“A sobering day for the industry.” That was how providers described the scathing Office of Fair Trading report into workplace pensions back in 2013, which criticised the proliferation of high-charging legacy schemes, poor governance standards and a lack of transparency on costs.
To tackle these challenges, and to restore some sense of balance and fairness to the £30bn languishing in legacy schemes, we have now seen the creation of independent governance committees. These snappily named organisations have been tasked with holding providers to account, and ultimately, ensuring members are getting value for money.
IGCs have had a year to judge whether workplace pensions are fit for purpose, and come up with recommendations for improving outcomes for savers.
Some committees have won some ground, while others admit they have further to go in bringing about meaningful change.
We are now seeing the first set of IGC reports, which are supposed to be aimed at encouraging members to take an active interest in the way their company pension is being run. Unfortunately, bar a cheery letter or two from those chairing the committees, the reports Money Marketing has seen thus far seem to be derived from the wake-up pack school of English language.
Despite well meaning glossaries and appendices, all this talk of “glide paths” and “VfM” (that’s value for money to you and me) is enough to make even the most conscientious employee realise they have infinitely more pressing things to do with their time.
A case in point mentions assessing “VfM” at the “outsourcer/technology platform level” and “in aggregate across all schemes for servicing aspects”. Given these employees may not even know what they are paying into their pension, do we really expect them to decipher what all this means?
Another IGC has talked of carrying out consumer research at “substantial cost” to the provider to understand what value for money means. Surely the industry luminaries that sit on these committees have the ability to distinguish between unfair, punitive charges and reasonable ones? Wouldn’t efforts be better concentrated on preventing new members being enrolled into modern, rather than legacy, products?
IGCs have made some strides in delivering value for money, and it is a shame they have to exist at all.
This is only the first attempt, but from here on in questions will start to be asked about whether IGCs themselves are providing value for money.
Natalie Holt is editor of Money Marketing – follow her on Twitter here