Aegon UK has called for a two year trial period for the government’s upcoming Value For Money pension scheme framework, arguing that the “fiendishly complex” concept could not be widely adopted without full testing.
Aegon made the statements during an ongoing consultation period overseen by the Financial Conduct Authority on the framework. The latest consultation closes on March 8, and looks to address areas such as the introduction of forward-looking metrics to be considered alongside backward-looking metrics in assessments, and a four-point rating system rather than three, to allow identification of top performing pension funds.
Aegon claimed there is ongoing uncertainty over implications of forward-looking investment metrics, and that a feasibility study was needed around the new market comparator proposal, with Aegon calling for a two-year trial period of the framework.
Kate Smith, head of pensions at Aegon UK, said: “We support the aim of ensuring all workplace members are in a scheme offering value for money judged across investment performance, costs and charges, and quality of services. But coming up with an objective framework that covers all components of VFM across a diverse pension landscape is proving fiendishly complex.
“In the latest consultation, the regulators introduce several fundamental changes. These include a completely new market comparator database, the addition of forward-looking investment metrics, and a worrying downgrading on quality of member services and engagement aspects.”
Aegon argued for the proposed trial to be limited to the largest multi-employer default arrangements and the largest single employer trust-based schemes, with the data shared only with the regulators. It could then be launched fully and publicly from 2030, coinciding with the deadline for main scale default funds or mega funds to reach £25bn.
The FCA has been contacted for comment regarding the Aegon proposals.