Reporting to members about the Value For Money (VFM) their DC scheme offers has been, since its introduction in April 2015, a difficult ask for us as DC Trustees.

For starters, our friends in Brighton have consistently refused to give trustees any guidance as to what VFM looks like. We have no problem with this, it’s not meant to be a box ticking exercise and a VFM template will inevitably lead to ticks in boxes.

On one level, VFM is simply the answer to the equation:

Scheme Benefits provided minus Costs to members

(investment returns, administration and communiciations)

As Trustees we know how much member’s pay to the scheme. We have metrics about what benefits they receive. But do we know what they actually cost? Price alone is no measure of value for money, but it’s a place to start. The issue of transition costs and in legacy funds, the mass of other costs, eat into a member’s pot and need to be taken into account by Trustees. From this ensuring that there is an open dialogue with asset managers about what these actually are is a given.

What do we trustees know about what member’s value? We have to ask members and having done that once, keep the dialogue up. If we are to demonstrate value for money we have to know what members value, speak to them in different formats and recognise that no one size solution is going to be answer. Increasingly we are seeing the use of different focus groups of members taking into account the age, demographic and sex of members. We see further segmentation of member’s opinions as something which Trustees should embrace along with member surveys and feedback from employers in order to better understand their members.

Good administration is rarely noticed by members, or anyone else for that matter, but poor administration certainly is. Members having to wait for answers to questions, contributions incorrectly allocated to the wrong funds at the wrong price are by no means the only examples of this. In our experience good administration is essential and for DC schemes an absolute necessity.  It follows then that the Trustees should consider administration each time they meet and actually visit them to see what is going on at the coal face in the Trustees name.  If service issues are highlighted then they need to be addressed and monitored.

From this it seems to us that the Trustees analysis of VFM is a mix of quantitative and qualitative measures which will need to be kept under review as experience within the Scheme and with peers grows over time.

If this strikes a chord with you please contact us at 0845 4334 199 or email us at

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