The SJP’s GAA report comes up short


This is how the SJP Governance Advisory Arrangement measures the value for money offered by SJP’s workplace pension schemes.

Behind this analysis is a statement from the GAA Chair

The GAA believes that value for money is subjective and will mean different things to different people over time, depending on what they consider important at that time.

What is clear is that it is always a balance of cost versus benefits

The first paragraph suggests that a common definition of value for money is impossible, the second statement defines “money” in terms of “cost” and “value” in terms of “benefits”.

The lack of definition in the first paragraph contrasts with the definitive tone of the statement in bold. But the GAA’s position is not intuitive to me and I suspect it is not the position that most savers will adopt. “Value” in terms of retirement saving is the value of the pension pot and “money” is the amount people pay into the pot.

The GAA’s position on value and money is directly opposite to current thinking from Government which focusses on achieved performance net of charges.


On “value”

The GAA’s value  assessments is based not on what has happened , but on a subjective view of what is likely to happen in future – “the forward VFM assessment”

This is taking the principal that past performance is no indication of the future to an extreme.  Closer inspection of what the GAA marks SJP for on “investment performance and risk”.

We would expect to see a robust governance
framework under which investment performance is
monitored on a regular basis. Performance should be
measured against investment objectives, including
against a measurable benchmark

But there is no evidence in the  report of what performance has been , how it has matched investment objectives and how performance has matched  measurable benchmarks.

The reliance on good governance is to be expected, the GAA is a corporate pension trustee. But this report is supposed to be for savers and all the research carried out on what savers value tells us savers are interested in the outcomes of their saving.

For most workplace savers, the “features” listed above are unlikely to be valued at anything like the weightings offered. There is a mismatch between what pension professionals consider valuable and what members actually want and I sense that were this report to be read by savers, they would find it hard to relate to.

On  “money”

Moving on from the benefits to the costs of the workplace pensions under scrutiny, I find the benchmarking quite odd.

Unlike investment performance, charges are disclosed, but only the charges on the SJP staff pension scheme’s default

The total charge is 0.88%,  though the scheme is AE compliant as it is only the high transaction costs that take the fund through the 0.75%  charge cap.

These charges are determined as “low” , in the overall assessment

As there is no disclosure of the costs and charges of the other workplace plans , we  have to assume they are higher than those in the staff scheme. The staff scheme is low-cost only relative to other SJP schemes about which we have no cost and charges disclosure

We know from SJP’s own Value Assessment that they consider their standard charges to be acceptable relative to their peers

2021 version


Whether the 2.3% pa charge mentioned here applies to workplace we have no way of knowing but relative to the generality of workplace pensions, these numbers are huge.

I would like to know what justifies putting SJP cost and charges for GPPs and IPPs into the green zone and what the costs and charges would have to be – to be in the red zone.

So I don’t just question the methodology applied by the GAA on their VFM assessment, I question the measurement.

On advice

As I have written elsewhere, I admire SJP’s advisory proposition which comes as part of the package on most pension products (including GPP/IPP). But the value of this advice is not measured by the GAA (unless it is part of the communications score) which is bizarre.

The report does mention advice

Given the provision of advice for GPPs and IPPs, the investment aspects of our Framework involve assessing how the provider ascertains that policyholders are being advised and that the advice is suitable. As may be expected, compared to other
workplace pension providers who do not offer advice, the St. James’s Place pensions have additional benefits,
together with a higher level of charges.

A more meaningful assessment of value for money would include an assessment of the value of this advice. Bearing in mind the very high value that SJP policyholders place on this aspect of the proposition, I am surprised that more is not made of this.

My suggestion to SJP is that they compare the outcomes of the advice with industry standard outcomes arising from non-advised plans. This could be done by looking at the FCA’s retirement income market data with its own market data , establishing whether the advice is leading to good outcomes for savers.

In conclusion

The scope of a GAA is limited , relative to an IGC and we do not expect quite such detailed analysis. In the past, I have praised the GAA reports on SJP but on this report I find the method and execution of the VFM analysis flawed.

I am conscious that as many people will read this blog as may have read the GAA report and I hope that a few people who do read my anlaysis will go on to read the report as a result.

What happens with SJP matters, the firm now manages well over £100bn of the nation’s wealth and represents a substantial part of the advisory community. It’s profits are ploughed back into training advisers and gross profit deployed to meet FSCS bills for the advisory community.

The GAA report is secondary to SJP’s Value Assessment but it need not be second-rate. I feel on this occasion , the report is weak and that a fresh approach to the VFM assessment needs to be adopted. It is however well written and produced .

For its tone of voice and production values I give it a green

For its effectiveness in soliciting change at SJP, I give it an orange

For its value for money assessment I give SJP’s GAA report a red

About henry tapper

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