IGC Chair – David Hare

I have three IGC reports to review from the Phoenix Group.  Each has two versions and IGC Chair David Hare has kindly sent me links to al six reports.

Standard Life – 2023 Full Report

Standard Life – 2023 Summary Report

Phoenix – 2023 Full Report

Phoenix – 2023 Summary Report

ReAssure – 2023 Full Report

ReAssure – 2023 Summary Report

Because the Standard Life workplace pensions will from next year, be covered by the Phoenix report, I hope that the number of reports to be reviewed next year will be reduced to four.

This year, people in Standard Life workplace pensions can check progress using the Standard Life IGC report.

This is also David Hare’s final reporting season as he is hanging up his boots and focusing on his keyboard skills from Christmas. I wish him well, we have had a great nine years chewing the fat on value for money and what these IGC reports are really for. We may not always see eye to eye but we have always respected each other’s commitment to make IGCs relevant to the people who really matter- the policyholders and their representatives, the employers who select Phoenix’s workplace pensions.

Phoenix’s legacy pensions

Hare does not sign off with a happy report. He sees Phoenix as offering a second rate service (relative to that offered to Standard Life policy holders). The task he sets Phoenix going forward (and because reports are now a ridiculous 10 months delayed, that means from last year, is a tough one

Hare has never held back and the response from Phoenix’s Andy Curran is as people are wont to say these days “nuanced”

We value enormously the challenge that we receive from the IGC – and also the praise that we sometimes get! It is evidence-based and totally focused on the in-scope customers. It is also fair in recognising where we do perform well, while clear when calling out areas for further improvement.

I have noted the challenges posed by the IGC to us this year and am happy to commit that we will carefully consider them and follow them up as appropriate

I very much hope that whoever steps into David Hare’s shoes , can elicit a similar response going forward. David Hare has been a champion for his members for nearly ten years and if anyone deserves recognition for the ongoing relevance of IGCs and their reports – it is him, this report gets a green for its effectiveness.

I am not so happy with the way this report assesses value for money. It is done the Hare way and not the Government way and going forward I want to see the multiple metrics merged into three , costs, net performance and member services.

ESG is now a part of the net performance rating, investment and customer service are one and the same thing and feed into the efficiency rating which is what costs and charges measure. Ultimately everything comes down to the way contributions are converted into pensions and since we have no way of measuring performance as experienced by the member , we must rely on proxies such as “net performance “.

Doing so with Phoenix does not lead me to give Phoenix the Green Rating that Andrew Miligan assigns to it.

The performance of individual funds continues to lag competitors

and while some with profits funds are offering value for member’s money, some most definitely are not.

Policyholders getting little more than 2% pa over 20 years, can reasonably ask why other Phoenix policyholders are getting nearly 7%.

Relative to the arguments about charges, the impact of declared bonus and unit growth in unit-linked and with-profits policies fades to nothing.

There is a real problem in fairness between policyholders here and so long as Phoenix operates as a single IGC covering all the different life companies within its portfolio, it should be working to create intra- policyholder fairness.

I find it hard to justify a green rating for Phoenix so long as these inequalities remain. Redington (now Gallagher’s) rating of performance is far from effusive.

We are reassured that this external analysis by Redington has not highlighted any issues that were not already known and understood

So what is this analysis?

The approach is to invest more heavily in actively managed funds

We learn that

‘this approach has resulted in past performance being generally towards the lower quartiles during the growth phase, but towards the upper quartile closer to retirement’.

Any analysis of the bar charts above shows that the actual returns from investment performance are lagging competitors and indexed benchmarks and that the lag is less than previous years does not tell us that members are getting value for money.

I give this report’s VFM report an orange rating. Its conclusions don’t match its research.

As always with David Hare’s reports, the language is clear, the approach personal and the report laid out in a way that draws you in. The structure of these long Phoenix reports has evolved so that we can dig as deep or as shallowly as we like and get rewarded accordingly.

I give the report a green for its style and panache, thank you David Hare for your readability over the years