Today is the final day for IGC Chairs to report on what happened in 2023 (ancient history to some). After getting 10 months grace, most of the big houses are only now delivering their statements.
So far I have reported on
Vanguard (who got theirs in early)
Virgin Money who were early to the table (albeit with a “ghost” report.
Scottish Widows who actually did a full report early
and Legal & General- whose report arrived on Friday and was reviewed over the weekend
I have been sent by the reliable and helpful Stuart Gash, the Aviva report and no doubt Standard Life, Phoenix, Reassure, Prudential, Aegon and Royal London are about to be or have just been published.
But should we really be finding reasons to delay? My sense is that the IGCs this year are having to face the constraints of Value for Money reporting that is based on what the Government wants and the consumer needs. This means an end to the reporting on what the insurer wants to promote as a marketing exercise.
This message has not got through to one major insurer’s IGC which insists on marking their homework their way…
Let’s hope that others keep things simple and don’t give us a balanced scorecard of one.
Why IGC reports matter
The Government is looking at the future of GPPs as workplace pensions. There are questions over their existence in the Call for Evidence from the Treasury that closed on Wednesday last week. I responded twice on that and said much the same thing, GPPs can only be justified if they do something that master trusts don’t. Right now I haven’t spotted what that something is but I have spotted that insurers who run both GPPs and Master Trusts are spending more on developing the Master Trust than the GPP leaving the GPP a legacy product.
GPPs are not being put forward in beauty parades for employers putting their workplace pension provision to the secondary market. Instead GPPs are being dismantled and bulk transferred into Master Trusts – contributions first, pots second. Those insurers who have both GPPs and Master Trusts know this very well as do the two major insurers which have no master trust but a GPP that is being cannibalised.
I have yet to read an IGC report that puts forward a case for an employer not to close the GPP and move contributions and savers to a Master Trust.
The IGC report should lay out the value for money of the workplace pension and compare this with comparable Master Trusts so employers can make reasonable comparisons. The IGC report should not be a marketing tool but a window for employers and savers to look through -into the workings of the products which are being reported on.
IGCs have also to report on their retirement options
Where GPPs are ahead of occupational pensions is in the early adoption of investment pathways down which savers can go to reach desired outcomes (pension annuity, invested drawdown, cash-out and wealth transfer). The Investment Pathways have yet to take off and may never do so. It may be that people retire from master trusts that pay pensions or even from innovative DB schemes that open their doors to “transfers in” – the LGPS being one.
But right now, IGCs should be working hard to make investment pathways not just fit for purpose but GPP’s USP. Having just gone through the decumulation experience at L&G, I hardly noticed that I had investment pathways, more can and should be done to make them worthwhile.
The IGCs have a role to play in helping people over 55 to understand their options.
D-DAY for IGC reports
Today, 30th September is the last day for IGC chairs to publish their reports on the web. As I have every year since 2015/16, I will be calling out these reports for their readability, their effectiveness and for the quality of their VFM reporting.
This year I will have new tools, the DWP and FCA have published their VFM framework proposals by which they wish GPPs and other workplace pensions to be judged.
The IGCs should no longer be a cosy club of well-heeled veterans pursuing a portfolio career, they should be fighting for their savers and those spending their retirement savings.
I hope that this year’s crop will show a little of the fight I want them to display, but I fear by what I have seen so far that what we will get for our RAG will be the usual sea of green.
