The search for quality: secrets to success

When you’re booking a dinner in a restaurant that you haven’t eaten at before or a hotel that you’ve never visited, what do you do to make sure that you’re making the right choice? Some people look for a TripAdviser rating, recommendations from family or friends. Or maybe you look at the website and try and find some pictures? I usually do at least one of these and when I haven’t I’ve paid the price. But that’s just a meal or an overnight stay. When it comes to choosing a pension scheme, making an informed choice is even more important. The scheme an employer uses for auto enrolment is looking after workers’ money and, therefore, their futures. Whether you’re an employer choosing a scheme for your workers or an adviser helping an employer, what can you look for so that you know you’re making the right decision?

At the recent Pension and Lifetime Savings Association (PLSA) annual conference we took part in the Learning Hub, running a session on what badges of quality you could look for from a master trust. It sparked some really interesting discussions and it helped us identify four questions that employers and their advisers can ask themselves before picking a scheme.

Are they PQM ready?

The PLSA Pension Quality Mark READY status is awarded to schemes meeting their high standards. These standards include good governance, low charges and clear member communications. Choosing a PQM READY scheme means if employers pass the contributions element, they’ll be awarded a Pension Quality Mark themselves. PLSA publish a list of pension schemes that have achieved PQM ready status online so you can check for your scheme.  NEST is PQM ready of course!

Are they MAF accredited?

A master trust assurance framework (MAF) report demonstrates that a master trust is meeting good standards of administration and governance. It was designed to help employers and their advisers identify good quality schemes for auto enrolment and to build confidence in pension saving. The Pensions Regulator (TPR) publishes a list of accredited master trusts, of which NEST is one.

Are they a responsible investor?

This means thinking more broadly about how the companies and markets they invest in are run, how they generate profits and how they treat people and the planet. Being an active and responsible investor is another way of making the most of members’ investments. In our view organisations that are well-run have the best chance of sustaining success & profitability long term. NEST’s recent Responsible Investment report explains more about our approach to responsible investment and why it matters.

Have they won industry awards?

If a scheme has a track record for award success it means they’ve been judged by their peers, who are usually experts in their fields and have achieved high standards. Awards can be general, the for example, best pension scheme or focus on a particular element, for example its investment strategy.   NEST has already won a significant number of awards, including for best pension scheme, innovation and investment approach. You see some recent examples on our website www.nestpensions.org.uk.

Like a lot of decisions in life, our judgement is based on taking an objective balanced view. While we can recover from a bad meal or a disappointing hotel room, the cost of getting your pension choice wrong can be much greater. Ensuring the scheme you choose meets core standards, measured independently, is one way of being confident you’re on the right path.