The platform solution to VFM reporting for DC schemes

The latest discussion paper from the Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) on assessing Value for Money (VFM) in workplace defined contribution (DC) pension schemes could be causing some sleepless nights.

We all want to see excellent value in DC schemes – as the regulators say, it is a critical contributor in maximising the income savers have at retirement. But measuring, reporting and comparing VFM metrics could present some DC trustees with challenges.

And the existing reporting burden is only getting larger. VFM has been expanded beyond costs and charges to include additional metrics such as net performance reporting. No doubt more metrics will appear over time. This creates a further need for trustees to have access to sufficient information on the assets making up their default and self-select funds.

Of course, it’s not just about measurement – the real benefit is delivering and continuously improving VFM for members on multiple fronts. The key is having accurate, relevant and consumable data. For trustees, much of this data comes from fund metrics. Here at Mobius Life, we are committed to supporting DC schemes’ governance and oversight needs by providing our clients with the data they need.

Take the regulators’ requirement that members’ savings are not eroded by high costs and charges. Our tools enable trustees to access accurate transaction cost reporting at both a scheme and fund level, providing aggregated costs at a blended level, together with an attribution of those costs.

The regulators also want to see performance data available net of costs – to help trustees and members understand and compare the real returns they are achieving. Our tools deliver reliable information either to feed into performance engines, or to create net performance data. Again, this is available at a blended level and for the individual funds which make up the blend.

Critically, the regulators recognise well-designed default arrangements are essential in delivering VFM. Using the Mobius Life platform, trustees can configure default funds designed to meet their exact requirements, whether this is by blending existing funds, or by manufacturing a bespoke strategy from scratch.

And of course, for schemes using our target date fund blending capability, or lifestyle model portfolio approach, we can supply performance data by age cohorts – as proposed in the discussion paper. This means trustees can understand the actual returns their members are receiving, based on their age and time to retirement. It’s good to be ahead of the curve!

We can also help trustees to understand and report on important metrics such as ESG and TCFD/climate – which were highlighted in the discussion paper as a critical long-term driver of VFM.

It’s clear from the regulators’ discussion paper they want to see a common framework and transparency in VFM reporting. Using the Mobius Life platform trustees will be able to access the data they need to meet emerging VFM requirements. One less thing for trustees to worry about. If you want to know more, please get in touch.