I wasn’t at the launch of the IGC’s research, commissioned by NMG, I was spending a day on the Ganges in central India. Just as well! I am quite sure I would have been ejected from the meeting in a bout of spleen!
When NMG were first appointed by a collective of IGCs to find out what the public thought of the various providers the IGCs govern, I had grave misgivings. For years these providers have been pulling the wool over the eyes of policyholders and justifying high charges with arguments that it’s the value bit of “value for money” that counts.
Well I had policies with many of the providers in the group of 11 providers who paid for this research and I will tell you that charges do matter. My Allied Dunbar policy has struggled to make any capital gain and as soon as April 1st comes and its exit penalties are lifted, I’m offski!
The arithmetic is obvious, an extra 1% in charges over the lifetime of a personal pension means a 28% fall in what comes out when the pot is taken.
And yet the conclusion reached by the IGC collective (as reported by Professional Pensions) is that charges are not a priority for members. We are dealing here with alternative facts.
Meanwhile the report tells us that members do think that a good return is important! We are bound to conclude that either the survey questions were very misleading, or public understanding is so limited that IGCs cannot be left to their own devices.
Ironically , Jacqui Reed of Sackers who convened the meeting is reported as saying that “education and ongoing support is vital for increased awareness and to create a greater sense of empowerment for members”.
So what does “empowerment” mean? The capacity to pour money into workplace pensions without regard for what they’re paying their providers?
This is of course precisely what the insurance companies want. The IGCs were not set up to determine the level of ignorance among policyholders (the OFT had already done that and concluded
What the IGC should be doing is making sure that people understand what they are buying and to do that , they need to consider both value and money.
So long as the IGCs play on public ignorance and tell us everything in the garden is rosy, the longer the insurance companies can get away with murder.
It is high time that the FCA intervened in this market research nonsense and got the IGCs back on track, the excursion into benchmarking, of which yesterday’s meeting was the report-back, has told us nothing that we didn’t know. NMG have pocketed a lot of consultancy fees and another year has gone by.
If the IGC’s are to continue to commission benchmarking information, it has better produce more than the vague waffle reported in Professional Pensions.
“There is a great willingness to engage if misconceptions can be peeled away and gaps in learning can be filled. Members are more likely to save and consider saving more (producing better outcomes) if they are more confident about the security of their savings”.
I suspect that if they knew that a large chunk of their savings could be lost to costs and charges, these members would stop saving altogether!
If there are no hidden costs and charges in these workplace pensions, let the IGCs tell us so. But don’t kid us that because members don’t prioritise charges, that they don’t have an impact and let’s remember that no one ever went bust underestimating the ignorance of the public.