Who do IGC chairs write their chair statements for? It was a question I discussed yesterday with an IGC chair. Every IGC report states that it is written solely for members but any member who opens the link to the Standard Life IGC report is going to be confronted with this message

You are reading page 1 of 141. Standard Life has a history of long reports and I thought that those reports were in the past, they are not.

In partial mitigation, the Standard Life report is not quite as long as L&G’s if you include L&G’s separately published appendices, but Standard Life’s report is lighter on pictures (especially young ladies in woolly hats).

In a sense, the report is over before it begins. It’s opening salvo is its VFM assessment.

All that is left to understand is why some aspects of Standard Life’s proposition are more excellent than others. What can a member learn from this by reading the next 140 pages?

The reality is that the bulk of this report is not written for the member but for the FCA. And I get the impression it is written as an act of protest.  The bulk of the report should be consigned to spreadsheets and infact Standard Life do host a page with the bulk of the information in the report set out in spreadsheets.

The wilful bulking up of the report with so many pages of unexplained data tells me that this report is a protest against the attempts of the FCA to get IGCs to produce meaningful comparative information. This may be a message from the IGCs to other IGCs but I hope that David Hare will look at the reports of Royal London, Fidelity and Aegon and see that reports can run for less than 50 pages and deliver powerful messages.

The report is extremely intricate and offers links which allow the alert reader to navigate it reasonably easily, but this requires readers to engage with a range of subjects in varying degrees of detail in a way that is quite beyond the time resource and financial capability of all but the aficionados of such reporting.

The aim is admirable, the execution expert  but for all but a handful of readers the navigation is too sophisticated.

That value for money assessment

The VFM dashboard insists that Standard Life is producing value in all areas of the assessment but the key messages do not bear this out. When we look at the investment sections we find this statement

We then get a chart that compares performance over the 8 years of auto-enrolment.

It would of course be more transparent to have the competitors named as Royal London had the courage to do

Table taken from the Royal London 2021 IGC report

Standard Life’s workplace pension  is in the relegation zone, along with NOW pensions. It is lagging most of its rivals by a considerable margin. So how does Standard Life get such a good rating from its IGC for its investment performance?

As regards costs, I admit to being totally lost by Standard Life’s analysis. Aegon took the FCA’s guidelines and simply published the range of AMCs against the size of employer scheme.

Taken from Aegon’s 2021 IGC report

But Standard Life seem to have ignored or rejected the concept of the “employer’s scheme” and persisted in reporting page after page of costs and charges of all kind of funds with no kind of context.

This is a filibuster.

Standard Life have made considerable advances in their online technology, enhancing the guidance given to their members and making it easier for them to bring pots together. But this work is so buried in the report that by the time I got to the communications section, I had become disillusioned.

The IGC give Standard Life a rating of 24/25 for its communication and engagement. For the most part, this is for the implementation of its Fit for Purpose protocol. The detail of this protocol is published on p121 of the report. With the best will this kind of internal document is not of interest to the member, it is only of interest to Standard Life, the FCA and as an advertisement to advisers supporting Standard Life.

Large sections of the report seem to have been included to promote Standard Life , rather than for the edification of the member.

ESG

Like other IGCs , Standard Life’s has been tasked with analyzing the ESG proposition to members.

It seems obvious but it’s worth saying again. What matters is the integration of ESG principles into the proposition and that means the default fund, into which 90% of the money is invested.

In the 10 dense pages devoted to Standard Life and Phoenix’s internal policies , documents, committees and sub-committees set up to implement ESG, there is only the briefest mention of changes to the default proposition. Rather than focusing on implementing ESG in the existing defaults , Standard Life has chosen to launch a new green default (though it is hard to understand how a default can be chosen other than by employers (who are not acknowledged to run schemes).

The task of integrating ESG into the money already under management will have to wait for the outcome of the review of defaults which is happening this year. This is not seen to be a priority action for Standard Life in 2021 . The IGC considers it more important for Standard Life to focus on these two actions

The key challenge for Standard Life is to make the billions under management in workplace defaults , making money matter for them.

Conclusions

This report – despite the Chair’s statement on his video to the contrary, is not speaking to its members , but to the FCA.  Much of it is a filibuster , showing the FCA , the error of its ways. The report is almost silent on the role of the employer as the creator of employer schemes and instead full of detail that is of no use to anyone.

The report does not deal with investment pathways which are covered in a previous document published earlier in the year.

The VFM assessment is inconsistent with much of the information in the body of the report, especially when it comes to investment. The section on ESG is inadequate.

In summary , the report – for all its length has lost sight of what members want to know, how Standard life is improving their outcomes.

For its length and overelaborate architecture, I give it an orange for its engagement – and this is only partially mitigated by the clarity of tone from the Chair.

For the effectiveness of the IGC in its dealings with Standard Life an Phoenix, I give the report a green, no report knows its provider’s proposition better.

For its value for money assessment I give the report an orange and a ruddy orange too. In my opinion, the review of Standard Life’s defaults is long overdue and I see no evidence that they are providing the bulk of Standard Life’s savers with the value they should be getting – either for the money they have invested or for the charges they are paying