Commenting on the closed DWP Consultation 'Value for Money: A framework on metrics, standards, and disclosures', Callum Stewart, Head of DC Investment, Hymans Robertson, says:

"Overall, we welcome the DWP’s recommendations and proactive approach to engaging stakeholders as part of this process so far. The overall approach to assessing value requires reform, and we are particularly pleased to see ‘outcomes’ mentioned more than 60 times in this consultation. We wholeheartedly agree that member outcomes should be a primary consideration in the assessment of value, and reflects the approach we adopt through advice and provider assessments.

“We feel the proposals could go further in terms of addressing value from strong governance, and the quality of retirement support which will be a key driver of outcomes. Whilst we welcome the emphasis on net rather than gross investment performance as a metric, we would caution encouraging members or decision makers to make choices on the basis of this information. For example, we expect the last 5 years’ of returns will account for less than 5% of a younger member’s retirement savings. Future (net) returns are expected to be a much more material driver of outcomes in retirement, even for older members. Therefore, continuing to encourage an emphasis on value and outcomes over cost will be welcome to meet the overriding ambition of improving retirement outcomes for savers across the UK. Perhaps the time has come to more actively discourage an emphasis on cost?

“We are encouraged that there is a willingness from the DWP, FCA and tPR to continue the engagement and deliver further enhancements to the approach for assessing value over time. For example, we would encourage the regulators to examine all stakeholder roles with influence over member outcomes (including advisors), and strengthen requirements to focus on value over cost.

“Finally, we hope that the final response following the consultation will result in significant changes to the current requirements and a focus on outcomes and value, not cost. We are really impressed with the engagement and proactive nature of this consultation as a truly forward step in the right direction. We eagerly await more details on the impact this will have within the DC pension marketplace, and welcome further engagements with the regulators to keep the momentum building towards a brighter future for savers as well as looking to a consideration of broader issues which also need to be reviewed to enable better outcomes.”