How does the Trustee check that the Scheme is offering value for members?

Every year, with support from its independent adviser, the Trustee carries out a review on the value for members of the Scheme. It looks at things such as:

  • Whether investment fund costs and charges are competitive within the market and how they compare with similar schemes with a similar mix of investments;
  • How well run the Scheme is and whether benefits are paid accurately and on time;
  • The level and type of communications and support available to members to help them make informed decisions about their retirement savings;
  • The range of investment funds offered to members and whether they reflect the retirement options available, enabling members to align their investment choices with their retirement goals;
  • The range and quality of services available to members of the Scheme.

The Trustee considers both the services and features of Scheme membership that members pay for and the services and features which members benefit from as Scheme members which are paid for by the Trustee or the Bank.

What is the Trustees latest view?

In November 2018, the Trustee undertook a ‘Value for Members’ assessment, with support from its advisers covering the Scheme year to 30 September 2018. In line with the requirements of the Pensions Regulator's DC Code of Practice legislation and guidance, this assessment considered the value to the member of the services for which they bear the cost. The assessment measured various key elements of a DC scheme and included the use of a scoring mechanism to determine the outcomes, which were documented, with any areas for improvement captured for future reference.

The Trustee appreciates that low cost does not necessarily mean better value, so it also considers more generally the range and quality of services and benefits associated with membership of the Scheme.

The Trustee has concluded that the Scheme represents excellent value for its members because the only charges borne by members are those to access the investment fund range, and these charges are competitive, both in absolute terms (i.e. when compared with typical levels of charges in the pensions market) and in relative terms (i.e. when considered in the context of the range and quality of services and benefits associated with membership of the Scheme for which the member does not bear the cost).

What did the Trustee take into account?

In forming this conclusion the Trustee considered matters including the Scheme's management and governance, administration, investment governance, fund performance in the context of the investment objectives, member communications and member experience and also the general characteristics of the Scheme's membership. In particular:

  • Charges for the Scheme's default arrangements are significantly below the statutory charge cap of 0.75% a year
  • Charges for the Diversified Lifestyle option have significantly reduced for members during the last 15 years before members’ target retirement age
  • Members have access to various asset classes, all of which have competitive fund management charges
  • Members do not currently pay for the costs of Scheme administration, professional adviser costs or any costs (other than fund management) associated with the operation of the Scheme (rather, these costs are borne by the Sponsoring Employer)
  • Members are provided with regular and clear communications on their options
  • Members received a good quality of customer service
  • Members have access to some retirement flexibilities on a basis which is in keeping with similar schemes.

Due to incomplete data, the Trustee was not able to assess the level of transaction costs as part of its value for members’ assessment.

The Trustee is currently exploring how best to gather feedback from members on what services and benefits they value and this will be taken into account in the next value for members' assessment which will be undertaken during 2019.