IGCs – 6 months in – a worrying lack of diversity.

governance 2

In April 2015, insurers offering personal pension contracts were required to set up Independent Governance Committees as a result of the findings of a study by the Office of Fair Trading that concluded

OFT

Also in April 2015, the FCA issues a call for evidence on how we could judge “value for money” in workplace pensions. With the call for evidence , they published a paper commissioned from Novarca, a European consultancy, which provided a method for assessing the costs of a pension fund relative to the value it was bringing (value for money).

In the intervening six months , we have seen a lot of hand-wringing from those who have been appointed to these Independent Governance Committees about how hard it is to report on value for money, but precious little action.

If you’d like to see how to assess the costs incurred by a fund manager in delivering value- you can do so by reading section 8 (the appendix) of the Novarca report by pressing this link.

Nobody is expecting ordinary people to have the time, energy, skill or knowledge to assess the value for money from their workplace pension. But we are expecting the IGCs to do this for us. They are due to report to their members in April 2016 (for the first time) and I am expecting good things, along the lines of the Novarca report.

That is because I have been promised big things by a Government who decided not to refer the insurers offering workplace pensions to the Competition Commission. If the IGCs do not come up with the goods, I hope that the FCA recommends that the Competition Commission are brought in.

So what are IGCs up to?

My friend Dominic Lindley has spent some time compiling a list of the major insurance company IGCs. I’ve copied his research to the end of this blog.

Another friend, Jack Jones of Professional Pensions has forwarded me the link to his publications list (here). Both lists are far from definitive, many small insurers don’t have to run full blown IGCs (they can run mini IGCs called Governance Advisory Arrangements).

A quick search of the smaller life companies (such as Mobius Life) suggests that next to nothing has been published (yet) on what the GAAs are up to.

We heard about the discussion of the IGCs at their recent meeting in the City because some of the attendees went live on twitter. I’ve reported on this here. I’ve been studying the public utterances of members such as Laurence Churchill (Pru IGC chair)

The great thing about having an intervention like IGCs is that it’s newsworthy and people might take a little more interest,” he says. “Fundamentally I think we [IGCs] need to account for ourselves publically in a way that’s accessible for members and get the message through somehow.”

Well so far IGCs have not been newsworthy, my articles on them occupy a high proportion of the google listings!

For the avoidance of doubt, this is what these IGCs are supposed to be doing

Assessing

the ongoing value for money for members delivered by schemes, particularly, though not exclusively, through assessing:

Whether default investment strategies are designed and executed in the interests of members, with a clear statement of aims, objectives and structure appropriate for those members.

Whether the characteristics and net performance of investment strategies are regularly reviewed to ensure alignment with the interests of members, and action taken to make any necessary changes.

Whether core scheme financial transactions are processed promptly and accurately.

The levels of charges borne by scheme members.

The direct and indirect costs incurred as a result of managing and investing, and activities in connection with the managing and investing of, the pension savings of members, including transaction costs.

Scheme administration including communication with members.

Raising

with the firm’s board any concerns it may have in relation to:

the value for money offered to members.

the information or resources that the firm provides or the arrangements in place to ensure that the views of the members are directly represented to the Committee.

Escalating

The Committee will escalate concerns as appropriate where the firm has not, in the Committee’s opinion, addressed those concerns satisfactorily. This may be to the FCA, TPR, members and employers and/or the public as appropriate.

Reporting

The Committee will produce an annual report setting out:

The Committee’s opinion on the value for money delivered by schemes, particularly against the matters listed in 3.1 above.How the Committee has considered members’ interests.

Any concerns raised by the Committee to the firm’s Board and the response received to those concerns.

 

What can we learn from the composition of the IGCs?

It’s fair to say there has not been massive competition for places on these committees. Despite industry calls for diversity, there is little difference between the composition of the IGCs listed in the appendix.

Ptimans Trustee Limited provide an independent committee member to Aegon , L&G , Friends Life, Standard Life, Fidelity and Black Rock. These positions are held by Richard Butcher, Colin Richardson, Steve Carrodus and Kim Nash (all but Kim Nash having multiple appointments).

Law Debenture provide an independent committee member to Aviva, Prudential and Fidelity (John Nestor, Inder Dhingra and David Felder). BES Trustees have two appointment (Fidelity and Black Rock – both to Rachael Brougham and CCtl also have two appointments – Jonathan Lord at Friends Life and Claire Ashton at Fidelity.

