L&G ‘s IGC ratings fall with a sorry 2017 Chair’s report.


Legal and General has published its third IGC report, which you can read here..

Overall rating

VFM – Red

Engagement – Amber

Effectiveness – Amber


Value for Money

It doesn’t get off to a very good start, giving us a diagram of what the IGC considers important to measure value for money.

L&G Vfm

This ignores whatever research has been carried out by the IGCs in previous years and reverts to a generalist approach where soft factors such as feedback and communications are rated alongside the hard analysis of investment returns and costs (not price which is different).

All this does is demonstrate (yet again) that value for money can be whatever the IGC fancy it to be, and whatever suits them so long as they can say , as this IGC does that (Legal & General) do offer good value for money for the majority of members.

We are given no analysis of the relative importance of each factor in the IGC’s decision, nor any benchmark as to why L&G is doing well – relative to what could be achieved – or what others are achieving. The inclusion of an analysis of default funds as part of “VFM” measurement, further confuses matters.

Since L&G has been the VFM thought leader in previous years, this is disappointing.

On the plus side, L&G do appear to be moving towards a proper scoring system, but this will need to be simplified.

Drilling down into the nuts and bolts, I have some further gripes. The IGC seem to consider administration purely as it touches members. The report makes

It is not helpful to confuse investment administration and record keeping as the administration box in the diagram does.

It is certainly not good enough to ignore the employer’s experience of L&G’s workplace pension. Actually this should be given a red score – especially as it touches small employers. It is an open secret that L&G are withdrawing from underwriting arrangements for new employers with less than 50 members,, an admission that the twin strategies of using pensionsync and eAsE are not commercially successful. In practice, many intermediaries who report using  L&G via intermediary software packages report poor experience and blame L&G for not developing direct integration with payroll via the API technology now commonly in use elsewhere.

L&G may consider that the employer experience isn’t part of member VFM, but it is. If an employer is spending time and money sorting out data integration on AE Business as Usual, it is spending a budget that could be used for better things (like increasing employer contributions to member’s pots).

Having spent some time with the IGC explaining this, I cannot agree with the bland assertion in the report that,

The IGC is pleased that some of the issues of greatest concern were improved over the course of 2017 and we believe that we will see further improvements over the course of 2018. We hope that this will enable us to move from an ‘OK’ rating of +0.5 to a score that indicates ‘good’.

Nor do I agree with the prominence the report gives to the new “communications suite” that L&G are about to launch. This section is little more than an advertisement and doesn’t reflect the “member journey” members like me have had to date. I want my VFM ratings to be based on what I’ve been getting, not on L&G’s aspirations for the future. More on the lack of separation between L&G and its IGC in the next section.

In summary, I found that the VFM methodology was flawed in that it confused and conflated to the detriment of what value for money should be. I thought the sections on communication and administration were poorly thought through and showed a lack of engagement with what members and employers had actually “got ” in 2017.

In conclusion , I am giving the L&G IGC overall score for VFM a red – despite all the good work that it had done in its previous reports.



The Chairman’s statement reads well and I enjoyed it for its balance between professionalism and immediacy.  At 15 pages, the report feels the right length and I thought it well organised around the aspects the IGC find are critical for a value for money assessment.

But as I read through the report the claim that the IGC would avoid jargon wore thin. Take this statement from the section on communications. No external report trying to avoid jargon could include this message.

A four-stage member journey was launched and rolled out across the communications suite.

This is undoubtedly taken from an internal document and I hope whoever was its author is suitably ashamed of him/herself!

On the same theme , the following statement appears in the section on “stewardship” ,

We have also committed to support an initiative, co-ordinated by the 30% Club to promote more women to the senior management and boards

Is that “we” referring to the IGC or L&G or LGIM?

There appears to be more cutting and pasting going on from reports being sent to the IGC. This is not “independent” – it is merely allowing the IGC report to be used as a marketing brochure for L&G departments

Why should the IGC member want to engage with a report that claims to be independent but reads like a sales aid?

I give the IGC report an amber score for engagement – it’s good enough – but only just and L&G’s IGG is redeemed because  it really does engage with members throughout  the year.



A good part of the report deals with the work that the IGC has been doing this year to deal with legacy issues. L&G has always managed its legacy well and continues to do so, but the IGC really seem on top of their life company and this work seems to be going well.

I was a little disappointed by the IGC’s admiration for L&G’s strategy for retirement outcomes which looks to me – decidedly “me too”. However, it would be wrong of me to mark down the IGC for not pushing for more effective strategy at  the decumulation end of their retirement book. There is plenty of innovation within LGIM and the Group and I am comfortable there are areas that the IGC need to look to first (see above).

The report makes no mention of Future World, its new investment strategy that is now employed as the default accumulation strategy by HSBC bank. While I applaud the report for having a section on sustainability, why did it not ask the question about the use of LGIM’s sustainability work in L&G’s default investment strategies?  As I have no answer to this, I assume there is a degree of tokenism about the IGC’s inclusion of this subject.

For all my moans, I continue to rate the L&G IGC as a committed group of people who are going about their jobs with vigour and the report shows that if not “innovative”, their work is effective and I’m happy to continue with  an amber for now, in the hope that they will move on from legacy and become effective in pressurising for a default decumulation option in the near future.


This report is a sad surprise. In year one, L&G’s IGC report was a stand-out, the best of the bunch, it slipped a bit in 2016 (but was still good). This report is not good, it is confusing, it doesn’t engage and it really doesn’t get to grips with the big issues facing workplace pensions (default decumulators, CDC and most surprisingly – integrating ESG).

I’m pleased that there is space for some fresh blood on the IGC and I hope that L&G will find new people with the spirit of Tony Filbin and Paul Trickett, who’s presence is missed in this report. I am not sure that the current chair, Dermot Coutier, is right for this job. He has a full-time position at Kingfisher and I’d like to see him on the IGC (for his understanding of behaviourism and effective communication). But is he really the person for the job – next year will see – as an L&G workplace saver – I’m expecting better.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions and tagged , , , , . Bookmark the permalink.

1 Response to L&G ‘s IGC ratings fall with a sorry 2017 Chair’s report.

  1. Ant Donaldsoon says:

    Interesting analysis and comment as ever. I’ve been reading Fidelity’s 2018 IGC report today with interest. It looks like an improvement to me but I’d be interested in your views if you’ve seen it.

    Having said that, on the subject or jargon and copying information provided to the IGC, how about this?

    “Fidelity have recently hired a Head of Stewardship and Sustainable Investing, who will be responsible for overseeing Fidelity’s strategy and policies on engagement, voting and ESG. ESG integration is carried out at analyst level within the equity, fixed income and real estate teams in Fidelity and the portfolio managers are also active in analysing the potential effects of these factors when making investment decisions. A specialist in-house ESG team consolidates Fidelity’s approach to ESG and the implementation of their voting policies. Fidelity’s approach to integrating ESG factors into their investment analysis includes the following activities:
    • In-depth research,
    • Company engagement,
    • Active ownership,
    • Collaboration within the investment industry.”

    To be fair, the report includes a definition of ESG above this section but I doubt may members will understand a word of this section.

Leave a Reply