Why IGC reports are more relevant than ever this year.


Since Independent Governance Committees (IGCs) started in 2016, I have been reading their Annual Reports and commenting on thiem. I look at how effective they have been , the credibility of their assessment of value for money and I comment on the style of the report and whether it is readable to its audience.

IGCs were set up to stop insurers offering contract-based workplace pensions being referred to the Competition and Markets Authority. It was an L&G initiative – led by Toby Filbin and the sadly departed Paul Trickett. It was supported by the ABI and adopted by the FCA who provide oversite to the activities of the IGCs.

The evolution of VFM

The fundamental question an IGC asks is whether the provider to which it is providing Independent Governance is offering savers value for their money. Until this year, there has been no direction given to the IGCs on what VFM should be measured by, but that has changed. The VFM Framework proposed by the DWP and supported by the FCA and TPR, proposes VFM is assessed using three metrics – investment performance, cost and charges and quality of services offered to savers. The IGCs have an extra responsibility (to occupational schemes) in that they assess not just the saving phase of a workplace pension but what accounts for the “pension phase”, clumsily known as “decumulation”.

There has been a shift in emphasis over the 8 years in which IGCs have been operating from focussing on costs and charges to a more especial focus on “outcomes”. Outcomes should mean what savers are actually getting in terms of value for their money – not just what they are paying for it.

Productive Capital

VFM is not the only thing that has evolved. Workplace pensions are coming under increased scrutiny as a result of what are known as the Mansion House Reforms. These touch the IGCs in that the Government is looking to workplace pensions to offer more sophisticated investments to savers  which offer access to unlisted companies, often in the early stage of their development. Researching and managing these investments is more expensive than invested in listed securities and therefore involves a bet that higher costs will lead to better outcomes. Many of the providers, governed by the IGCs have signed up to a Compact which commits them to investing 5% of their workplace pensions in “productive capital” by 2030. The publication of the IGC reports have been put back to the end of September to give more time to take on board these and other changes in the Mansion House Reforms.

At retirement choices

The 2023 reports should be an evolution of those of previous years, considering not just VFM and investment issues, but the challenge faced by members in choosing how they wish their pension pot to be paid to them (what the FCA call investment pathways). The “choice architecture” used to make decisions easier, is something I hope this year’s report will focus on. I will also be interested to see whether the IGCs comment on the provider’s efforts to embrace innovation, especially in the tricky areas of investment, drawdown and longevity protection.

Investment performance in 2022

While the Mansion House reforms look to the future, it is beholding on IGCs to consider the past and when it comes to “what has happened” , the problems savers had in 2022. Returns on workplace pensions differed radically last year. The key drivers for returns were the providers asset allocation, in particular the allocation to UK and overseas equities , gilts and bonds and the allocation to cash. Secondary considerations were the degree to which the fund hedged currency risk from overseas earnings and the level of diversification to alternative assets. I hope the IGCs will focus particularly on the “de-risking” of lifestyle funds and whether it achieved the protection saver’s needed in what turned out a brutal year.

Are GPPs already a legacy product?

I will be interested to see how IGCs consider the support given to the current  workplace pensions and legacy arrangements , relative to master trusts. Most of the IGCs oversee GPPs and Stakeholder Plans that are little marketed and are fast becoming legacy products. The exceptions are Royal London and Hargreaves Lansdown, which are the only open workplace pension providers not to offer a master trust. Prudential  operates an IGC which oversee closed DC books and Vanguard offers an IGC to oversee investment pathways. The question facing these non-marketed GPP workplace pensions is when they become “legacy” and to what extent they are falling behind master trusts offered by the same provider.


Finally , I will be interested to see how the IGCs assess the stewardship of the money held by their providers. It is now generally accepted that stewardship involves having an eye to environmental sustainability, social responsibility and the governance – not just of the funds, but of the underlying assets within the funds. Stewardship of our money by providers and those delegated to manage the assets our money is invested in , is a critical function of provider’s fiduciary obligation – they need to make our money matter.

Reviewing IGC reports

I look forward to reading the various reports I am being sent. With the exception of Vanguard’s which arrived a month in front of the deadline, all the reports are being sent to me in  the last few days of September. Thanks to Fidelity, Phoenix, Royal London, Aviva and L&G who have already sent their reports to me. I will be getting on with the job of reviewing next week.

IGC reports are a lot of work to produce and too few of them get properly read. Though I am not always flattering, I hope my comments are useful feedback, in the absence of more general comment. Necessarily, the report’s detail, especially the cost and charges tables, have to be skim read, but I promise all IGCs that I approach each report without prejudice. The quality of reports varies from year to year and this is reflected in my ratings which I publish once all reports have been reviewed.


The importance of proper publication

Finally a word on publication. We saw TPR issue a fine last week to ExxonMobil occupational trustees for failing to publish the results of their TCFD report.

There is no point in writing simply for an internal audience. Governance of workplace pensions , of whatever type, is a matter of interest for those who benefit from them. To dismiss the non-publication of a public report as an “administrative” error is to miss the point.

IGC reports must be written with the saver in mind and the distribution of the report, if only as a prominent link on a website that the public can read. Otherwise the original aims of the IGCs are not being met. So long as reports are published, then the consumer is being informed, I consider the efforts made by IGCs to get their reports seen and reviewed , part of their function, so please may those providers from whom reports have been requested, send me theirs’s next week.

About henry tapper

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