Value for members Value for members (VFM) assessment for the Honeywell Retirement Plan

For the year to 31 March 2020, the results showed that the Plan offers good value for money, offering a wide range of services that benefit Plan members including:

• stringent investment governance and monitoring by the Trustee;
• very competitive fund charges;
• a range of communications and online tools to help members to make appropriate choices;
• access to a third-party annuity service provider, paid for by Honeywell; and
• members only pay investment fund charges – administration and other costs are met by the Plan.

The Trustee is carrying out a revised value assessment to consider not only the services members pay for, but also the ‘broader value’, i.e. the wider Plan benefits and services members receive for which they do not pay such as Plan management, investment, charges, administration and communications.

Value for Members (VFM)

The Trustee is committed to ensuring that members receive value for the services that are provided under the Plan, in particular any costs that are met by the members themselves and keeps value for members in mind on an ongoing basis, including it as an item on the Plan’s risk register. The Trustee undertakes an annual value for members’ assessment taking into account the requirements within The Pensions Regulator’s DC Code of Practice with support from its advisers.

In June 2020 the Trustee undertook an assessment of whether the total cost of Plan membership represented value for money. In carrying out the assessment, the Trustee considered the following areas which encompass the total services members receive; scheme management, investment, administration and communications. The assessment approach is closely aligned to the Pensions Regulator’s ‘How to guide’ for ‘value for members’ and the Trustee has taken the following steps in the assessment process:

1. Identify what services the members pay for in the context of investment, administration, communication and scheme governance.
2. Assess the range and performance of the services based on member needs.
3. Conclude from the assessment, does the Plan offer good VFM?
4. Document the assessment outcome and address any areas of poor value.

The Trustee with independent input and assessment by its adviser, concluded that the Plan does offer good to excellent VFM as the Plan offers a wide range of services that benefits its members including:

• Stringent investment governance and monitoring by the Trustee, including a detailed review of the investment fund options during 2019.
• A well-constructed passive fund range with very competitive fund charges which have performed in line with their respective benchmarks within acceptable tracking errors over short-term and long-term periods.
• The Plan provides members with a range of communications and online tools and sites to assist members with making appropriate choices. Following a communication strategy redesign during the reporting year there has been a significant increase in focus on member engagement and communication.
• The Trustee hosts pension awareness sessions to help members better understand their benefits.
• Members have access to a third-party annuity service provider which is paid for by the Plan.
• Members only pay investment fund charges as administration and other costs are met by the Plan.

In terms of the investment costs met by the members (the TERs and transaction costs), we believe these costs represent VFM in that not only are the costs very competitive compared to other pension arrangements, but the members have access to a range of funds with a leading passive investment manager.

In 2019, the Trustee reviewed the Utmost policy and concluded that it was in the members' interests to transfer these assets to the Plan in 2020 and providing members with better value was a key factor in coming to this decision. The Trustee now holds closed AVC policies with Utmost and Prudential with a small number of members remaining invested in With-Profits funds. The Trustee is mindful of the with-profits nature of these arrangements, which means that there is little scope for the Trustee to make changes. The Trustee will continue to keep these policies under review and may look to consolidate where possible in the future.