Scottish Widows has published its IGC report. It was sent me by the IGC chair Anna Bradley (thanks) , it seems that otherwise, it might have escaped all attention , which is a shame. The Scottish Widows IGC looks after about 2m policies and though it does not oversee the Scottish Widows Master Trust, it looks after the large number of employer sponsored workplace pensions set up as group personal pensions.

The report is published and you can download it here It is published but is it getting read, but by whom?

It is important that it does get read, Scottish Widows may not publicise it but there is a large Facebook group of disgruntled policyholders who have experienced bad quality service and bad outcomes from Scottish Widows products. You can see what its customers have got to say here.

While the group has only around 2,000 members , I know of no comparables. Scottish Widows have a problem with their policyholders and Anna Bradley, the IGC Chair is aware.

This year she assigned a red VFM rating to the Legacy Book (mainly Clerical and General) which is producing poor outcomes and poor service, or at least it was in 2023. We learn that in the first quarter of that year it took on average 271 days to process a death claim.

It took on average over five minutes for Scottish Widows to answer the phone in the second quarter of the year

And though Scottish Widows make a big thing about being able to read bank and pension statements on a single screen, the small print of the report tells us there are 1.6m customers in workplace GPPs who don’t get the full digital services because they moved jobs.

The picture is of resources being channelled towards customers who are delivering increasing profits and not to the older customers who have no further contributions to make.  This is a variant of the active member discount (better described as two tier VFM).

Bradley rightly point to Scottish Widows consumer duty. She is no shrinking violet, she has been described by a friend in a senior position at an insurer where she was previously the IGC chair as a “pain in the arse”. She should be proud of that, that is what IGCs are supposed to be. The consistent badgering of Scottish Widows to keep their promises (which they clearly do too rarely) is a feature, I give the IGC a green for being on the customer’s side and being effective.

VFM?

I am not so sure that Bradley’s VFM report  hits the mark.  We have been promised punchy VFM measurement around three metrics;- performance, charges and service. Here we get a fourth “Communications, engagement and customer support”.

To me , these are aspects of “service” and frankly secondary to net performance which is what VFM is really about.

I’m pleased to see the reporting on past performance being clean (net performance) and while it is still showing what the fund manager is providing, rather than what members are getting, AgeWage calculations suggest that in accumulation, Scottish Widows had a good year in 2023 and have delivered sound returns for policyholders over a variety of terms

I’m pleased to see numbers against institutional benchmarks – inflation and cash for the various pathway funds. The negatives are all around the impact of the disastrous 2022 which impacted all aspects of the default’s lifestyle

I’m impressed by the IGC picking up on the “will they , won’t they” attitude of the investment department to currency hedging and pleased to hear some attestation of IFAs with bespoke defaults is at last going on but I don’t see much analysis of what the impact of hedging was on outcomes or on how these bespoke portfolios are doing against PP2.

And I’m not so pleased about is the benchmarking of the accumulation funds, the chosen competitors are other workplace GPPs, but Scottish Widows workplace pensions are competing for VFM against master trusts. It is important that the benchmarking is not selective but whole of market.

And I find the VFM assessment of investment pathways incomplete

If I was one of the 25,700 customers with £1.3bn of assets, I’d want more than this.

So I give the VFM assessment an amber mark, the IGC should stick to the three items requested of them and should dig a lot harder on net performance – I suspect that there are many bodies to be unearthed.

Readability

I was able to digest the report relatively quickly, it is not burdened with endless tables and thankfully it does not have the usual ration of stock photos. I found the table of contents at the front confusing and the long glossary at the end -looked padding.

This is not a high budget report and Anna Bradley and her team are rather more restrained than in her Zurich reports. It shows that Scottish Widows are focussed on their core products and letting the legacy languish and this is communicated sensibly,

The report gets a green for being the no-nonsense production of an experienced chair and board.

I hope that this review gets a few more people reading the IGC report and thinking about Scottish Widows as their pension provider – whether employer, policyholder or adviser.

Scottish Widows’ rather menacing tube ad.