15 July 2019
My team don’t call me Helen ‘I love VFM’ Stokes for nothing (and I’ve got the badge to prove it). Whilst Value For Members could be seen as a tick-box exercise, I really look forward to putting our reviews together and going through them with each of my DC trustee boards.
For some of my well-run schemes (not just the larger schemes) it can be good reflecting on and recognising achievements over the year. That could be that they revisited their investment offering or designed some scheme specific nudge communications or simply negotiated lower fee rates for the members. One of my schemes used our new VFM tool and managed to negotiate savings for its members of around £200,000 each year.
But it is not all about patting themselves on the back for being a great scheme. You won’t get the badge just by doing that.
Here are 3 steps to take when approaching VFM – take these and you’ll join the well governed club:
- Make sure the output is a clear action plan.
You shouldn’t only be looking back at what you’ve done. Think about what you haven’t done and what you could do. The output should help set your agendas and business plan for the next year.
- Branch out and consider broader areas than those suggested by the Pensions Regulator.
I have been working with schemes to include scheme design and at retirement support.
a) Scheme design: a key consideration is the contribution structure. Whilst outside of the trustees’ control, I have had schemes benchmark and review the structure, challenging the company about the age-related structure. I’ve also had others look in more detail at the take up of the different contribution rates and the impact that could have on retirement outcomes. This has had feedback into communications strategies.
b) At retirement support: this is an area many schemes are starting to think about more and more. The actions will depend on the maturity of the membership and actions they are taking at retirement. Actions have included increasing pre-retirement communications, setting up guidance services, partnering with a drawdown provider to offer a post-retirement solution or increasing the flexibilities within the scheme. A first step can be to understand what support members are currently getting and then starting to think about whether that meets members’ needs.
- Tell your members about it.
Yes, I know it is in the Chair’s statement but let’s face it, with all the new requirements that has really turned into a compliance document. Bring out some key themes in a member friendly way, not a compliance way, say in a member newsletter. Don’t hide it away in the 20-page Chair’s statement (I’ve seen longer!).