Aegon highlights concerns with IGC proposals in FCA consultation

Aegon pensions director, Steven Cameron, has highlighted concerns with proposed responsibilities for Independent Governance Committees (IGCs) in the Financial Conduct Authority’s (FCA’s) Driving value for money in pensions consultation.

Specifically, Cameron warned that the proposal for IGCs to carry out comparisons at individual employer level and to inform employers where they believe better value for money may be accessible elsewhere was “not realistic”.

He noted that the change would involve “significant complexity and huge extra cost” if it was agreed to and employee benefit consultants and corporate advisers would be better placed to shoulder the responsibility.

The FCA is proposing introducing a standardised definition of value for money, which would not just include costs and charges but also “delivered and expected” investment performance and quality of services, such as communications.

“We fully agree with the FCA that value for money in workplace pensions goes well beyond simply low costs and charges,” said Cameron.

“Value should be judged in terms of delivering good member outcomes which in turn relies on schemes offering appropriate, well performing investment funds and truly engaging members so they can make the most of their pension and plan their retirement.”

Cameron added that the comparisons and benchmarks for value for money would need careful design to achieve their aims.

“With value for money being so multi-dimensional, comparisons between offerings need to be handled carefully,” he added.

“For any comparison or benchmark to be helpful, it must include the key elements that improve member outcomes, objectively comparing like for like, while avoiding scope for misinterpretation. A poorly designed, incomplete or subjective approach could do more harm than good.”

Cameron noted that whilst the variety of charges and default funds offered by providers created challenges in ‘like for like’ comparisons, broad benchmarking “may be feasible” based on categories of employers with similar membership profiles.

“However, the consultation suggests IGCs might in future be asked to go well beyond this to carry out comparisons at individual employer level and inform an employer directly where they believe better value for money may be available elsewhere,” he continued.

“We do not believe this level of comparison is realistic for IGC – it would involve significant complexity and huge extra cost.

“Selecting or reviewing the best scheme for a particular employer’s workforce is the role of employee benefit consultants and corporate advisers who have the skills and processes in place to do this.”

    Share Story:

Recent Stories


Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video interviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today. Please click here for an edited write-up of the video

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Global sustainable credit
Laura Blows speaks to Royal London Asset Management senior fund manager, Rachid Semaoune, about global sustainable credit
Global equities and transition investing
Pensions Age editor, Laura Blows speaks to Royal London Asset Management equity investment director, Jonathan Price, about transitioning to sustainable investments within global equities

Advertisement Advertisement Advertisement