Yesterday I wrote about going to the L&G IGC Forum. It was one of three great events I went to (the other was a meeting at the FCA to discuss outcomes of pension savings and the third an inspiring meeting with 50 or so students at LSE where I hope I preached the truths of lifelong saving to some of our future financial leaders).
What all three meetings had in common was a willingness among participants to listen to each other and a feeling within each room that change could happen – and that change was down to us.
I have not given up on pensions, no matter what people are saying. Mickey Clarke on Wake Up to Money was bemoaning the fate of those who have stopped saving because they have hit the lifetime allowance. I have hit the lifetime allowance and I am still saving, not because I like paying tax, but because the marginal rate of tax I pay on savings above the LTA is not penal, it is just higher.
The story in the Telegraph this morning is indicative of a mind set. Those who see life through a tax lens , miss the bigger picture (Telegraph story here)
But I digress.
Yesterday’s meeting had around 70 of us crammed into a room in L&G’s Central London office in the City. The invitation list appears to have been a bit random and it will be interesting to see whether they’d have got more (or maybe less) next year using a more general invite. Those in the room were people who I generally didn’t recognise (which I took to be a good thing!).
I had brought to the meeting a shopping list from my blog yesterday. I needn’t have bothered, it seems that those speaking on behalf of L&G had either read the blog or been briefed on it (flattering but scary!).
My principal concerns had been (and are)
- lack of investment in operational infrastructure (the underlying admin architecture of the workplace pension most of us use)
- failure to deliver the modelling tools (and apps) to workplace savers (other L&G savers get more)
- need for clarity on pre and post Brexit member protections (especially those in the spending phase
- better facilities for payment of pensions
- evidence that the ESG processes pioneered at LGIM are embedded in the L&G investment default
- lack of progress in replacing Chair of IGC
I said I’d report on how these concerns were addressed and make comment. I think it worth doing as L&G’s workplace pension is widely used and these comments may resonate with advisers and the responses useful. In a wider context, I hope that those in charge of other IGCs will pick up on what L&G are doing and see that if you run these forums, not only will people come, but people will engage and provide the feedback that IGCs need to do their job. Consider such meeting an annual trip to the petrol station to get refuelled
- L&G need to overhaul their current systems. It is now too expensive to take on new business for them to do so directly (hence pensionsync and eAsE being used as interfaces. Interim Chair of IGC (Steve Carrodus) accepted the comment though I have not hear any formal actions from the IGC. My worry is that for financial reasons, L&G give up on innovation and simply pull up the drawbridge (like Prudential some ten years ago).
- Apparently L&G are involved in a comms. review. If this is simply a sharpening of the coloured pencils, then I’d call that an exercise in procrastination. To really help members we need real time information delivered through proper digital channels (including hand held applications).
- I spoke with John Roe (multi-fund supremo). The MAF will maintain its current (un) hedged strategy at current currency levels, the trigger for a move to hedging would be sterling 1.15 to the dollar. I hope that L&G will issue us with regular updates on how our default is being managed through this worrying time.
- I was concerned that the Chair commented that he felt the current payment systems were satisfactory. L&G do indeed offer the pension freedoms but the delivery of money back to us is slow and expensive. I don’t see why I should have to pay my insurer a fee to have my money back. This remains a concern for me as a policyholder.
- We had a good session from the L&G ESG team, I mentioned that I felt that the default fund manager – Martin Dietz – had sounded “equivocal” about the influence of ESG factors on asset allocation and the cost of the team on LGIM profitability. I still sense that tension but suspect that it is a creative tension within the investment organisation. Policyholders clearly want to see social purpose to their investments though not at a cost to performance. We want our cake and to eat it too!
- Richard Atkins, the brilliant IGC Pension Scheme Manager confirmed that the plans for replacing Paul Trickett would deliver a new Chair by the end of the year and that this was always the plan. Tony Filbin told me that comparing the arrival of David Sims as Zurich’s replacement for Tricky was not “like for like”. I’ll take Tony’s word for it, in the meantime, Steve Carrodus seems to be doing a good holding job.
Was this meeting successful? I think broadly it was. If I could be critical, I think that Rachael Brougham could have been more incisive in her comments – a little less process and a little more insight would have been handy! Rachael use to adjudicate in pension pitches I used to give and I’m used to her being plain with me – I hope she will take this comment constructively – from someone who admires her!
I loved the format of the meeting and the fact that it happened. Yesterday I wrongly suggested that this was the third meeting of its kind. I stand corrected, previous meetings were Forums for members of L&G’s mastertrust.
So – one down – about 24 to go! Long live the IGC and well done L&G!