I am pleased that Royal London have based the purpose of its IGC in Value for Money and hope that this will be the basis not just for commercial insurers active in the workplace and to policyholders but to commercial master trusts who act in the same space. I have written about the history of IGCs and the challenge they (and particularly Royal London’s) will face going forward here.
The IGC report can be downloaded from this link . I cannot go into great detail on the lengthy document and will stick to the high level summary and these critical aspects of VFM given to it by the FCA (and also applied elsewhere by the Pensions Regulator)
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Plan charges and transaction costs
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Investment strategy and performance
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Customer service and communications.
The IGC also assesses Royal London’s environmental, social and governance (ESG) policies.
Chair Peter Dorward start off by concluding
I am pleased to report that no material concerns requiring escalation were identified during 2024.
Why we should have to wait till the end of September 2024 is unclear. We live in a digital age, thinks get done in real time. Let that be.
Costs and Charges are the first and still predominate area the IGC is interested in, this being how IGCs came into being (an Office of Fair Trading report in 2014)
The charges at Royal London are assessed differently than with other insurers, Royal London distributing profit back to members, effectively reducing the costs taken to meet the insurer’s costs. This now relates to all but a few stakeholder plans (legacy).
While I am happy with the IGC’s report on costs and charges, I think I and anyone coming at this document from a consumer’s point of view will be dis-satisfied by the section on investment. Principles are one thing, practice is another. The best intentions mean little to the person who has been short-changed by ineffective investment, we are left asking “how did we do?”.
And as we read through the shortened document we come to a section on ESG which reads like an audit, with no connection with a normal saver
So what? We press for information why “investment solutions” are not properly incorporating policy and strategy and are told
We recognise that the integration of responsible investment remains a work in progress as the investment proposition evolves, and that challenges remain in bringing customer
perspectives into solution design. We are aware that Royal London intends to assign more resource over 2025 to support the integration of responsible investment into its investment solutions.
This is the problem with the report from a saver’s point of view. There is no touch point for the saver, only a lot of “principle” and “strategy” but very little example of what this means, both in terms of return and to improving the world savers will retire into.
Finally the report takes us into the third area of VFM, “member service”. Here much is happening outside of IGC, we have a Pension Schemes Bill , introduced in 2025 which not mentioned (as this is a 2024 report). Instead of the concept of default retirement funds we have investment pathways and I suspect that Royal London, especially targeted to policyholders who have contracts with advisers either directly or as employees of employers who do, will hope that savers take advice and draw money down as they choose.
All the same, the future of the IGC, as it passes from Peter Dorward to Colin Stewart at the end of September (after 10 years with Peter) is going to be shaped by what is happening in Westminster.
As a document, the IGC “at a glance” report is sufficient, an excellent review of a compliant insurer. I have read the full document and have found little in it that is more than an audit of the activities of the life company as a workplace pension provider and as a provider of “investment pathways”.
It does its job properly and if I were to be marking as I have in previous years, I would give it a green for concluding that Royal London is doing the right thing by customers.
But here is the problem for the life company, it is now facing competition in workplace pensions not just from other insurers but from consultants with master trusts and from organisations like Nest that are growing fast and thinking about ways of paying people pensions as required by a Pension Schemes Act which will shortly be on us.
The view of the future will be radically different for Royal London. It has belatedly decided to enter the bulk annuity purchase market but it has no master trust. It has put its trust in the advisory market but that market is being hit by major changes in the taxation of wealth when stored within pension wrappers. None of this is addressed in the 2024 report.
Is Royal London delivering to its customers? I think that this document shows Royal London to be thoughtful about risk and about compliance but does it tells its customers whether it is ready for the decades to come? I don’t think it does.
Stocked with photos of corporate activity in City spaces, the “glance ” and full 63 page review is adequate but not thrilling. Royal London were the first (and maybe the only) IGC to have a policyholder representative, the consumer representatives are now an actuary, an investment expert and an IFA. The intent of the IGC to represent savers, spenders and employers seems to have been lost.
I hope that IGC reports going forward are less audits and more a call to customers to be a part of Royal London’s vision – I hope the IGC can talk again before September 2026
The IGC today?