I am a member of the Legal and General WorkSave Pension and have my life savings with the personal pension plan, made available to me when I worked at First Actuarial.
I am very interested in the IGC report for 2023 published on 27th September 2024
The Government has asked everyone to consider Value For Money in terms of cost and charges, performance and the member experience. Nowhere does it ask for assessments of investment choice , member engagement and communication and accessing your pension. There is no VFM measure for investment pathways though the holy trinity from DWP/FCA and TPR should apply.
It is arrogant of the L&G IGC to continue to use their own measure. It makes its assessment difficult for regulators, employers and members to compare and it is another block to our establishing a common definition of Value for Money, something the consumer needs.
The report is published at the very end of September , 10 months in arrears of the period on which is reporting. We live in an era of real time information generated using artificial intelligence. While I am grateful for being sent it when I was, the report could and should have been published sooner; The same can be said for almost all the major IGC reports, only Scottish Widows of the big GPP providers did not publish against the October deadline.
So much for my structural moans. I will now get into the weeds of the report which I find to be seeing Legal & General’s current VFM as rather less good than the IGC.
Here is the report (without appendices which appear at the bottom of this blog)
I was pleased to hear that after many years of waiting, members of L&G’s WorkSave GPP (the one I’m in) are finally getting an app.
I was not so pleased to know that having decided to take some money out of the plan (more on this later) , I cannot use this app.
I can say as a veteran of using this L&G plan that functionality has consistently lagged its competitors and indeed the L&G Master Trust which has become the insurer’s flagship product.
Member service is described as excellent for L&G contract based savers. My own experience in trying to encash a portion of my fund to forestall any changes to tax in the forthcoming budget have not been excellent. I will repeat what I have posted in previous blogs.
To give you an idea , here is the initial correspondence made on the in-mail facility of my worksave pension portal
Things started speeding up when I was allowed to go digital but even when my application form arrived towards the end of September, I had to send it back, together with a wet signature on my Lump Sum Allowance declaration by post.
To the credit of L&G they assigned me a case-worker who has liaised with me, agonising over the four days it took for the application to get to L&G. But I have no idea of what price my units were cashed. The account balance on my “pension” has been blanked out as “Temporarily Unavailable”.
So I don’t know what my tax free cash entitlement is or what I’m getting when the money finally arrives. I am of course subject to a single swinging price on encashments. If there are plenty of people taking money on the day I take money, then the price is likely to be lower – reflecting liquidity – I wonder when I get my statement of withdrawal whether I will have got out at fair value or at a calculation of units based on a price that “swung” against me. Of course it could swing in my favour as well but as I haven’t had access to my unit price for some days (due to a systems problem at L&G) you can imagine I’m a little concerned!
In my case a 1% swing in the price represents around £2,000 in added or lost value.
So what does my story tell you?
It tells me that even with my L&G pension , I needed five weeks to get my money , though I may have transacted in four,
This is not excellent service. Other than the mails I’ve been getting from a dedicated account manager, I can’t think of any part of this service that is first class. I bank with Starling and First Direct, that is first class, I am used to buying and selling on the web and know what a good user experience is. The Legal & General member experience is dire and the only thing I can compare it with that is better than it was is the service I used to get from L&G which was worse.
The “pension” I tried to access was actually a lump sum (not a pension) and to describe my experience as “good” is nonsense. Nothing went wrong – the process was flawed – it felt 20th century. Not to have a transactional app to do things like drawing down cash is poor, to have an app which only be used by savers (not by spenders ) is crazy. For me to encash nearly £200,000 of my money and be blanked from seeing digitally or in any other way the bargain being made on my behalf seems a way away from satisfying L&G’s consumer duty.
So much for the first of the three VFM Metrics – “quality of service”. I would rate the service I got and am getting “poor”.
Performance
The matter that most affects member’s outcomes is the performance of L&G’s default funds and in particular the default that most of the money is in, the MAF or multi-asset-fund. The MAF is consistently failing its users. It takes too little risk for savers and it takes too much risk for spenders and it underperforms its rivals in terms of achieved outcomes in both cases. L&G are at least offering us the Corporate Adviser Comparison Tables
When the fund is working for spenders it is taking a lot more risk than competitors but it is still under-performing many of its rivals. The risk/reward trade off isn’t working
And the MAF sits at the bottom of the class for savers – because it isn’t taking risk when it’s needed.
The fund is passive and doesn’t get involved in active markets (the ones that it’s hoped DC will move into. We can ask why and we get the answer in the next area of analysis.
L&G’s main default seems to be failing on its performance and the target date funds which are replacing MAF don’t seem to be shooting the lights out either. When I asked for TDFs in the fund range in 2013 , I was laughed at by one member of L&G’s staff (now left). These funds are now arriving 10 years late and they are already looking out of date. The L&G default fund situation is a mess and delivering poor value for money.
Costs and Charges
We may wonder why it’s giving poor value for money and may regretfully conclude it’s because L&G has been selling fund management too cheaply to the market.
Legal & General are proof that if you pay peanuts you get monkeys. The poor defaults are not getting the pick up of others from private market investment because they have insufficient budget to do so
L&G are signatories to the Mansion House Accord but there is no mention of the Government’s plan to put private market assets into WorkSave or any of the legacy workplace savings plans L&G offer. LGIM has launched a private markets fund but there’s no mention of it in this report.
What has happened at L&G is that the cost and charges were set at the wrong level when the majority of its GPP business was sold and – since the arrival of the Master Trust, Worksave and other plans are now part of L&G;s legacy. They get minimal investment in either the default funds or in the customer experience and the GPP now offers bad value for money because of its low charges and the insurer’s understandable desire to make some profit out of a product it no longer sells.
I give L&G’s workplace savings product a fail for Value For Money, it should be reported to the FCA as a Red on its RAG system and I give the IGC report a Red for saying that the value for money on this plan is “good”.
Tone and structure of the report
This is a highly professional report that is put together in such a way as you can read a narrative separately from the analysis. Splitting the two is good and the report is very well written and easy to read.
But the fact remains that the structure of the report adds to the confusion of what “value for money” is. The sections on ESG, fund choice, member access and the long introduction to the board and what it does dilute from the main message which should be about the member outcome and experience.
I can only give it an amber for its tone and structure, because what the report does, it seems to do rather more for L&G than for the members. The IGC are effectively a buffer between the life company and the FCA and that is not what the IGC should be,
As for the IGCs activities, they seem to have slowed to a minimum. I have had no invitation to any member forums in the past few years and see nothing from the IGC other than this report, Next year’s work on our behalf is summed up in one paragraph of the report
Here is as weak a workplan from an IGC report as I have ever read. I am not sure what the L&G IGC is doing and I’m not sure they are either. I give them a red for failing the policyholder they are paid to protect.
Appendix
Here are the performance figures (published as appendices)