VfM meaning

In this issue: Spring Budget 2024 The Pensions Regulator Pensions taxation The Pension Protection Fund Investment Scheme governance Daily and weekly news alerts Dates for your diary Trackers Spring Budget 2024 Key pensions announcements and views from the market In the Spring Budget 2024, delivered on 6 March 2024, the Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, outlined the government’s central objective: to stimulate growth by funnelling more capital into UK equity markets, improving the UK’s standing as a listing venue, and building on the Mansion House reforms announced in the Autumn Statement 2023. Key pensions measures include: expanding the regulatory remit of the Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) to enable the closure or winding-up of poorly performing defined contribution (DC) schemes, aligned with the reformed Value for Money (VFM) framework requiring DC funds to publish, by 2027, a public breakdown of...

HM Treasury set out a slate of goals settled with TPR, among them an examination of the reporting duties it presently imposes on retirement schemes. However, at least one specialist argues that separate government moves, including fresh value-for-money reports and voluntary asset allocation disclosures, will significantly increase the existing volume of paperwork required of pension plans. The package agreed with TPR was presented as part of a far broader overhaul of the UK’s ‘risk-averse’ financial regulation framework, which the government estimates could propel up to £70bn in economic growth nationwide...

What is the background to the FCA’s consultation? Automatic enrolment (AE) launched in 2012 channelled more default saving into DC pensions. Default design in these schemes is sticky; members must overcome behavioural biases to make active choices. Evidence, including a recent Pensions Regulator blog, indicates most AE savers remain in entry‑level defaults such as the default investment strategy. Although steps since AE—such as the Occupational Pension Schemes (Charges and Governance) Regulations 2015 (SI 2015/879)—have been made, a narrow emphasis on charges has not invariably delivered better outcomes. Since 31 December 2021, trust‑based schemes under £100m in assets have faced enhanced value assessments under the Occupational Pension Schemes (Administration, Investment, Charges and Governance (Amendment) Regulations 2021 (SI 2021/1070), yet this has done little to spur DC consolidation or strengthen value measures. Differences between schemes mean some members enjoy stronger DC retirement outcomes than others. The absence of consistent, comparable data and metrics hampers like‑for‑like assessment, and the new VFM framework under consultation aims to increase visibility of scheme quality and...

FORTHCOMING CHANGE : The Pension Schemes Bill, expected to receive Royal Assent in 2026, will allow regulations to define which trust-based schemes meet value for money (VfM) standards and will require trustees to act accordingly. Produce and publish annual VfM assessments and notify TPR when published Conduct member satisfaction surveys Provide specified metric data The Bill introduces a VfM rating system with grades of ‘fully delivering’, ‘intermediate’ (with turnaround plans required), and ‘not delivering’ (which may lead to transfers or closures). TPR will be able to enforce the framework through compliance measures and fixed penalties of up to £10,000 for individuals and £100,000 for entities, with routes to contest any incorrect ratings. In parallel, the FCA is preparing equivalent rules for contract-based schemes. For more information, see Reform of the VfM duty below and Practice Note: Pension Schemes Bill—tracker—Value for Money (VfM) framework for DC schemes. Since 6 April 2015, trustees of relevant schemes (as described below) have been required to...

What is a local authority audit? External audit of local authorities is essential to the proper safeguarding of public funds. In England, this role is outsourced to accountancy firms and is governed by the Local Audit and Accountability Act 2014 (LAAA 2014). Public Sector Appointments Ltd (PSAA) (see below) awards contracts to firms on a standard five‑year basis, having let engagements for the period 2018/29–2022/23 and, most recently, for 2023/2024–2027/28. Under PSAA’s arrangements, appointments run for five years and PSAA sets the audit fees for specific bodies. Within each firm, the individual engagement lead must be accredited by the ICAEW as a Key Audit Partner. That accreditation is granted only where the individual has the necessary experience of local audit bodies and a commitment to spend the vast majority of their time on such audits. The Financial Reporting Council oversees the quality of the audit work undertaken. The scope of a local authority audit is significantly broader than that of a commercial audit. Every five years, the National Audit...

Abandon Describes a situation where the contractor halts performing the works for an extended, uninterrupted span of days (eg 20 business days) or for a greater aggregate of non-consecutive days (eg 60 business days) across the project’s duration or within a stated timeframe (eg 12 months), doing so wilfully and without justification at any stage of delivery or execution. Abandonment is ordinarily treated as a contractor default, enabling the Authority to terminate the Project Agreement and/or permitting Project Co to end the construction contract immediately for cause. Acceptance Tests Tests carried out to confirm whether the facility (or another project asset) achieves the standards required for the Authority to deem facility complete and accept it. Access Protocol The protocol that Project Co must follow in order to obtain access to the buildings forming part of the project at any time during the term. For instance, on a social housing scheme or a school, prerequisites would have to be satisfied by Project Co before...