I hadn’t been aware that IGCs had been submitting their statements to win awards. But the first think I am taught about Aegon’s activities last year is that in 2016 the Aegon UK IGC was awarded the “Best Independent Governance Committee 2016” at the Pensions Insight DC Awards.
No doubt these awards are “prestigious” and no doubt I should be congratulating Aegon, but my assessment of Aegon’s IGC report in 2016 was that it was a dull affair and my impression of the 2017 report is that it does a great deal of willy-waggling but tells us very little about the supposed improvements for policyholders.
The 2017 statement is punctuated by sound- bites from its members, each saying nothing in a very corporate way.
The best I can say about this year’s IGC report is that it is a very good corporate brochure, and, should the IGC submit it again to the Pensions Insight DC awards, I fully expect it to be “head and shoulders above the other IGCs” ; as last year it has “plenty of pictures and diagrams to maintain interest” and “it is written in plain language”.
But stylish presentation aimed at winning awards is not what IGC reports are about and winning awards should not be promoted as a principal activity of an IGC. The IGC should be on the member’s side and not part of the provider’s (Aegon’s) corporate marketing strategy.
The major thrust of Aegon’s report is that the IGC is listening to members. They’ve done this by being one of 11 IGCs who signed up to the NMG research project (which was commissioned through Sackers, the legal firm of which Ian Pittaway – Aegon’s IGC chair is a partner. The results of the NMG research are reported uncritically; Aegon is considered a paragon of engagement with its customers; here’s how the IGC report puts it..
The “deep delve” reveals that members are going on-line to look at their account and that opt-outs remain low , but these measures do not make for higher contributions or better outcomes. This superficial approach to member engagement is characteristic of the report as a whole. Nowhere is this more evident than in the report’s comments on value for money.
It’s hard to engage in your workplace pension if you have nothing to engage with. The Aegon IGC report has nothing to engage with.
A complete absence of engagement with Aegon’s investments.
People do not want fine words, they want fine actions. They want a good return on their money and they want to know they are getting it. The IGC report is a chance for members to see how their investments have done and what they’ve paid to get those returns.
The IGC report give us no details on the performance of the Aegon funds, no idea of how costs are, in absolute or relative returns and makes no mention of the funds driving performance. This is particularly relevant at this time of change for Aegon.
In 2016, Aegon purchased BlackRocks workplace pension business and signed an agreement with BlackRock tying it into BlackRock’s funds. The IGC touch on this uncritically; members are given no insight into whether the deal has value for them or just for the shareholders of the two institutions
In a year where other IGCs are publishing the transaction costs of the workplace pension products, Aegon’s IGC chooses to reassure us that it has received information on Aegon’s five largest funds the “current assessment is these costs look reasonable”.
Aegon policyholders are entitled to know what they are paying for their funds, especially in the light of the BlackRock alliance. They don’t and the IGC have ducked the issue.
Aegon and employers
The IGC says it supports Aegon’s “focus on supporting employers to be ambassadors” for Aegon’s workplace pensions. This is all very well, but the report makes no mention of the support that Aegon is (or isn’t) giving employers in managing workplace pensions.
Where most of its rivals are now engaging with employer payrolls to move beyond existing data-interfaces, Aegon is sitting on its hands. The IGC remains uncritical of Aegon’s almost total failure to upgrade its workplace pension administration proposition. As with so much else in the report, the issue is ducked.
It will be hard to make employers ambassadors , if they are not given the API interfaces they can get through others, then employers will be reluctant to promote Aegon. Indeed we have seen considerable dis-satisfaction among our clients at Aegon’s lack of engagement.
Employers wanting to use the IGC report as a focus of their governance, will need more than this to go on!
One wonders whether the lack of support given to employers reflects a general disinterest in workplace pensions. Members who crave the security of a strong provider, should be concerned that Aegon are falling behind in the provision of workplace pension support.
Tone , effectiveness and engagement.
This is a lazy report that suggest complacency in the IGC. It is very well composed and very well written and at times quite passionate. But for all its sound and fury, it signifies nothing.
NMG research has been used to plaster over the lack of any proper challenge to Aegon on the thing that really matter – the investment return. The report is silent on ESG matters. It is extremely weak in exploring the support it gives employers. It is difficult to assess whether Aegon has improved the lot of its legacy policyholders as the report is devoid of concrete numbers.
The report fails to engage on value for money for policyholders. We are given nothing but vague statements on the matter. It is as if that award has gone to the IGCs head.
For its tone and structure , I give Aegon a green, for its effectiveness I give Aegon an amber but for its engagement in whether its workplace pensions give value for money, I give Aegon a red.
You can read the Aegon IGC report here; https://www.aegon.co.uk/about-aegon/independent-governance-committee.html