Frequently asked questions
The Value for Members (VFM) rules are a new set of rules that Trustees of defined contribution pension schemes must assess their scheme against annually if they meet a set criterion. The VFM assessment outcomes must then be included as part of the scheme's annual chair's statement. These rules have been set out by The Pensions Regulator to safeguard positive member outcomes.
Only certain schemes have a legal duty to complete the VFM assessment as set out by The Pensions Regulator. If your scheme meets all of the below criteria, you will need to complete a VFM assessment annually:
- Your scheme is a defined contribution, or hybrid scheme,
- Your scheme has less than £100 million total assets as per your most recent accounts,
- Your scheme has been operating for at least three years,
- You have not notified The Pensions Regulator that you are in the process of winding up.
If your scheme meets the criteria above, take our free scheme health check to gauge how your scheme compares to the best schemes available to members.
For schemes whose year end falls after 31st December 2021, your VFM assessment must be completed each year and reported in both your chair's statement and your annual scheme return.
If you undertake a VFM assessment and find that your scheme does not meet the minimum assessment criteria, the Trustee should take one of two steps which should be outlined in your scheme return:
- Set out the immediate action you will take to make improvements to the existing scheme.
- Wind up the scheme and transfer the rights of your members into a larger occupational or personal pension scheme.
You might want to consider transferring into a Master Trust, such as Crystal as the authorisation of schemes of this type means that they are more likely to provide the desired outcomes for your Members. For more information about Crystal and the valuable benefits it offers to Members, please contact us.