Pension Industry Collaborates in new Workplace Pensions Initiative with members
Independent Governance Committees (IGCs), in conjunction with their UK workplace pension providers, are collaborating in an important new initiative to understand pension scheme member attitudes to ‘value for money’.
Last year, the FCA published its rules mandating that providers of workplace personal pension schemes should establish and maintain IGCs from April 2015. Under the FCA requirements, IGCs must act independently of their provider. IGCs have specific primary duties to act in the interests of scheme members, to make an objective assessment as to whether members are receiving ‘value for money’ from their workplace personal pension arrangements and to report on their findings.
IGCs have produced their first annual reports which had many common themes, including detailed work on investment performance, charges and service standards. They now want to build on the work carried out last year to investigate further how their members approach the topic of value for money.
As a result, 11 IGCs, with the support of their respective providers, are collaborating in an extensive research programme with members, co-ordinated by Sackers. The aim of the programme is to develop a common understanding of what members themselves value and why.
The organisations collaborating on the first wave of this initiative are Aegon, Aviva, Fidelity International, Legal & General, Old Mutual Wealth, Prudential, Royal London, Scottish Widows, Standard Life, Virgin Money and Zurich. After a comprehensive tender process, NMG Consulting has been selected as the consultancy to conduct the research programme.
An extensive programme of member research will take place over the next few months so that the findings can inform IGC thinking as they prepare their second annual reports.
Jacqui Reid, associate director at Sackers, who is co-ordinating the research programme on behalf of the participants said:
“All IGCs (and their providers) are clear that value for money is about maximising good member outcomes. However, pinning down the components of it and how you measure them has proved harder. Many of us agree that, although fair charges are important, there is much more to achieving good member outcomes than price. IGCs are here to act in the interests of their members. It is therefore vital to enable them to carry out their role effectively that they understand what members themselves, and not just the pensions industry, value. This is an exciting project which has great potential to inform our thinking and improve member outcomes across the contract-based pensions landscape and beyond.”