Pru’s IGC 2019 report – steady as you go.

LC

The main theme of Lawrence Churchill’s fourth Prudential IGC Chair Statement is steady as you go. The IGC got off to a good start in 2015 by picking a value for money benchmark which was outcomes based. I has stuck with the CPI + 3% benchmark since and this has meant that even after a bruising 2018, the statement can say with accuracy that the benchmark is still exceeded – over a four year period.

There is both concision and precision in the writing of the report. Churchill speaks straight to the policyholder

 

Each year I try to make it concise, relevant and insightful.

I go to this report for straight talking and get it. Churchill delegates reporting on individual components of the service offering (investment communication and administration) to his committee. These are generally well written, though I’d have liked to have seen a little more insight on communications , bearing in mind the VFM assessment below. The investment section is particularly well written.

As in previous years, I find the report engaging, the summary page helpful and the style neither deferential to the provider nor annoyingly informal. It gets a green for its tone.


The Value for money assessment

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The IGC identifies an area of failure and marks it as red. It conflates Prudential’s problem with a wider problem – people don’t get pensions and then allows Prudential to deliver corporate nonsense to explain how the red might turn back green

Prudential’s business transformation programme will provide a robust platform
for driving customer communications and engagement to the next level.

Is that what the IGC believes, or is that what the Prudential are telling them? Several times in the report the Chair points to the formation of the Money and Pensions Advice Service as a remedy for the problem and makes a bold claim that a pensions dashboard should be available to policyholders in 2019.

All this may come to pass (though I doubt it). But it will not improve the communication and engagement the Prudential offer policyholders. If the problems of engagement rest with the Prudential as the VFM assessment suggests, what is the IGC going to get the Prudential to do?

I think the VFM assessment is confusing and does not integrate with the report and I’m giving it an amber. 


Effective

Lawrence Churchill has never been shy of singing success and he clearly thinks the IGC has been and continues to be effective. I believe he is right. The Prudential in 2015 had just stopped taking on new workplace pension schemes and things could have turned ugly.

Rather than neglecting the book, Prudential have made it a success and the IGC has been a part of this, weeding out the non-performing and under used funds, overseeing the transition of much of the back book to the modern Diligentia platform and digging down on the Prudential’s position on responsible investment.

In particular, it has been good at getting the information it needs to make recommendations and acting on MI.  Look for instance at its analysis of transaction costs

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While it would be good to know which funds have high transaction costs, we can feel comfortable that the IGC are not just on top of the situation but have a means of red-carding habitual offenders.

While most other IGCs reported a similar spread of costs, only the Prudential have determined what the reasonable level of transaction costs is (0.2%) and where to direct Prudential to take action if high charges persist.

Churchill makes it clear that the delivery of these numbers by fund managers was too slow and that the Prudential did not make haste to serve him.

This is effective governance.  Having seen the IGC interact with the Prudential and its fund managers I believe it is doing its job well and give it a green (with the proviso that it needs to do more on engagement).


In conclusion

This report was late in publication and has yet to appear on the Prudential’s website. When it does it should appear here.

was published after the FCA announced it would be requiring IGCs to more strenuously report on ESG, work on default investment pathways and better promote reports.

We know the results of the Statements speculation , which goes to show it doesn’t pay to be late publishing! The pathway you have to follow to get to the IGC report is obscure. I have said this before but can the Prudential please be more punctual about publication and make it easier for the general reader to find the report when published.

On a happier note, the interactive features in the report are really excellent – showing that the Prudential can do digital technology (or at least the IGC can!)

The timelines of actions taken and actions to be taken that appear at the front of the report are excellent and show what a difference this IGC has made.  But it shouldn’t be complacent, the Prudential knows it is not getting through to its members and I think Churchill knows that more can be done by the IGC to make communications relevant. I look forward to something a little more radical than this steady as you go report in 2020,

 

About henry tapper

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