Author: Michelle Brown
Why benchmarking matters more now
As cost pressures continue to shape financial decisions, workplace pensions are coming under more scrutiny. Trustees and employers are being asked to show not just that governance processes are in place, but that schemes are delivering real value for members. Against that backdrop, investment benchmarking is starting to play a bigger role in pension scheme governance, helping schemes respond to growing expectations around transparency, comparison and oversight.
The Value for Money (VFM) framework is a clear sign of that shift. What used to be more narrative-led is now expected to be backed by evidence, easier to compare and able to stand up to challenge. Trustees increasingly need a fuller view of how investment performance, governance, charges and member outcomes come together to support value. Having seen first-hand how the retirement savings market works in Australia, I believe the UK is well placed to respond — not by copying that market, but by building on the strength of its own governance framework to create a more disciplined approach to assessing value.
It may feel like a subtle shift, but it matters.
What's changing
Trustees have always looked at key measures such as investment performance, fees, governance structures and member engagement. None of that's new.
What is changing is what people expect trustees to do with that information.
Under the VFM framework, it's no longer enough to show that each area is being reviewed separately. There's a growing expectation that schemes can show value in the round — explaining not just what is happening, but how it compares, where the strengths or risks are and whether members are getting good outcomes. This is where a more structured benchmarking approach can really help.
In practice, that means moving away from fragmented reporting towards something more joined-up, more structured and easier to compare.
Where the challenge is
Despite these rising expectations, the tools available to trustees and employers have not fully caught up.
Across the industry, reporting often remains:
- Siloed — investment, governance and member outcomes assessed separately
- Inconsistent — varying formats, metrics and benchmarks
- Difficult to compare — limited ability to assess relative value across schemes or providers
The result is a familiar challenge: making confident, evidence-based decisions when meaningful comparison is still difficult.
As scrutiny grows — from regulators, auditors and governance bodies — that gap becomes even harder to ignore.
Why investment benchmarking matters
Against that backdrop, investment benchmarking is starting to move from a useful governance exercise to something much more strategic.
At its core, benchmarking provides a structured way to:
- Compare performance, fees and outcomes against relevant peers.
- Identify strengths, risks and areas for improvement.
- Support stronger, better-informed decision-making.
But in today's environment, and with more pressure to show value clearly, its role is starting to change.
Benchmarking is no longer just a useful source of insight — it's increasingly becoming a way to show that decisions are grounded, consistent and based on more than assumption.
It helps trustees show that decisions are based on more than instinct or process. They can show how those decisions compare, where value is being delivered and where questions still need to be asked.
Looking at the bigger picture
Not all benchmarking approaches give you the full picture.
Many existing models focus on just one area, usually investment performance or cost. That's a useful starting point, but trustees — and increasingly informed members — are asking wider questions. They want to know where money is being invested, how it's being managed, and whether it's really delivering value. A basic benchmarking report can support governance discussions, but on its own it only shows part of the picture.
If the wider picture is missing, it becomes much harder to judge value properly.
This is where Gallagher sees a real opportunity for clients. A more integrated investment benchmarking model can give a fuller picture of value for money by bringing together the measures that matter most in one clear framework. We believe the strongest approaches should include:
- A holistic view of value, combining investment, governance, fees and member outcomes
- A consistent framework, enabling meaningful comparison over time and across schemes
- A clear evidence base that supports trustee oversight and regulatory expectations
For us, benchmarking is most useful when it reflects the full picture of how value is being delivered — not just separate parts looked at on their own.
Why benchmarking is becoming more important
The UK may not have the same consumer-driven dynamics seen in markets like Australia, where members actively compare and switch providers. But that does not make the need any less real.
In the UK, the driver is different — but just as important.
Here, demand is being shaped by governance, regulation and the need for decisions to stand up to challenge. As the VFM framework develops, that's likely to become a more regular part of the annual governance cycle.
Over time, evidence-based benchmarking is unlikely to stay optional. It's more likely to become a standard part of how schemes show value.
What benchmarking means in practice
For trustees and employers, the message is clear.
The question is no longer whether benchmarking has a role to play, but how it can be used well to support clearer, more consistent decisions.
That's where the right approach matters. At Gallagher, we work with clients to move beyond fragmented reporting by bringing together investment performance, governance, fees and member outcomes into a clearer picture of value. Done well, this gives trustee boards and employers more clarity, stronger evidence and more confidence when it comes to challenge, oversight and planning ahead.
As expectations continue to change, the ability to show value clearly and consistently will become more important for pension schemes — and for the advisers supporting them.
For schemes looking to strengthen their approach, investment benchmarking offers an opportunity not just to improve governance, but to build a clearer evidence base for value.
If you'd like to talk about how Gallagher can support a more structured approach to benchmarking, governance and value assessment, please get in touch.
