Igc value for money
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The document discusses creating a value for money assessment for pension policies that provides meaningful analysis to policyholders. It outlines key benefits expected from pension policies, such as funds to save into and policyholder support. It also discusses calculating value for money by comparing costs like fees to weighted benefits and services. The document raises concerns about potential conflicts of interest for some independent governance committees and a lack of consistent annual reporting across insurers. It envisions how pension savings could be invested in infrastructure and used to fund housing and regeneration projects in the future.
Igc value for money
- 1. Making IGCs relevant How we would create a Value For Money assessment and use it to present policyholders with meaningful analysis. Henry Tapper Director First Actuarial Founder Pension PlayPen Antonia Balaam DC Consultant First Actuarial
- 2. Our credentials Antonia Balaam Founded 2004 200 employee pension consultancy FCA permissions through Institute and Faculty of Actuaries Active in DC governance Partners Novarca in the UK Henry Tapper Founded 2013 Due diligence for SMEs Used by non-experts (accountants +payroll) Mass market 28% owned by First Actuarial As one on value for money
- 3. Measuring Value for Money
- 4. What is Value for money? The overall Value for Money offered by a Pension Policy can be assessed by comparing the cost with the benefit to the policyholder. Total benefits of Policy Total costs of Policy We’re on our own
- 5. What do we expect from a pension policy? • Funds to save into (and clear direction) • Policyholder support (helplines, online and paper-based) • Options to spend pension savings (pension freedoms) • Sustainability – capacity to deliver over time
- 6. What do we pay for an insurance policy?
- 7. What happens when you cheat? Is the cost of Pensions Trust’s default 0.45% or 0.52% ?
- 8. How do we calculate VFM for services? Services • What services do members receive? How important are the services • Weightings of importance are applied to each of the benefit categories and to each of the services within that category Fee comparison • The charges are compared against the benchmark – 0.5% pa Services offered to policyholders Weightings of importance Fee score
- 9. A way to compare?
- 10. A simple intuitive way of doing it? Do insurer’s need an Origo for Governance?
- 11. Talking about value for money
- 12. Engaging – Educating – Empowering Policyholders
- 14. Who should we write the annual statement for? Winning hearts and minds?
- 15. Conflicts • IGC members owe their appointments and their remuneration to the providers – is this independent? • Company appointed members usually make 40% of IGC • Several members appear on multiple IGCs • Some IGCs are packed with former intermediaries • GAAs offer little choice
- 16. How seriously are IGCs taking their duties? Insurer Number of meetings so far Terms of Reference (downloadable Aegon 3 NO Aviva 2 YES BlackRock 3 YES Fidelity NOT KNOWN NO Friends Life 5 NO Legal & General NOT KNOWN NO On request Phoenix 4 NO On request Prudential 5 YES Royal London 3 YES Scottish Widows 8 NO On request Standard Life 6 YES Zurich “numerous” YES Source Lexis Nexis Occupational Pensions October 2015
- 17. Consistent reporting – but not like this
- 18. We deal in pictures….
- 19. What of the future?
- 20. 2020 LEGAL&GENERALGROUPPLC Retirement Balance Sheet: Last Time Buyers, Lifetime Mortgages • Chronic Shortage of UK housing • A third of retirees want to move/rightsize • Only 2% of housing is built for older people • Tailored housing needed in the right places: Family, Friends, Facilities • Frees-up housing stock for families • Part of the care cost solution • For those who want to stay in the family home, Lifetime Mortgages are a solution • L&G entered this market in March and is now seeing £10m of applications per week.
- 21. 2121 LEGAL&GENERALGROUPPLC Pension Savings as “Slow Money” for Infrastructure Media City, Salford, and L&G Investment • Individual Savings are the basis of all institutional investment • Recognised by Commissioner Hill’s Capital Markets Union… • …and by George Osborne’s LGPS proposals • Digital and Data can pinpoint where a saver’s assets are invested… • ..for yield enhancement, local jobs and growth
- 22. 2222 LEGAL&GENERALGROUPPLC L&G: Long term direct investments •We continue to drive risk- adjusted returns upwards through direct investments in long dated real assets where the banks have left behind ‘white space’. Investment in housing and regeneration are economically useful for us, for the broader economy and socially useful too.” £15bn Placesforpeople: £252m,acquiring4,000homes, building7,000houses,50 year lease ThamesValleyHousing: £40m,25yearfacilityenabling 500 affordablehomes RoyalLiverpoolUniversityHospital: £429mrebuild EnglishCitiesFund schemesinLiverpool, Plymouth,CanningTown, SalfordandWakefield: over5.4msqftof mixed-use space,brownfieldland Transportand Logistics:£320m, maturitiesto30 years Aberdeen international business park: £127m investment, 335,000sq ft office space CALAHomes: £210minvestment(47%stake),further £200mforBannerHomes HydeHousingGroup: £102minvestment 15yearfacility Sentinel Housing: private placement (registered social housing provider in Hampshire) Universityof Southampton: £93m,1,104beds,40yearsincome MethodistCareHomes: £70minvestment,30yearlease MediaCity,SalfordQuays: £503minvestment.50% ownership PRSInvestment–100s of newhomes £162mLeeds regeneration project:200acremixeduse site withpotentialfor7,000 homes £400mCardiffcitycentre redevelopmentjointventure £200mBracknell regenerationpartnership withSchroders
- 23. 2323 LEGAL&GENERALGROUPPLC Pensions Auto-Enrolment: Basis for Beveridge 2.0? • “Europe accounts for just over 7% of the world’s population, produces around 25% of global GDP and has to finance c.50% of global social spending... It’s obvious it will have to work very hard to maintain its prosperity and way of life” • Angela Merkel, German Chancellor *The Economist 1 June 2013. From the print edition Polling shows 18-24 year-olds are increasingly likely to see welfare as a personal, not a State, responsibility. Public-private risk-sharing offers a solution.
- 24. For more information First Actuarial have offices in Leeds, Manchester, Peterborough, Tonbridge and Basingstoke First Actuarial – www.firstactuarial.co.uk Pension PlayPen – www.pensionplaypen.com Henry Tapper- www.henrytapper.com Henry.h.tapper@firstactuarial.co.uk @henryhtapper 07785 377768 Antonia.balaam@firstactuarial.co.uk
Editor's Notes
- #2: Our ideas