Value for Members (VFM) Requirements

Value for Members assessments are a new legal requirement keeping pension scheme trustees up at night.

All findings must be reported through the annual chair’s statement and online, giving members a transparent view of how their savings and subsequent investment returns have performed relative to others. Dean Wetton Advisory (DWA) see this as a good thing.

Does the Value for Members regulation affect your scheme?

In terms of the Value for Members regulation, trustees of all relevant pension schemes must calculate and state the return on investments from their default fund and any self-selected funds and record this in a chair’s statement.

The Value for Members requirement applies for scheme year-end after 31 December 2021.

The likely impact of the regulation is to accelerate the consolidation of small DC arrangements into larger schemes. This will apply if your scheme has less than £100 million total assets and has operated for at least three years.

The three relevant comparators must include at least one scheme that has been engaged in discussions about accepting the scheme’s members. DWA experience, connections and dataset allow us to pick appropriate comparators for your scheme and assist with this engagement.

Schemes that are impacted will then be subject to a new Value for Member assessment framework. This includes:


The gathering of information on all costs and charges and assessment against three comparator schemes


The assessment of net investment returns against three comparator schemes


The assessment of scheme management and governance


The reaching of conclusions and agreed next steps

DWA’s approach to Value for Members

At DWA, we want to help you and your board with your Value for Members requirements. So, we’re offering the opportunity to assess your scheme for Value for Members compliance, which will be delivered as a complete assessment of your scheme, and compare your scheme against other options in the market.

Comparing reported costs and charges for members against three other schemes is an important part of determining the value that a member gets from their investment.

DWA has created an easy-to-use database, which allows us to compare performance of your scheme. The DWA scheme database is an efficient and robust means for assessing the performance of a fund’s costs versus returns.

Working closely with you, we’ll use our proprietary tools to assist our pension clients in showing how your scheme is providing Value for Members.

How DWA can help you?

DWA has several tools we use to help assess the investment governance element of Value for Member, including:

A ’value add‘ chart which tracks how much more money is in a typical members’ pot over a period of time and what they and their employer has paid in.

The Fairway Model, used to assess the investment strategy. Each Fairway Model takes a different risk or return metric and plots the glide path of the considered strategy for each age cohort.

Other metrics we consider with our Fairway Model include historic return, risk in terms of both standard deviation and maximum drawdown experienced, as well as risk relative to annuity prices which can serve as a proxy for retirement income. This allows us to compare the suitability of different investment risk profiles.

With DWA’s help, you’ll be able to quickly see where you as a scheme are delivering VFM and in which areas you are not, and get a comparison to the relative value from previous assessments. DWA provide reports that collate information in the required format, all of which can be used to support your chair’s statement.

Alliance Bernstein
Smart Pension