Laurie Edmans, Zurich’s IGC chair is a laid-back man. It shows in the IGC report that is considered and unhurried. It is a very good read as a deliberation on value for money though it is rather short on action – which for policyholders like me – is something of a let-down!

Zurich’s IGC is contrarian. To it and Zurich’s credit, it is made up only of independents with no Zurich staff on the committee. It was also unusual last year in going it alone to find out what people wanted from their workplace pension and how they’d consider value for money. It would seem that though Zurich did not participate in the NMG survey, their work reached similar conclusions

From the 2017 Zurich IGC

What can Zurich do?

It is clear that Zurich can do considerably more to influence the outcomes on money they receive than determine the contributions themselves. Having been head of sales at Zurich, I know how keen Zurich are to see higher contributions per member – it is a key commercial metric. It aligns with what is in the long-term interests of policyholders  (despite conflicts with short term debt/housing).

However Zurich can do little to influence the contribution rates to their workplace pensions from employers and employees, this is the gift of employers, employees and to a degree advisers. The report admits this.

By comparison, there is a great deal Zurich can do to improve outcomes of their policyholder. This includes reducing legacy costs with a minimum of 1% exit fees for those over 55. As a legacy policyholder (over 55), I’m not impressed that Zurich’s conversation with the Regulator about reducing these exit penalties is “still open”.

More importantly for those actively saving into new workplace pensions are whether the Zurich investment options are providing value for money. We have no way of knowing this as the IGC has not even been able to get the data necessary to publish transaction charges. In a very sinister statement Edmans writes

Clearly a number of managers are not coming quietly, the journey to a transparent world will be a long one. It is a shame that Zurich ran out of time to publish the findings of Zurich’s first report – especially as we are now two years in!

Better late than never?

Zurich’s IGC also received the final report from their market researchers too late to apply it to the five principles that it had come with go determine value for money. I agree that the principles are split between hygiene factors (compliance and customer service levels) and “value attributes” . Hygiene factors form (for Zurich) the platform on which value attributes are judged and without them , any idea of value is a nonsense.

I am impressed by the IGCs principle that value for money should not just be considered in isolation but should be benchmarked against other workplace pensions. This is progressive, radical thinking. For all its dilatoriness, this report gets down to some serious thinking.

This is slow and steady stuff, a little too slow and steady for me, but at least it is coherent and consistent. The tone of the report is serious, there is no attempt here to big-up Zurich and though the relationship with the company seems harmonious, the IGC is clearly keeping itself at arms length. I like the tone of the report and give it a green.

I am not too sure that this is an effective report. Everything seems about to happen, As far as I can make out, some of the stuff that hasn’t happened, is now in breach of the new exit penalties rules. While there is some tough talking in the Report, there is not a lot of action. Sadly I have to call this report ineffective and will give it a red.

Finally, the work done on value money is good work. The money and time spent on consumer research has given the IGC the five principles and a basis for assessing vFM.

The degree to which Zurich can be held responsible for the “light-bulb moment” that will illuminate to ordinary people the need to change their (saving) ways – is debatable.

The degree to which Zurich can manage “value attributes” is easier to judge. Let’s hope that the final formula that the IGC arrives at, weights what can be measured rather higher than what can’t.

I think that Zurich IGC’s have taken not just their own understanding, but our general understanding a little further. The split between hygiene factors and value attributes is sensible and the emphasis on benchmarking disruptive. The narrowing down of value to the two essentials of return and engagement, may be something of a breakthrough.

I am happy to give the IGC’s work on vFM a green, even if we are light of any evidence that Zurich is supplying it!

You can find the Zurich IGC report here; https://www.zurich.co.uk/en/about-us/independent-governance-committee

The Zurich IGC