David Hare – Standard and Phoenix’s IGC Chair

Standard Life’s IGC has been very courteous and issued an interim report for those (like me) who read their reports every March/April. This year we will have to wait till July to read the report and I’m particularly interested in what Standard Life will have to say, under the ownership of Phoenix. I have written about the importance of the brand and of the value Standard Life bring to UK workplace pensions.

The interim report is a little light on insight and long on reassurance. We learn that  in terms of customer support Standard Life got back to normal by Q3 2020, but so did its customers. When people needed help most was when lockdown started and markets plummeted and despite the disaster recovery plans in place, almost all insurers were not able to pivot to providing support from home in real time. The re-mobilization of support centers was better at some than others , but Standard’s service (which I tested at the time) was pretty woeful when it was needed.  Perhaps the Standard IGC will look in more detail at the situation in the spring of last year and compare with other parts of the group and other insurers in this market.

I’m also hoping that we can have more detail in the summer on the report commissioned from a “respected external consultancy”. This report seems to be another in a long line of benchmarking reports that help pension providers rather more than their customers. Customers of course want to know about outcomes of their savings, their returns and whether they’d be best sticking where they are or looking elsewhere. This information is available from Standard Life’s own systems and I hope that we will see it published in July!

We commissioned a respected external consultancy to assess Standard Life’s
performance against what they see elsewhere in the market, particularly
amongst other providers that offer contract-based workplace pensions. The
assessment was carried out across all of Phoenix Group’s investment activity
(i.e. including what is done for Phoenix-branded pensions as well as Standard
Life-branded), reflecting the combined “one business” management approach
that is followed by Phoenix Group.

What appears universal is that progress has been made, but we require a high-bar from Standard Life and the other Phoenix IGC’s in assessing whether that progress is good enough. This is particularly important when assessing the headlong rush of workplace pensions to embed ESG in their propositions.

The consultants’ view was that Phoenix Group has made good progress in
this area. Their assessment highlighted that governance was a particular
area of strength and the commitment demonstrated both by becoming a
signatory to the Principles for Responsible Investment and embedding those
principles in the firm’s policy was positive. The recent launch by Standard Life
of the new ESG integrated default fund was also noted as an encouraging
development.

There are a large number of services available to assess whether ESG has been embedded in products and this in itself is worrying. The one service that I’d like to see Standard Life report to is TCFD as this appears to be recognized globally and very much endorsed by Government. We hope that the FCA ensure that what is good for the Standard Life Master Trusts is good for the IGC.

Investment pathways

From the Standard Life pathway literature

The IGC has also produced a paper on its scrutiny so far of the Standard Life investment pathways. One of the IGC’s obligations is to report on the value these are giving for policyholder’s money, which is a tough ask as they have only been operating since the start of February. Unless the IGCs are able to look at past  drawdown data and model how the drawdown/leave alone options would have fared, it’s hard to see how VFM can be reported on with any precision.

The Standard Life IGC tells me that it considers VFM a forwards looking metric in which case it is by definition speculative. The paper is saying “so far so good” in terms of delivery (though it notes that the drawdown options don’t show much sign of ESG factors at work).

There is some criticism of Standard Life for not supporting customers who “go their own way”, and that they risk being overwhelmed by a multitude of funds. The answer seems to be either to reduce fund choice or to train experts in funds to provide support. It will be interesting to see whether the IGC pursues this , I suspect they will be guided by the number of pot-spenders who devise their own strategies without advice, I suspect these will be small in numbers and perhaps  Standard may be able to provide support where needed from the people who selected the funds in the first place.

My feeling , reading the investment pathways report, is that the IGC really doesn’t find this work too exciting right now. It is hard, until the pathways are trodden , to see how they add value – unless they back-test.

Phoenix and its IGCs

The Phoenix group now incorporates the portfolios of no less than five organizations that in the past had their own IGCs. They are Standard Life, Phoenix, ReAsssure, Abbey Life and Old Mutual. We will have to wait till July to find out how many individual IGCs survive and whether David Hare and his team act as the board to them all.

Venetia Trayhurn

It’s good to see Venetia Trayhurn joining the Standard Life board. She is one of the best professional trustees in the UK and is a good addition. Where Phoenix goes – other will follow –  let’s hope that others will keep us up to date as Standard Life are doing.