Tisa calls for greater consideration of ESG in pension value for money definition

The Investing and Saving Alliance (Tisa) has called for greater reference to environmental, social and governance (ESG) considerations in the Financial Conduct Authority’s (FCA's) value for money (VfM) assessment.

Responding to the FCA's Driving value for money in pensions consultation, the group agreed that the three elements identified by regulator should form part of VfM considerations, clarifying however, that further work should still be undertaken around individual elements.

Tisa head of retirement, Renny Biggins, stated: “There are some key aspects which need to be considered in determining what constitutes VfM and how the Independent Governance Committee assessment can be undertaken in a way which achieves the desired outcomes.

“VfM is subjective so priorities will differ from person to person. They will be influenced by various factors including a general personal preference, accumulated pension wealth, how close retirement is, their status within the scheme i.e. active or deferred, and level of engagement.”

In particular, Biggins emphasised that given the strong focus being placed on climate change and ESG factors, there needs to be reference to this within the VfM definition, with all elements holding “equal prominence”.

He continued: “Additionally, the consumer view of what they consider as VfM needs to be taken into account, with a further reference to the creation of good consumer outcomes.

"The level at which the assessment takes place is also crucial to the success of the proposals and consumer outcomes.”

Biggins stated that the scope of the consultation also provides an “excellent opportunity” to give additional guidance and support IGC’s in carrying out their VfM assessments and achieving good financial outcomes for savers.

"Aside from the legacy scheme focus, this will help drive forward the continued success of workplace pensions within the contract-based landscape," he concluded.

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