I don’t know whether to laugh, applaud or cry when reading Zurich IGC reports and Laurie Edmans’ third report is no exception.

Laugh – because of Laurie’s brutal honesty

But from the members’ perspective, it does not matter whether the issues are industry wide or not. The fact is that the considerable majority of scheme members have little idea whether what and how they are saving is going to give them the lifestyle in retirement they expect.

Cry at the massive amount of customer research that has led the IGC to this conclusion.

Or applaud Laurie for pursuing the course most difficult, questioning whether we can ever sufficiently empower customers for the task ahead of them – to manage an income for life from a pot of money built up within a DC plan.

This may explain my erratic ratings of previous reports. I veer between violently agreeing , ranting with frustration and then smiling appreciatively at Laurie’s great project.

Sadly, that project will not be continuing as intended. Zurich’s modern pensions, the book of DC business established since the turn of the century, has been sold to Scottish Widows, what will be left will be the old Eagle Star and Allied Dunbar books, which hardly bear examination under the ambitious project that Laurie and his colleagues embarked on in 2017.

Value for Money

The IGC comes to one important conclusion that every other IGC should contemplate. Relative to its peer group, the Zurich Corporate Pension is succeeding, but relative to what members want – it is not.

This tough assessment results from the consumer research conducted between 2015 and 2016. It is not based on Laurie’s private prejudices. It is ironic that the largest scheme that Zurich has underwritten, the Royal Mail’s DC plan, looks likely to be abandoned by its 40,000 members, in favour of a CDC plan which – to the Postal Workers – delivers what they want (value) for their money.

When I was working at Zurich (then Eagle Star), the Royal Mail Trustees came on a site visit, arriving in a couple of limos at the gates of our Cheltenham offices.

“Who you here for?”

asks the gateman of the chauffeur.

“We are the Royal Mail trustees”,

replies a voice from deep inside the car.

“Alright, the post room’s round the back”,

said the gateman dismissively –  the site visit never quite recovered.

I am sure the IGC will smile at the story, which illustrates that how we see our customers and how they see us, are seldom aligned! Here is how the IGC sees Zurich relative to its peers.

Here is the “harsher” truth of how Zurich customers see their pension

When Zurich looked at service standards, they concluded

… our consumer research clearly shows that the comparators that count most for members were not with other financial services companies but with other sectors which are perceived as having higher standards – retailers and digital companies being cited most as examples. Consumers saw financial services companies generally as falling short of their expectations for service. Zurich, in common with its peers, appears to have work to do

What worries the IGC is that Zurich’s service standards and dashboards pass muster not just within Zurich, but with the employee benefit consultants who recommend Zurich. Like Eagle Star, who alienated the trustees of the Royal Mail all those years ago, Zurich don’t know their customers.

The same can and is said by the IGC about the empowerment of customers to take the decisions they need to take to keep their policies up to date. Zurich are proud of the tools and communications they put in place, but the customers don’t seem to use them or read them. Having seen the efforts Zurich went to , to create a self-service culture among clients, and the pitiful use of self-service, I know the frustration that must be felt by Zurich, the painful truth is that much of what is being asked of customers, is beyond them. Again, the simple conclusion is that this is more than a Zurich issue – but it is an issue for Zurich all the same.

The only areas where Zurich’s view of itself (as a good provider) and the view of its customers align, is in terms of investment and compliance. My cynical view is that these are areas that are the “inner sanctum” of a provider’s competence. It is extremely hard for the general public to question whether value for money is being achieved in areas of competence they know nothing about and against which they have no proper benchmark (you don’t find funds or pension compliance on the high street).

These insights are important and for more than Zurich. For the IGC’s brutal honesty, for their focus on Zurich’s customers and for their refusal to give “the right answer” to their masters, I give Zurich IGC a green.

Effectiveness.

For most of 2017, I was a Zurich customer and I struggled to transfer my legacy pension away from Zurich. I even got as far as tabling a complaint, but gave up against the waves of bureaucracy that came at me. Mine was not a happy experience, I suspect that Allied Dunbar and Eagle Star customers of the eighties and nineties, will have similar stories to tell. To have any chance of getting value out of legacy pensions, you need to be 55 and in my case, it wasn’t till close to my 56th birthday, that I finally got out with only a 1% penalty.

There is a lot of data relating to legacy products , much supporting the assertion that the underlying funds are doing well both in terms of value (outperformance) and efficiency (low transaction costs). There is also much truth in Zurich’s assertion that the process of “moving away” can cause more detriment than staying put (or at least moving to a better fund).

However, I don’t find that Zurich have been particularly effective at managing legacy issues and I don’t find the IGC have been particularly good at helping me! I give Laurie and his team an amber for “effectiveness”.

Engagement

Having criticised some other IGC reports for being over-lavish with stock photos and info graphics (sometimes used as padding), it may seem churlish of me to criticise the Zurich IGC as over-Spartan.

It does however look like one of my reports, before I put it into beautification for clients. Heavy blocks of text appear as they would on a first draft word document , tables are poorly aligned and there is little  relief to the eye over 24 pages.

Did the budget not stretch to some proper type-setting and some “modern” presentation?

While I enjoyed the content, I couldn’t help feeling that the IGC had run out of money and support from Zurich. This may be the case, as workplace pensions is clearly not the focus going forward.

It is a cruel irony, that having so much time and money since 2015 , getting engagement with its public, this report fails to engage them back. As a matter of style, there are too many difficult words. Here for instance is the opener to the Chair’s statement

The IGC’s main task is to ascertain whether the members of the pension schemes within their remit receive ‘value for money’from their product provider

The word “ascertain” appears at the start of the main body of the report. Why? “find out is the phrase ordinary members use and understand.

This report contains some of the best work of any, sadly it doesn’t quite engage and I can give it only an amber.

In conclusion

Once again, I am left laughing, crying and applauding all at the same time. Laurie is Hamlet “he was likely , had he been put on, to have proved most royally”.  However, the grand design of the IGC is dead and what follows for the Zurich IGC will

necessarily be less.

Alas poor Zurich, I knew it well.