Clause 15 details the actions that may be required when an arrangement falls into an intermediate rating. That could be an arrangement that is at risk of not delivering value, or one that provides a certain level of value, but needs more work to improve the value it offers. It allows for regulations to detail the actions required of trustees and managers for schemes or arrangements rated intermediate. That could include producing an improvement or action plan, outlining their planned steps towards improved value for members or informing the employers currently paying into the arrangement of its value for money rating and ensuring that the arrangement does not take on new employers until it improves the value rating. That last point was raised at the evidence session on Tuesday.

As clause 14 provides the ability to set a number of sub-categories of rating within the intermediate category, clause 15 enables different consequences to be attached to those sub-categories depending on the value being provided. We are proposing to give schemes in the intermediate rating a period of up to two value for money assessment cycles to make the improvement needed to provide value to their savers.

It is important to differentiate between the intermediate and the “not delivering” rating. Schemes rated as not delivering are essentially not providing value to savers, with no identifiable improvements within a reasonable amount of time. Those schemes will be required to make an assessment of their next steps, which will most likely be to transfer the savers to a scheme that is providing value. That is the ultimate sanction within this framework.

Schemes that are rated intermediate will have identified where improvements can be made and will be required to complete an improvement plan. This would outline the proposed changes to improve their VFM rating within two years. As well as providing definitions of employer and participating employer in the context of the clause, it also allows for the content of an improvement plan to be included in secondary legislation.