Life at ReAssure is complicated, so complicated that we have to learn there are two different ReAssures; ReAssure Ltd. manages legacy books (now branded “heritage books”), while ReAssure Life Ltd – which you probably know as Skandia or Old Mutual, is treated separately.
The good news is that – according to the IGC that looks after both ReAssures considers both ReAssures are giving value for money though in different ways.
There are many ways of interpreting value for money; the simplest and my favorite is that is a validation of the management of my retirement money. So the ReAssure IGC are telling you that it’s worth keeping your ReAssure pension.
But the trouble is , every IGC is saying that their workplace pension is value for money which isn’t much help if your money is spread across a number of workplace pensions. Should we keep them all as they are all good, or are some pensions better value than others?
This is particularly interesting to David Hare who is Chair of Reassure’s , Phoenix’s and Standard Life’s IGC, all of which he thinks give value for money. It’s like training half the horses in a race and suggesting they all should be backed.
The FCA is frustrated that there is no common measure of value for money that could allow consumers like you and me to compare one workplace pension against another, even if one is governed by an IGC and another by a board of trustees. The FCA is fed up that whether the outcome of saving is good or bad, the pension is always considered value for money.
So how does Reassure stack up for Value for Money?
We know from the Old Mutual IGC reports that their workplace pensions are extremely expensive. This is confirmed by this report which suggests that on average we are paying 1.4% pa (+transaction costs) for the management. This is like paying 110p for a pint of milk which is in Tesco at 55p. You may think that your 110p is superior milk or you might just grin and bear it. For that 110p pint of milk to be good value, the milk needs to be very superior. Most of us think that milk is milk.
To be fair to ReAssure, they are doing their best to improve the situation for savers who have been overpaying for their
milk pension management for years. But sorting things out is not easy.
We often talk about the complexity of pensions – here is a prime example. How are ordinary people to make head or tails of this.
The advice to the over-paying customers of ReAssure Life Ltd is to talk with your financial adviser. Over the years , I sold people a lot of Skandia Pensions, those people no longer have their original financial adviser and I fear that my former clients are not alone.
The problem for the ReAssure IGC is that there clearly are better pension schemes which don’t involve having to see a financial adviser or pay 4.1% pa on part of your investment.
ReAssure participated in a comparison through Redington with other legacy providers and they found ReAssure came out quite well, which is what Zurich found and presumably the other legacy (heritage) providers. But this isn’t quite the point. If you are paying 110p for a 55p pint of milk you either want superior milk or two for the price of one.
And of course, if you are in a ReAssure pension , you could be in a Standard Life pension and get a much better modern pension without leaving the Phoenix Group.
It is very hard to be David Hare – who is IGC Chair of Reassure and Phoenix. How can he be effective in the help he is giving his readers knowing they could be better elsewhere? This is why it might be helpful if we had a common definition of value for money which told customers whether they were getting value for their money as a matter of fact.
The IGC report
At 91 pages, this takes the trio of Phoenix reports to well over 300 pages, which is a couple of books.
The report repeatedly refers to the Reassure Life Ltd as offering “open architecture” which releases it from reporting on its ESG. This is no different from any other workplace pension which does not have an in-house asset manager.
The point is that workplace pensions are fund platforms and fund platforms have a responsibility to exert influence on the fund managers they admit to the platform.
It is not acceptable for the IGC to omit an ESG report on Reassure Life Limited.
Otherwise, I can only make the same comments as I have made on the other Phoenix reports, there really is no need to spin these out over 100 pages. However the production values and David Hare’s fluent style make for professional if not coruscating reading. It deserves a green for its energy and engagement. It is readable.
For its diligence in tackling two very messy books of business with a clear plan for the future, I think this is an effective document. But it fails to properly compare what is going on with these heritage pensions with other better workplace pensions and fails to properly explain the impact of high charges, variable performance and the recent failures in service on the L&G heritage book. Overall I give the report an orange for its effectiveness
With regards the value for money scoring, I am not happy with the conclusions being drawn. much of the analysis gives the benefit of any doubt to the future actions of Phoenix, right now these products don’t seem to be delivering much value for money. I give the report an orange for its VFM assessment.