PMI warns against "one-size-fits-all" Value for Money framework for pension schemes 

The Pensions Management Institute (PMI) has urged the Government to retain an exemption for hybrid pension schemes within its proposed Value for Money (VfM) framework, warning that extending the regime to schemes it was not designed for could increase costs and regulatory burdens without delivering meaningful benefits for savers.  

In its response to the Value for Money Framework consultation on draft regulations and draft FCA rules, the PMI supports the overall direction of the reforms, including the move away from assessing pensions primarily on cost and towards a broader evaluation of investment performance, service quality and member outcomes.  

However, the PMI is concerned that revised proposals would bring hybrid schemes into scope, despite the framework having been developed principally around standalone defined contribution arrangements. The PMI believes this risks creating misleading comparisons, additional complexity and significant compliance costs, while offering limited practical benefit to members.  

And it warns that schemes could be required to spend increasing amounts of time, money and governance resource complying with reporting requirements that do not improve retirement outcomes, potentially diverting attention from activities that genuinely add value for members.  

The PMI is therefore calling for hybrid schemes to remain outside the initial scope of the framework, or for a temporary exemption until a more proportionate and tailored approach can be developed.  

Helen Forrest Hall, Chief Strategy Officer at the PMI, said: 

"Everyone wants pension schemes to deliver value for money. The test is whether regulation helps savers achieve better outcomes or simply creates more process. 

"Hybrid schemes are different by design. Applying a framework built for standalone DC schemes risks adding cost and complexity without adding value. 

"We should be careful not to confuse measuring value with delivering value. The focus must remain on better outcomes for savers, not more administration for schemes. 

"The Government has made important improvements to these proposals, but keeping hybrid schemes exempt for now would be the right and proportionate approach."  

Alongside its concerns on scope, the PMI has welcomed a number of improvements to the proposals, including a stronger focus on overall value rather than charges alone, a phased implementation period, broader comparator groups and measures intended to encourage continuous improvement rather than conformity.  

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