This preponderance of independent trustees is not matched by people known to be consumer champions. Only Joanna Causon of Aegon, Anna Bradley and Laurie Edmonds at Zurich and  Tony Filbin at Legal and General have any reputation as consumerists,

The composition of the boards shows little imagination and very little intent to provide a robust governance structure to the insurers. There is a notable exceptions – Zurich being one (well done CEO Gary Shaughassey for being a member) and Legal & General (who have been ahead of the curve for some time) being another.

That the majority of the IGC members are spreading their net over a variety of other trustee and non-executive directorships, is worrying. Several IGC members are also on the insurer’s master trust boards. There seems to have been a pooling system for selection which has led to a much lower level of diversity than we could have hoped for.

If the general public was asked to identify one figure on any of these boards, it would be hard pressed.

It is too early to say that these boards are packed with flunkies, but independence is as independence does and I’m hoping by April – (more in hope than expectation), that we will see a genuine challenge to the hegemony of the insurance executives.

 

Appendix ;Dominic Lindley’s compilation

Aegon

Joanna Causon, CEO of the Institute of Customer Service and Colin Richardson, Client Director of PTL will join Ian Pittaway who was appointed as the Chair of Aegon’s IGC last month.

Joanna Causon brings with her a wealth of customer service experience from both commercial and not for profit organisations. She also has extensive experience of working with government and professional and trade bodies. She has been the CEO of the Institute of Customer Service since 2009 which has enabled her to put customer service at the heart of all business activities, which she demonstrated by launching the UK Customer Satisfaction Awards in 2011.

Colin Richardson will take up his appointment on Aegon’s IGC while in his role as Client Director at PTL. Colin has more than 25 years of experience in pensions and actuarial consultancy providing trustee advisory services. He was formerly a Director at KPMG and a partner at Barnett Waddingham LLP after which he held senior positions at JLT and Buck Consultants. As well as pension trustee appointments, Colin sits on the PTL Governance Advisory Arrangement, alternative IGCs for smaller providers running workplace personal pension schemes.

The remaining two places on the committee will be filled by Angela Seymour-Jackson, Managing Director, Workplace Solutions and Gordon Greig, Customer Innovation Director from Aegon. As Aegon nominated IGC members they bring a wealth of experience and diversity to the committee.

Legal & General

Paul Trickett (Independent Chair)

Tony Filbin (formerly MD of L&G Workplace pensions and now independent consultant)

Paul McBride – provider representative

Steve Carrodus (Pitmans Trustees Limited)

Rachel Brougham (BESTrustees Limited).

Prudential

Lawrence Churchill Independent Chairman
Paul Barlow Independent Member
Lesley Alexander Independent Member
John Nestor (Law Debenture) Independent Member
Edward Bridge Prudential employee
David Evans Prudential employee

Aviva

Aviva is pleased to announce the appointment of Law Debenture as the Corporate Chair of its Independent Governance Committee (IGC).  Inder Dhingra, a director of Law Debenture, will take on the role of chairman.

Inder Dhingra is an independent non-executive director, independent pension trustee and an experienced senior executive from the financial services industry.  He serves as director of Law Debenture, representing the firm on the trustee boards of a number of large pension schemes including as chair of investment committees.  Inder is also a trustee director of the Lloyds Banking Group’s primary defined contribution pension scheme, and chair of the Group’s defined contribution investment committee.

In addition, Aviva is today confirming the appointments of Marcia Campbell and Robert Talbut as independent members.  Marcia Campbell is an independent non-executive director with over 25 years’ experience in the financial services industry and is currently on the Board of Sainsbury’s Bank. Robert Talbut has over 30 years’ asset management and insurance experience and was Executive Director and Chief Investment Officer for Royal London Asset Management for ten years between 2004 and 2014.

Brian Gabriel, Director of Corporate Pensions and Business Solutions at Aviva, and Craig Hunter, Existing Business Commercial Director at Aviva, have also been appointed to the IGC.

Friends Life

Following a robust recruitment process Pitmans Trustees Ltd, represented by Steve Carrodus, a Director, is appointed as independent Chairman of Friends Life’s IGC. Steve is supported by two further independent committee members; Jonathan Lord of Capital Cranfield Trustees and Charles Pickup, who is also Non-Executive Director of Rothesay Life Limited.

The IGC also includes two senior executives from Friends Life; Colin Williams, Managing Director Workplace and Intermediated, and David Still, Managing Director Proposition and Pricing.

Primarily focused on ensuring the delivery of good customer outcomes and value for money across Friends Life workplace pensions, the committee benefits from a wide range of industry expertise and will provide oversight directly to the Friends Life Board.

