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Regulations now require trustees and administrators of DC schemes with assets under £100 million to carry out assessments to see if their current pension plan is offering value to its members compared with three other schemes.
However, even for larger schemes which aren’t currently obliged to undertake these formal assessments, it’s important to regularly review whether they’re providing good value for members as a matter of best practice.
Assessing value for money
Value isn’t determined by cost alone and the cheapest scheme might not be the best option for members. Government guidelines on assessing value says assessments should cover:
- costs and charges
- net investment returns
- administration and governance including quality of services for members
In assessing the last of these categories (administration and governance), schemes should be checked for how well they perform in the following areas:
- Promptness and accuracy of core financial transactions
- Quality of record-keeping
- Appropriateness of the default investment strategy
- Quality of investment governance
- Level of trustee knowledge, understanding and skills to operate the pension scheme effectively
- Quality of member communications
- Effectiveness in managing conflicts of interest
Our *award-winning Legal & General WorkSave Mastertrust
The Legal & General WorkSave Mastertrust was set up by Legal & General in 2011 using the company’s resources and investment capabilities but managed by an independent board of trustees.
The trustees ensure the Mastertrust is well governed, operates in the best interests of members and, where necessary, will challenge Legal & General on opportunities to improve.
Value for money is assessed annually and the results are published in the annual trustee chair’s report which can be found at www.legalandgeneral.com/mastertrust.
As winners of Corporate Adviser’s award for Best Master Trust in 2021*, we’re proud to share some of our scheme’s best features:
Economy of scale: Our Mastertrust surpassed £17 billion in assets under management as of December 2021, making it the largest commercial master trust in the UK. This scale gives us the ability to continually invest in our proposition.
Member engagement: Our second virtual annual member forum on pension basics attracted thousands of members on the day while the recording of the event was still being downloaded four months later. We have had more than 18,000 views to date.
Our trustees’ Member Advisory Panel meets quarterly to provide trustees with an opportunity to hear direct feedback from a diverse member base to understand what matters most to them.
Client liaison: Our 24/7 interactive dashboard, MySI (My Scheme Intelligence), provides insightful information that keeps scheme managers up to date with the latest matters relating to their scheme. We were the first provider to offer real-time scheme data and service-level tracking.
Innovation: Our app, Coll8, allows pension scheme members to access their pension on the go so they can feel in control of their retirement savings. We’re also continually enhancing our secure pensions portal, Manage Your Account. This includes a virtual assistant so members can receive rapid online support, an interactive retirement planning tool, and lays foundations for developments like the pensions dashboard.
Wellbeing: Our financial wellbeing site, Go&Live, addresses financial welfare issues from accumulation to retirement.
ESG focus: We teamed up with fintech platform Tumelo to allow members to vote on the environmental, social and governance (ESG) issues that matter to them. This insight allows us to factor in members’ views before we vote on ESG issues at company annual general meetings.
Our Mastertrust offers our ‘to and through retirement’ Target Date Funds which include funds that have growth components which we believe may potentially help clients wishing to offer members a default arrangement with a more positive environmental, social and governance stance. Members also have access to our investment pathways through our Mastertrust arrangement.
Member choice: We provide flexibility in how members take their pensions including accessing income drawdown within our Mastertrust without the need to transfer to a separate vehicle, making for a seamless transition from saving to spending.
If you’d like to find out more about specific costs for your scheme, please visit www.lgim.com/scheme-consolidation.
Important Information: For professional clients only. Past performance is no guarantee of future results. The value of an investment and any income taken from it is not guaranteed and can go down as well as up, you may not get back the amount you originally invested. Views expressed are of LGIM as at April 2022. The Information in this document (a) is for information purposes only and we are not soliciting any action based on it, and (b) is not a recommendation to buy or sell securities or pursue a particular investment strategy; and (c) is not investment, legal, regulatory or tax advice. Legal & General Investment Management Limited. Registered in England and Wales No. 02091894. Registered Office: One Coleman Street, London, EC2R 5AA. Authorised and regulated by the Financial Conduct Authority, No. 119272.