Can IGCs stand the test of time?

1. The story so far2. Defining “value for money”3. Engaging with their audience4. Empowering change.

Henry TapperDirector First ActuarialFounder Pension PlayPen

The story so far

Lexis Nexis reports on IGCS 10/2015Insurer Number of meetings so far Terms of Reference

(downloadableAegon 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

My unaudited assessmentsProvider Effectiveness Tone Value For Money workMainstream insurers Royal London      Prudential      Legal & General      Prudential      Scottish Widows      Aviva      Friends Life      Aegon      Zurich Assurance      Standard Life      Asset Managers       Fidelity      BlackRock      Legacy providersOld Mutual      Abbey Life      ReAssure      Virgin Money      Phoenix      New breed SIPPs Hargreaves Lansdowne      True Potential (due next week) Intelligent Money (promised)

Defining Value for money

It seems easy enough!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

But-No consensus as to how to measure or benchmark

How have IGCs decided to measure it?

Performance

• Prudential

DIY Formulation

• L&G• consensus

Consumer research

• Aegon• Zurich

The balanced scorecard approach

Services• What services

do members receive?

How important are the services?• Weightings

applied

VFM comparisonScore

How this can work in practice

Measuring “Money”

How Novarca use indices to measure VFM

Measuring trust -IBI Transparency Index tm

Show whether all asset management costs have been disclosed

Engaging with your audience

Are IGCs too conflicted to fully engage?

LEGAL & GENERAL GROUP PLC

15

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

LEGAL & GENERAL GROUP PLC

16

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.

LEGAL & GENERAL GROUP PLC

17

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.”

£15bnPlaces for people:£252m, acquiring 4,000 homes, building 7,000 houses, 50 year lease

Thames Valley Housing:£40m, 25 year facility enabling 500 affordable homes

Royal Liverpool University Hospital:£429m rebuild

English Cities Fundschemes in Liverpool, Plymouth, Canning Town, Salford and Wakefield: over 5.4m sq ft of mixed-use space, brownfield land

Transport and Logistics: £320m, maturities to 30 years

Aberdeen international business park:£127m investment, 335,000sq ft office space

CALA Homes:£210m investment (47% stake), further £200m for Banner Homes

Hyde Housing Group:£102m investment15 year facility

Sentinel Housing: private placement (registered social housing provider in Hampshire)

University of Southampton:£93m, 1,104 beds, 40 years income

Methodist Care Homes:£70m investment, 30 year lease

Media City, Salford Quays:£503m investment . 50% ownershipPRS Investment – 100s of new homes

£162m Leeds regeneration project: 200 acre mixed use site with potential for 7,000 homes

£400m Cardiff city centre redevelopment joint venture

£200m Bracknell regeneration partnership with Schroders

Empowering change

Top down- getting IGC’s to workhttp://www.thepensionsregulator.gov.uk/foi/how-to-join-or-leave-the-group-personal-pension-list.aspx

your independent governance committee (IGC) or governance advisory arrangement (GAA) has assessed the GPP (or relevant GPP product series) under offerin year two, we expect the IGC/GAA report to include a statement relating to the value for savers in respect of the relevant GPP product series which confirms that it does not offer 'poor value‘employers considering whether to use the GPP can easily obtain the most recent IGC/GAA statements

Bottom up – getting IGCs to work– Football Supporters’ Trusts• D Formal, democratic and not for profit

For fans to strengthen influence over club

With Government support (Industrial and Provident Societies)

Responding to crisis threatening team’s future

140 supporters trusts in UK

100 supporters’ trusts own equity in club

40 supporters’ trusts have place on board

Can IGCs Stand the Test of TimeWe’ve covered• the challenges that IGCs face from: • defining value for money, • creating appropriate benchmarks, • improving their grasps of transaction costs • and boosting interaction between members and IGCs.

Let’s put it to the vote – can IGC’s stand the test of time?