The document discusses challenges facing Independent Governance Committees (IGCs) in fulfilling their role, including: defining and measuring "value for money"; developing appropriate benchmarks; improving their understanding of transaction costs; and boosting engagement between IGCs and members. It also provides examples of how some IGCs are working to address these challenges through approaches like balanced scorecards and consumer research. Overall, the document questions whether IGCs can withstand the test of time given the difficulties in their oversight role.

1. Can IGCs stand the test of
time?
1. The story so far
2. Defining “value for money”
3. Engaging with their audience
4. Empowering change.
Henry Tapper
Director First Actuarial
Founder Pension PlayPen

2. The story so far

3. Lexis Nexis reports on IGCS 10/2015
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

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

5. Defining Value for money

6. 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

7. How have IGCs decided to measure it?
Performance
• Prudential
DIY Formulation
• L&G
• consensus
Consumer research
• Aegon
• Zurich

8. The balanced scorecard approach
Services
• What services
do members
receive?
How important
are the services?
• Weightings
applied
VFM
comparison
Score

9. How this can work in practice

10. Measuring “Money”

11. How Novarca use indices to measure VFM

12. Measuring trust -IBI Transparency Index tm
Show whether all asset management costs have been disclosed

13. Engaging with your audience

14. Are IGCs too conflicted to fully engage?

15. LEGAL&GENERALGROUPPLC
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

16. LEGAL&GENERALGROUPPLC
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.

17. LEGAL&GENERALGROUPPLC
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.”
£15bn Placesforpeople:
£252m,acquiring4,000homes,
building7,000houses,50 year
lease
ThamesValleyHousing:
£40m,25 yearfacilityenabling
500 affordablehomes
Royal LiverpoolUniversityHospital:
£429m rebuild
EnglishCitiesFund
schemesinLiverpool,
Plymouth,CanningTown,
SalfordandWakefield:
over5.4msqftof mixed-use
space,brownfieldland
Transportand Logistics:£320m,
maturitiesto30years
Aberdeen international business park:
£127m investment, 335,000sq ft office
space
CALAHomes:
£210m investment(47%stake),further
£200m forBanner Homes
HydeHousingGroup:
£102m investment
15 yearfacility
Sentinel Housing:
private placement
(registered social
housing provider
in Hampshire)
Universityof Southampton:
£93m,1,104 beds,40 yearsincome
MethodistCareHomes:
£70m investment,30 yearlease
MediaCity,SalfordQuays:
£503m investment. 50% ownership
PRSInvestment– 100s of newhomes
£162m Leeds regeneration
project:200acremixeduse
site withpotentialfor7,000
homes
£400m Cardiffcitycentre
redevelopmentjointventure
£200m Bracknell
regenerationpartnership
withSchroders

18. Empowering change

19. Top down- getting IGC’s to work
http://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
offer
in 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

20. 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

21. Can IGCs Stand the Test of Time
We’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?