Skip Header

Supporting trustees in demonstrating value for members

In our regulatory outlook article for Q2 2021, we mentioned that the DWP had confirmed its intention to mandate a value for members (VfM) framework for schemes with less than £100m in assets.

The DWP have now introduced this regulation. Occupational schemes with £100m or less in assets, that have been operating for more than three years and have a scheme year-end date after 31 December 2021, must carry out an assessment of how their scheme delivers value for members. The assessment should consider net investment returns and reported costs and charges, as well as other measures of scheme governance and administration. The scheme must also complete a comparison of costs and charges and of net investment returns against at least three other schemes.

The outcome of the review, together with details of any intended actions, such as making improvements or closing the scheme, must be included in the annual chair’s statement. The statement must be published within seven months of their scheme year-end date and must be accessible on a publicly available website.

Occupational schemes with assets of more than £100m are not required to do a comparison, but from 1st October 2021 are required to calculate and report their investment returns in the annual chair’s statement.

Net investment returns will be required for all funds, including the default, that have been available for members to investment in, within the relevant scheme year.

A comparison scheme must be either:

  • an occupational pension scheme that, on the relevant date, held total assets equal to or greater than £100m; or
  • a personal pension scheme which is not an investment-regulated pension scheme.

Trustees must have had discussions with at least one of the comparison schemes about a transfer of members' rights if their scheme is wound up.

How we can help

To make the additional reporting requirements more manageable for you, and to make it easier to evidence the value you’re providing for members, we’ve enhanced our net investment returns reporting capacity. We will be turning the data we hold into reportable values for you, although the onus for the final report will rest with the Trustees.