What UK Life insurer is based in Telford Shropshire?
Answer – ReAssure
And if you were in a workplace pension with Guardian, HSBC, Barclays Life, Alico and National Mutual, you are now one of their customers. They are the kind of pensions that are easy to forget and if you want to check what you have , you can try www.gov.uk/find-pension-contact- details for free. Anyway- back to ReAssure who -for the second year running – have produced a good -if unambitious – IGC report.
I like the work the IGCs are doing with closed books, the Phoenix report is the model but the ReAssure report (written by Chair Zahir Fazal) is a healthy rival. The Board could do with a woman on it.
Over the past twelve months, the pension book of Guardian Assurance passed into ReAssure with around 2,500 active policyholders. They should note that while ReAssure have taken AMCs down to 1% on all but “externally” managed funds, the initial charge cost (which can be 4% + on top) remains (where charged). As one of its value for money tests, the IGC runs “an current market equivalent test” to see whether individual groups of members might not be able to obtain better products elsewhere in the market.
Now that ReAssure customers are guaranteed an exit from high charging contracts with no more than a 1% exit charge (provided they are 55 or older), the IGC should make it clear that older customers should consider transferring now. I appreciate that this is not in the interest of ReAssure but the IGC are here for the policyholders (not the shareholders).
The current policy is to offer a transfer into ReAssure’s low-cost retirement account which has an AMC of 0.65% investing in low-cost passive funds with no-nasties. The offer is made in writing and the IGC has been monitoring take-up, going so far as to contact some policyholders. In rather arcane language, the Chairman suggests that ReAssure need to try harder (presumably most letters either are returned or go in the bin).
There is an important role for IFAs and their Pension Dashboards to play here, as these dud policies are likely to show up in any policy search. The IGC should be thinking of ways of flagging to intermediaries that better alternatives are available (both in-house and on the open market).
The IGC notes that very few of the policyholders are in default funds (presumably because the unit-linked policies pre-dated defaulting and relied on IFAs to sell. The alternative is to negotiate a consolidation into these new low cost funds for members who do not respond to any mailings. Such drastic action would need FCA approval, but the IGC should actively explore this with ReAssure (as it admits that there is scope for improvement in terms of communication and engagement).
I get the impression that the IGC are on top of these issues and working well with ReAssure and its owner Swiss Re. I give it a green as an effective power for good for the policyholder though it will have to push hard to retain the rating.
Value for money
As regards value for money, the report could do with some numbers. The report is 16 page long and doesn’t contain anything but text! Frankly the impact of transaction costs, relative to the horrors of initial units, will be slight. The report notes that the transaction costs are not available from underlying managers but that ReAssure are working to decrease their costs by simplifying fund structures within investment options.
The IGC have laid out the three value for money tests applied to policies. Most interesting is the “absolute value for money test” which includes a “ReAssure profit test”. The latter tests the margin on each policy retained by the shareholder. I wonder whether the IGC has signed an NDA with ReAssure or whether this information could be shared with policyholders. It would be a first and a very useful precedent for Phoenix and other legacy providers (most of them having GAAs).
The lack of numbers is a negative, I think the IGC is a little shy of disclosing what ReAssure are taking from its back book and should “publish and be damned”. That said, they have a good grasp of how to go for the jugular and let’s hope next year they do. This year I give them an orange for value for money.
Tone and engagement
As for tone, the report is generally well written if a little formal. When it gets to the hard bits, the syntax gets a little tortured and the words get longer. It is a little formal in its tone and for a report that encourages engagement , a little unengaging. Nevertheless its tone is generally communicating an empathy with the policyholder and at no time becomes “salesy”. I give the report an orange for tone
The ReAssure IGC seems to be doing a good job without a lot of publicity. Hopefully it will take heart from this report (if it gets read).
Despite Telford being a way away from this country’s financial hubs, ReAssure policyholders must not be left behind!
You can find the ReAssure 2017 IGC report here https://www.reassure.co.uk/uploads/2017/04/IGC-Annual-Report-April-2017.pdf