Royal London IGC report – a welcome shift in focus

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Royal London are (as usual), the first IGC to report. They have been kind and sent me the Chair’s Statement which saves me searching. But it’s easy to track down here

The IGC has delivered a really interesting read which I enjoyed. At 64 pages it is no baby, but it is manageable in length and is seldom boring.


It’s Peter Dorward’s first full year in charge of the Royal London IGC and this year’s report shows a marked change from the enthusiastic approach of previous reports to a more measured and analytic style.

This  recognises the separation between IGC and provider rather better, despite Royal London being a profit-sharing mutual, the report talks of its savers as “customers”.  While this approach loses some of the warmth of Phil Green’s reports, the report reads at greater arms length.

The report also recognises the realities of workplace pensions. Whereas previous reports have focussed on the needs of IFAs, this talks to  the needs and responsibilities of employers. Royal London is now focussing on the views of members and the report is no longer focussing on intermediaries.

This is a recognition that few IFAs have the resources to provide services at member level to the workplace pensions they may have helped set up and few employers are retaining IFAs for this purpose. The majority of Royal London’s “customers” are non-advised and the independent surveys of customer satisfaction levels show that while Royal London are providing a higher level of customer satisfaction than its peer group, its customers are not particularly satisfied by what they are getting.

In its tone I think this report is an improvement, it is extremely well written and while it is dry, it is hard nosed. I give it a green for tone

Value for money

Here is what that independent poll is saying

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Let’s focus on the value for money poll

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A staggering 73% of Royal London customers don’t think they are getting value for their money.

The report’s value for money analysis does not pick up on this. The conclusions to the VFM section (which is in itself very well reasoned) state that

“Overall we consider that Royal London continues to offer workplace customers value for money”

The report opens with a section entitled “listening to our customers” and concludes that 73% of its customers are wrong. There is a disconnect here.

I would have preferred the VFM section of the report trying to understand why 73% voted as they did.

With regards to the value for money assessment, I give Royal London an amber. It works on its own terms, but not on its customers terms and IGC reports are for customers.


The bulk of the report focusses on the three key elements of value for money, performance, costs and the user experience.


User experience

The report is very good on the user experience , focussing on important metrics such as the employer’s interface – critical to the delivery of clean data and the avoidance of “out of market” risk. Royal London has a pension “plan holder ” as an IGC member and it shows.

He has been burdened with the role of championing the Vulnerable Customer and I suspect Miles Edwards (the plan holder) is making a positive difference.


Unfortunately, the saver’s perspective is lost in the analysis of performance and cost. There really is nothing for the saver to hang on to that speaks to his or her experience, only a series of charts showing abstract concepts such as fund performance.

There is some comparative performance analysis (using the Corporate Adviser league table) but again this is based on performance data not on “experienced performance”.

By that I mean what savers actually got as a return (net of all costs) and how this compared to other actual savers.

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Instead, there is some analysis of how savers have fared relative to the expectation set by the projected returns on the illustrations they received when they started their plans.

Again I think of the 73% who don’t recognise they are getting value for money and ask myself whether this kind of analysis has much relevance to their concerns.


Similarly with cost, the report is good at showing where additional costs are being created and mitigated at the fund level. There is also great precision in the analysis of the risk controls in place to reduce the cost of the complex transitions within the default lifestyle transitions.

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I could not find any analysis on the overall impact of this complicated “lifestyle journey” and whether value was being retained from all the transitions.

Again some analysis of savers internal rates of return against a charge free benchmark could have illustrated in pound shilling and pence terms what had been gained and lost.

The precision of work elsewhere suggests that Royal London are on top of their funds. The vast majority of the money is managed in-house and I see an opportunity to improve on the reporting by bringing some fuller worked examples into play (without losing the granularity on display this year.

Responsible investment

I was very impressed by the chair statement’s section on responsible investing (the right phrase).

Clearly Royal London have invested heavily in this area and they have won the hearts and minds of intermediaries

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But I think the 41% who “lacked all conviction” may best be as honest as those with “passionate intensity”. It is extremely hard to work out which asset managers are really effective stewards and I suspect that Royal London’s head start is because they are being very proactive in communicating the message. This may be  churlish, there is plenty of evidence that they have engaged with the UN charter but the statement is not  being   “wide-eyed” – it recognises that Royal London as the platform for its own and others funds has responsibility for responsible investing.

Interestingly it shows that savers see employers as holding them accountable (and professional intermediaries aren’t mentioned)

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The statement acknowledges that there is more to do and it picks  up on the FCA’s call to get member’s involved with stewardship. If 13% of those polled feel they have responsibility for stewardship, perhaps the IGC could think of ways of helping savers who think of their investment access to the kind of voting aggregation software discussed here.  I would be surprised if offering “easy access to self-select ESG funds” will do the trick.

For next year

I hope that we can get more reports like this, Peter Dorward has done a good job. But I think there is more he could do to bridge the gap between the very user-centric parts of the report and those parts which will fly above the heads of all but the experts. Adopting an approach to reporting based on what has actually happened would help here.

I note that change is afoot in the composition of the IGC to meet the challenges of enhanced monitoring of  and reporting on responsible investing. I look forward to a big push on this (as the FCA requires).

The IGC is also going to have to oversee the investment pathways (not just on the workplace pensions but on the unadvised  Royal London SIPPs and legacy pensions.).

I suspect that an increasing part of Royal London’s pension book is not advised and this may include a few policies funded by the transfers of DB pensions (advised then – orphaned now).

Royal London may need to continue the shift in focus from supporting the IFA to supporting the saver – even where products were taken out with advisers. For this is where some of the greatest vulnerability is.

From reading through this report, I think the IGC are well placed to fulfil these important duties.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Royal London IGC report – a welcome shift in focus

  1. Eugen N says:

    The problem is that Royal London are dreadful.

    It has become hard to believe their performance figures, especially for their property fund which is about 10% or more allocation within their Governed range.

    Their property fund has not lost value over the last 15 months when other property funds have lost anything between 5% and 12%. Many people do not know, but they share properties with other property funds and their share is still valued at the same price, when other property funds have already applied a reduction.

    They also have high allocation to high yield (junk) bonds, commodities and even their money market fund may have not-rates paper.

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