Scottish Widows

Babloo Ramamurthy as the Chair of its Independent Governance Committee, which was established in May last year to act on behalf of customers contributing into the company’s group pension products.

 

Babloo has an extensive background in pensions, and is currently a non-executive director with RPMI, the financial services company delivering investment and pensions administration services to the Railways Pension Scheme, together with a wide range of other clients. He also serves as chairman of the B&CE Group, which operates The People’s Pension. Babloo gained an extensive and diverse international experience and perspective in the consultancy field after nearly 35 years with Towers Watson, where he headed the EMEA Region and was on the firm’s Global Executive Committee.

Independent Chairman – Mr Babloo Ramamurthy

Independent Member – Mr John Howard

Independent Member – Mr Mark Stewart

Independent Member – Ms Tilly Ross

Provider Nominated Member – Mr Ronnie Taylor

Provider Nominated Member – Mr Iain McGowan

Royal London

Royal London announces the appointments of David Gulland and Peter Dorward as members of its Independent Governance Committee (IGC).  They took on their roles as of 25 March 2015, following the appointment of Chair of the IGC Phil Green earlier this year. 

David Gulland has a broad range of experience across the UK life insurance sector, with 25 years’ experience as a consultant followed by senior executive roles within the life insurance industry. He is currently Chief Executive Officer of Marine & General Mutual and was previously UK Managing Director of Reinsurance Group of America. Between 1983 and 2009, David worked for Bacon & Woodrow, whose actuarial business merged with Deloitte & Touche in 2000. He is also a Non-Executive Director of Investment & Life Assurance Group, a trade body representing members from the life insurance and wealth management industries.

Peter Dorward has solid experience both in life insurance and institutional investments, having worked across a broad range of disciplines, including business leadership. He was Chief Executive of SWIP’s Saudi Arabian joint venture business and is now Managing Director of IC Select, a private limited company specialising in the evaluation of providers to UK Pension funds. He currently holds two non-executive roles at the Citizens Advice Bureau – Chairman of the Board of Trustees, Central Borders and Non-Executive Director, Scottish Borders Consortium.

Fidelity

Kim Nash, Client Director of Pitmans Trustees Limited (PTL) has been appointed as independent Chair and is supported by Rachel Brougham, of BESTrustees PLC and David Felder of the Law Debenture Pension Trust Corporation.

 

The IGC and MTB also include senior Fidelity employees; Paul Mason, Chief Administration Officer will sit on both the IGC and MTB. Julian Webb, Head of DC and Workplace Savings will be a member of the IGC. Marianne Jaekel, Head of DC Legal will be a trustee of the Master Trust Board.

 

The Committee and Board will be focused on ensuring the delivery of good customer outcomes and value for money across the firm’s workplace DC pension schemes and Master Trust.

Standard Life

Chair René Poisson is a very experienced pension fund trustee, a senior banking professional, and a lawyer by training. For 30 years he worked at JP Morgan in senior credit roles. His trustee experience includes both defined benefit (DB) and defined contribution (DC) trusteeships. Over the last 15 years he has been a trustee of JP Morgan’s London Office Retirement Plan and, latterly, chair of the board and investment sub-committee of JP Morgan’s UK Pension Plan, one of the largest DC schemes in the UK.

René will also serve as a director on Standard Life’s Master Trust board.

Richard Butcher is managing director of Pitmans Trustees Limited (PTL), the trustee of Standard Life’s master trust scheme since its launch, and is a trustee to a number of both DB and DC pension schemes. He is vice chair of the National Association for Pension Funds (NAPF) DC Council and sits as a non-executive director on the NAPF board, as well as being a fellow of the Pensions Management Institute and a member of the PMI Council. Richard acts as governor to several contract-based pension plans and as a pension scheme secretary. Before joining PTL in 2008, he ran his own independent trustee and consultancy business.

PTL have also been appointed chair of Standard Life’s Master Trust board, and Richard will act as their representative.

Roger Mattingly is Immediate past president of the Society of Pension Professionals having spent his entire career in the pensions industry. He has been a director of PAN Trustees Limited since 2013 and is now its managing director. He served on the board of HSBC Actuaries and Consultants for over 20 years. He is a member of various industry groups including the Pensions Regulators’ Stakeholder Advisory Panel, the NAPF’s DB and DC Multi employer committees, the House of Commons Pensions Leadership Group and has been a member of several DWP Policy Engagement groups.

Ingrid Kirby is an independent trustee with 30 years’ experience in pension fund investment, having worked at Hermes Investment Management for the British Telecom pension scheme and its third party clients. She has been a trustee of both large and small DB and DC schemes in commercial and not-for-profit organisations.

