The Virgin Money 2021 IGC report
After five years of deadlock between Virgin Money and its IGC, I am pleased to read an IGC report from Sir David Chapman which reports achieved success in diversifying the default and reducing charges and looks to the future with the Virgin Money Stakeholder due to migrate next year to the popular FNZ fund platform.
It seems that the deal with Aberdeen Standard Investments (ASI) has refreshed interest in providing policyholders with a modern , fit for purpose , pension vehicle.
A report that shows persistence pays off
Hats off to Sir David and his committee which include independent members Dianne Day and Steve Balmont and hats off to Virgin for responding to the challenges laid down over the years and provide direct input into this report.
The damage to member’s savings by the default’s over-concentration in UK Equities will not be mended by the shift to a more diversified approach but at least it has stemmed the bleeding. The comparative returns are supplied by Hymans Robertson.
Until recently, older policyholders in the Virgin default were finding themselves buying gilts to protect themselves from annuity fluctuations (despite them not generally buying annuities),
Independent analysis on the individual rates of return achieved by members reconfirmed that members have not received value for money from this approach and the IGC were brave enough to give the Virgin Stakeholder a red assessment last year.
This has now been reduced to amber.
Evidence of the new found spirit of co-operation between IGC and provider goes beyond co-reporting in the IGC. It is good to see the transaction costs occasioned by transferring across to the new default strategy were picked up by the provider – not the policyholder.
A personal report
I have commented in the past about the empathy the Virgin IGC show with members and this year , that empathy is extended to the Virgin staff supporting members in a pandemic. The report points out that the call-center was based in Essex and was in the epicenter of the waves of infection that swept South East England in 2020.
The attention to Virgin staff welfare is typical of the report’s tone and better resourced IGCs could learn from this report’s tone.
But an incomplete report
Although mention is made of investment pathways in the 2022 “to do” list, there is no report on them this year. This looks like an omission. I’m not sure why there is nothing here on the retirement options as Virgin’s glide path is supposed to support income drawdown.
I can’t find anything on the Virgin Money website to suggest that it provides investment pathways though there is some mention of retirement options in the description of glidepath itself
The section on ESG is weak and suggests that the IGC and Chair in particular , need to better understand ASI’s positions on stewardship and the integration of ESG into the funds that will be on the FNZ platform.
Conclusions
The Virgin IGC is highly vocal and this year it has shown it can be effective too. I award the report a green for its effectiveness but worry that it is allowing Virgin to lag on the introduction of investment pathways and on the integration of ESG
The Value for Money assessment is good, proper comparisons are displayed which explain to members how far they have fallen because of the failure of the Automatic Fund Selector (AFS) in the default. I am not sure I would have my money in the Virgin Money Stakeholder but at least it is now offering comparable value to other workplace plans. Let’s hope it offers comparable retirement options soon. I give the VFM report an orange because it is incomplete.
I enjoyed the report as a read and this is down to the personality invested into it by the Chair. It gets a green for its caring personal tone.
