St James Place GAA Chair Statement- a must read

There aren’t many employers or policyholders that SJP run workplace pensions for, but though they are few, they merit a mini-IGC – known as a Governance Advisory Arrangement (GAA).



The SJP GAA Chair Statement is an excellent document that looks at value for money within policies used by SJP customers as workplace pensions.

It is a must read because it brings an institutional perspective to a retail issue – that of vertical integrated advice and product management.

This is the second time I have read this report and for a second time, I am highly impressed.




Given that ‘value for money’ inevitably assesses all the benefits received in the context of the charges levied, the GAA’s opinion is that the value for money varies from good to poor. When considering the earlier series of plans, policyholders with large funds and Series 3 policy holders which are more than 10 years into their contracts may receive good value for money. Policyholders with smaller funds and other Series 3 policyholders with less than 10 years in their contracts receive lower value for money. Smaller funds represent a large portion of the early series of plans. Series 4 policyholders pay different and simpler charges with, overall, a similar level of value for money. Series 4 policyholders represent the majority of policyholders

Policy charges are easily assessable, but the investment strategies pursued by SJP advisers are varied – tailored to the needs of each customer. The only exception is the SJP staff scheme which is invested in SJP funds and administered by SJP/

So the GAA are right to point out that without better reporting it cannot do its job.

However, the GAA was not able to conclude that St. James’s Place reviewed the outcomes for policyholders individually or in aggregate in a way which fed back into the oversight of the model portfolios. This was particularly pertinent for the SJP staff scheme where there is no advice.

The Chair’s Statement carefully picks its way through these difficulties. The tone of the report is formal – the report is there to be read by professionals , this is not a populist report. It’s tone is perfect and gets a green.

Value for Money Assessment

Although SJP are not as other providers , the GAA looks to assess value for money and concludes that while some policyholders are getting value for money, some most definitely are not.

It is not very easy to see who is winning and who is losing, not least because SJP don’t seem particularly interested in opining on what good looks like.

When the IGC inquires about the transaction costs within the workplace pension investment strategies – they come up with some startling results.

As the majority of SJP funds employ active management these costs are higher than other providers generally. The highest disclosed at June 2018 being Alternative Assets at 1.08%. High costs like this can erode members fund values over time, although the GAA note that the picture is mixed with the lowest transaction cost disclosed being minus 0.38% for the Absolute Return fund.

Since the dispersion of results is twice the workplace pension charges cap, you’d have thought this would have solicited some urgent comments from SJP. This does not turn out to be the case.

SJP have not commented on whether the transaction costs are in line with expectations; this is something we will look at further next year.

The “money aspect of the VFM assessment looks extremely toppy. If transaction charges of more than 1% are added in, then they begin to look excessive. The negative slippage on the Absolute Return Fund is worth of some kind of statement, if only of congratulation!  I wonder how on top of these costs , SJP advisers are.

Although I think the VFM assessment methodology fine, I am disappointed not to see more analysis of outcomes.  The best way for this to be done is to analyse the Internal Rate of Return of individual policies and benchmark them against each other. That would at least get to the bottom of what is working and what isn’t.

I’m giving the GAA an amber for its VFM assessment. What is there is good, but there is too little here for the VFM assessment to be meaningful.



SJP is a quoted company with over £100bn under management. It is genuinely surprising that it does not want to adopt a full scale IGC (something I’ve said in previous years).

As far as I know, the GAA is the only governance mechanism that can ask the difficult questions about charges, costs and value – from inside the tent. Certainly it is the only one to publish its findings.

The next steps section of the report makes it clear that the GAA are not going about their work  quietly


In the next year the GAA will:


  • Further assess the extent to which St. James’s Place governance monitors policyholders’ portfolios effectively.
  • Review the process by which SJP Partners tailor the investments for each policyholder.
  • Further consider policyholder feedback methodology.
  • Assess the future consideration of charging structure.
  • Assess the extent of Environmental, Social and Governance investment considerations.
  • Assess the extent of any actions taken around transaction cost analysis.
  • Assess the investment review process for any exceptions.

For a mini IGC, the SJP IGC is not pulling its punches, I give it a green for that, it is doing  an effective, if under publicised job


In conclusion – this is a must read


I am really pleased that the GAA have again written an authoritative statement of what SJP are up to as a workplace pension provider.

In doing so , they provide valuable insights into the vertically integrated structures that SJP employs.

This is a must read for people who want to understand how over £100bn of the nation’s wealth is managed. Like it or not, SJP sets the pace and the benchmark for other such firms.

This statement is of great value.



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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