Michael Craig is the Head of Product and Technical Consultancy at Standard Life. He is a director of Standard Life Trustee Company Ltd and a trustee chair of the Royal Blind pension scheme. Michael has worked in the UK life and pensions industry for nearly 30 years.

Zurich

Leading pension provider Zurich has confirmed the final members of its Independent Governance Committee (IGC).  

Chair Laurie Edmans CBE, whose appointment was announced in January, will be joined by Anna Bradley, Ken Hogg, Virginia Holmes and Robert Laslett.

The five-strong committee, set to meet at least quarterly from April, will assess the ongoing value for money offered by Zurich’s workplace defined contribution contract-based pension schemes.

All committee members are independent, meaning they can focus solely on providing oversight of workplace pension schemes and supporting Zurich in ensuring customers get good value for money.

Bringing with them extensive senior leadership experience from across the public and private sectors, the members will oversee the ongoing interests of Zurich scheme members.

Gary Shaughnessy, CEO of Zurich UK Life, said: “We have always been strongly supportive of Independent Governance Committees.

“The strength of this committee is a clear indicator of our commitment to ensuring that workplace savers get good value for money from their pensions as well as good governance over the solutions we offer.

“I am delighted that we have been able to appoint such high calibre committee members and believe that following these appointments Zurich is even better able to navigate the ambiguity inherent in this rapidly evolving market.”

— Ends —


Zurich Independent Governance Committee Members

 

Laurie Edmans CBE:  Laurie spent his executive career in the insurance sector, and has since held a variety of non-executive roles in the pensions industry. Currently, he is Chair of Marine & General Mutual Assurance Society, a Council member at the Pensions Policy Institute and a non-executive director at the Money Advice Service.  Previously, Edmans was a non-executive director of the Pensions Regulator (tPR) and recently left the board of the National Employment Savings Trust (NEST).  He was appointed CBE in 2006 for services to pensions reform.

Anna Bradley: Anna is a long-standing consumer advocate, having worked at Which? for many years, and she was formerly CEO of The National Consumer Council. She also has long experience as a regulator, having been a director at the Financial Services Authority and the Chair of a number of independent professional statutory regulators. Anna is Chair of Healthwatch England – a body tasked with championing the consumer and user interest in health and social care. She is also Chair of the Southern Water Customer Challenge Group, an independent group established in 2012 in response to Ofwat requirements to help water companies focus on customer interests.

Ken Hogg: Ken Hogg is a fellow of the Faculty of Actuaries and has more than two decades of experience in the insurance industry including stints with AIG Life UK as Chief Operating Officer, RGA as Chief Actuary, MGM Advantage as Chief Financial Officer and Aegon in a variety of senior roles including Marketing Director. He was also formerly a Director of the Insurance Sector at the Financial Services Authority, and is currently responsible for the implementation of Solvency II for the Gibraltar regulator, the Financial Services Commission. Ken has also served as a Trustee of pension schemes.

Virginia Holmes: Virginia brings valuable pension and investment expertise to the Independent Governance Committee from both her executive and non-executive experience. Virginia is chair of USS Investment Management Ltd, which manages the Universities Superannuation Scheme, one of the largest private pension schemes in the UK. She is also a Non-Executive Director of Post Office Ltd., the government-owned UK post office network, and is chair of its pensions committee, and of two investment management companies, with assets under management in excess of £300bn. Virginia’s executive career spans over 20 years in the financial services sector, culminating as CEO for AXA Investment Managers.

Robert Laslett: Robert brings extensive regulatory experience to the IGC, having previously held an Executive Director role at the Office of Fair Trading and Directorships at the Department for Work and Pensions for Private Pensions and as Chief Economist for Pensions. Robert is currently a visiting senior lecturer within the Department of Politics at University College London, and a Governor of the Pensions Policy Institute. He also has experience of advocating for consumers as a current member of the Civil Aviation Authority Consumer Panel. As an economist, Robert has undertaken roles within HM Treasury, The World Bank, and private consulting firms.

Blackrock

BlackRock has appointed an Independent Governance Committee (‘IGC’) to oversee contract-based workplace pension schemes for UK clients.

The new Committee consists of Chairman, Allan Whalley, an independent trustee, Colin Richardson of Pitmans Trustees Ltd, and Claire Altman of Capital Cranfield Trustees Ltd. The IGC also includes senior BlackRock figures, Paul Bucksey, head of the firm’s UK DC business, and Mark Allen, CEO of BlackRock Life Limited

governance

 

 

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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