The Prudential’s Lawrence Churchill has published the Prudential IGC’s Chair Statement (the first of the crop).
You can read it here https://www.pru.co.uk/pdf/PRUAG5076_A.pdf.
Last year, I reviewed this Statement and gave it the thumbs up, I’m going to give it a thumbs up again this year. Very sensibly, the IGC is focussing on member outcomes and not on marketing flim-flam. Churchill congratulates himself for setting his benchmark return at CPI +3% (noting that this is the same return as adopted by NEST – where he was previously Chair). I thought this a good benchmark last year though I am not sure adopting the NEST benchmark gets Lawrence his knighthood!
What the Prudential should now be doing is asking how much risk it took in getting the 20%+ return achieved by most of its benchmarks and asking how much extra return was lost from poor execution of transactions. Right now we know that the Prudential’s fund were in the right place at the right time but was this luck or judgement?
I will give the Prudential an amber score for their work on value for money; they cannot be blamed for having no measure to report on, but some published analysis on risk adjusted performance would have been welcome.
Tough on exit penalties (tough on the causes of penalties)
Lawrence cut his teeth with Hambro Life and Allied Dunbar so knows his way around charges and where they come from. The work the IGC has done for members is exemplary. Here is the summary;
The section contains a number of case studies showing just how much money has been saved for those picked out. I know Pru charges and these savings are vivid and real.
If this round of IGC chair statements shows such consistent improvements for policyholders with legacy charges, then the IGCs will have done a find job. I am giving the Pru a big green for the steps they have taken and the IGC a big green for getting them to take them!
I enjoy the humour of Churchill’s introduction to the IGC report which asks readers if they have the appetite to read more. He should not be so bashful, the report’s tone is clear and precise, it does not patronise nor does it flinch from criticising the parent (for instance on the communication of benefits to members).
I do wish the Prudential would give the IGC more prominence on its website. The report can be found by inoputting IGC into the search box but it could and should be given a more prominent position. I made this criticism last year and I’m making it again. But as with last year , I give the report a green for the way it engages with its members.
It is a shame that the Prudential have withdrawn from the workplace pension market (at least for new business). As with Royal Sun Alliance we can say “that they were likely, had they been put on- to have proved most royally”.
If I have a comment on the Chair’s report, it is that it fails to deal with the Prudential’s post retirement strategies for members of their schemes. Frankly we aren’t too impressed with the pricing of the in retirement drawdown portfolios we have analysed and remain unconvinced that Prudential are doing the right thing for existing members.
I’d suggest that Lawrence Churchill adds this to the wish-list for the IGC in 2017!