes valuable to their members, rather than penalising them for not conforming to a standard they were never intended to meet.”
