Confusion reigns at the Royal London IGC

In general IGC reports and press releases don’t mix. We’ve had two reports which have been advertised to the press and both fail to impress me. We are not asking IGCs to sell their workplace pensions, or even themselves, we’re asking for a clear view of what is going on.

I like Phil (not Philip) Green and I like his team, I like the way they brought on a new member from among the policyholders and I’ve enjoyed my meetings with members last year.

But having spent much of the last two days , trying to get my head round the report, I am still confused about what is really going on.

I’d like the IGC to focus more on its readers and less on its press-coverage!

Let’s start with value for money

Royal London’s analysis of the costs incurred in running its funds is weird.
Royal London

I am afraid I don’t recognise any of the columns. The method for calculation is obscure and though the eventual numbers are close to those of L&G, they don’t seem to have been arrived at with the help of the FCA’s slippage methodology.

But if I’m confused by this, I’m positively scared by the pounds shilling and pence calculations which suggest that for every £30,000 I have with Royal London, I appear to be losing £25 (as opposed to an unexplained TER (??) which loses me £204).


Royal London 3

The incidental costs of running the fund are compared with a TER which is unexplained and we are then presented with investment growth numbers which presumably relate to performance tables published a little later on.]

Royal London 2

the performance figures suggest that the funds are generally underperforming but against an undisclosed benchmark.

I am left totally dazed by a lot of numbers and research , none of which seems to add up to a value for money assessment! I am left asking the question

How do we make sense of this?

I suppose the conclusion I should be drawing is that I should be speaking with an IFA. But it would seem that Royal London are keen we consumers understand these things for ourselves.

For instance, the IGC tells us that Royal London has developed a do it yourself transfer service used by policyholders wanting to bring their pots together,  this service (used by 4,000 policyholders)  is available to those whose advisers have confirmed that “they don’t want to be involved”.

This confuses me as earlier in the report we are told that

“Royal London continues to attract new workplace pension business solely through corporate and financial advisers and does not offer its services direct to employers.”

There is this ongoing dialectic within the report between the need to provide services directly to the customer – and a need to keep the adviser in the loop.

My experience is that the needs of the employer, primarily to have a direct interface with Royal London in the most efficient way possible, aren’t being addressed. The API interfaces being developed between payroll provider and the intermediaries such as pensionsync have passed Royal London by.

The employer’s needs are simply ignored in the IGC report, despite the bulk of the report concerning itself with workplace pensions.

Just who is Royal London trying to please?

Confusing tone

I am confused by who Royal London sees as its customers and I’m confused by the charts produced by Royal London’s IGC. I am also confused by the tone of the report which at times appears to be eulogistic about Royal London. This is typical of its style

Royal london 5

This is not measured and it doesn’t inspire confidence. The profit share (which is adding 0.18% to returns this year is a great thing, but it is generated from excess profits after the payment of business expenses. There is no analysis of whether Royal London is an efficient business, of executive remuneration or benchmarking of the costs levied on employers and policyholders in the first place.

I fear that the lack of investment in new technology will make the Royal London proposition increasingly uncompetitive against its rivals (in terms of the employer interface). I wonder to what extent the advisers (through whom Royal London’s workplace pensions are established , help in the maintenance of the schemes). In short I am quite confused as to the sustainability of the workplace pension business and the profit share.

Finally there is the question of effectiveness

Royal London have got Professional Pensions to publish coverage of their IGC report with the headline

Royal London IGC: Charges down by £15m and transaction costs are fair value.

I have no doubt that Royal London have cut out a lot of dead wood from their legacy books (insurers such as the co-op). A £15m write off in charges is impressive.

I’ve been through the report a few times now but I cannot see where the £15m reduction in charges is talked about.

As with so much else in the report I find I want to believe but find my belief suspended as I try to make sense of the statements.

If the IGC has been effective, it cannot prove it using the rambling style of this report.

As a final point, it is not effective to publish a report in April , (signed off by the chair on March 2nd) and call the report the 2016 report. It actually makes it hard to search for and confusing to file!

Confusion reigns!

This report is simply not focussed, it seems to be trying to please everyone but is a pain in the backside to read. It is often confusing to read and at no point did I get a coherent sense of whether Royal London were doing a good or bad job.

I really would like to give this report a better score, as I would give it an A+ for effort, but I can’t.

For tone I give it a red– it reads like a peon of praise for its provider and though enthusiastic throughout, is full of undigested Royal London jargon. As with last year’s report it does not read as a critique.

For its work towards value for money I give it a green, clearly there has been a lot of progress since last year and it is good to see a real attempt to make the numbers real for members. I suspect that once they have a proper method of doing things (from the FCA), the IGC will do great things!

For its effectiveness, I give the IGC an orange, if the report weren’t so hard to read, I suspect i could have given it more. But there are important areas of governance that seem to have been by-passed. There is no statement on ESG and precious little scrutiny of Royal London’s workplace strategy – at least from the perspective of the workplace!

Royal London are an anomaly, not just as the last significant mutual , but as an organisation that is dependent for distribution on IFAs, I’d like to see next year’s report look at how this strategy impacts the member and the employer.

It’s a quirky, thought provoking and often quite brave, but ultimately this is a bit of a mess and I suspect its most important test – it is very hard to read!

Further reading

The IGC report can be found here;

The Professional Pensions coverage of the report can be found here;

About henry tapper

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